Innovation isn’t taking a back seat in 2024; in fact, 94% of tech executives are pushing harder with plans to increase IT spending this year, according to Ernst and Young [1]. Accelerating the pace, however, requires a razor-sharp eye on assets and expenses. Where are the innovation dollars going? How efficiently are new resources being utilized? Is your legacy tech portfolio lean and mean? What’s going unused and how can IT waste fund more investments?
The year 2024 begs the question of how businesses can save, leaning the budget toward future opportunities more than projects past. Here’s a breakdown of eight ways businesses can optimize in 2024.
Cloud-flation, cloud costs, cloud savings: walking the AI tightrope
Cloud-flation and AI are the heavy hitters this year. AI is the shiny new solution in today’s enterprise toolbox, but its heavy reliance on cloud storage and computing can mean unforeseen expenses required to stand up Generative AI models. On the other hand, AI has become a north star for navigating an increasingly chaotic world of cloud infrastructure optimization. As providers continue to roll out more services, discounting structures, and pricing models, AI does what human minds simply can’t - crunch mountains of data to find the best bang for your buck based on current workloads and predicted needs. This give and take of AI is a tightrope companies need to successfully navigate.
Meanwhile, high cloud costs will persist this year and cloud-flation will only continue as industry giants hike their prices. For example, CIO.com reports [2] IBM is expected to increase its cloud cost by up to 26% this year.
Cloud saving tips
- Don’t let AI’s hidden costs bankrupt your innovation budget. If you’re like most companies thinking about tapping into GenAI, you’ll need to consider the impact on your cloud spend. Business leaders should be prepared for the high costs associated with infrastructure setup. Plan for cloud cost increases proactively and work to gain as much visibility into usage as you can. FinOps strategies and cloud expense management practices can prevent AI from generating technical debt.
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Use AI to your optimization advantage. Automation is a game-changer for predicting spiraling cloud infrastructure costs before invoices hit, identifying cloud waste, and auto-correcting where needed to start instantly capitalizing on savings opportunities. Foundry research shows [3] companies using AI to power their FinOps practices save more than 20% (compared to less then 10% when not using AI).
AI shines at helping offset cloud-flation by exploiting the best discounts and deals available to drive to the lowest price possible. With new purchasing options released all the time, technology (not people) should play out what-if scenarios to determine which new options are most valuable given your consumption habits. - Now is the time to shop around. Big cloud service providers are being challenged by white-hot market competition. Teasing out the differences in similar cloud infrastructure offerings often comes down to the best pricing provided in exchange for long-term contractual commitments.
Mobile & IoT: seek out surplus, strategies, contracts
Smartphones, laptops, sensors, and IoT devices are consuming more of the IT budget and putting bigger burdens on the IT team. According to Vanson and Bourne [4], 81% of companies plan to modify their mobile strategy to save time and money with a smarter approach to device management. Hardware glut is also an issue after pandemic purchases put an oversupply of devices in the hands of every employee.
Mobile saving tips
- Consider mobile repos: Scale back your number of mobile and desk phones to avoid unnecessary expenditures in the age of video conferencing and preferences for softphones. In facing the question, “Does every employee need a smartphone?” companies can significantly dial back spending through mobile repossessions.
- Avoid mobile strategy regrets: Companies today are shifting mobile device ownership strategies, but too many transitions can be costly. Reversing course wastes time and money.
- Chase down your old mobile phone contracts: Get a firmer grasp on mobile data usage habits. Contracts from 2020 and 2021 were built for business models that are no longer relevant and open new paths to savings.
Telecom: disregarding resources and MPLS are costly mistakes
Internet connectivity remains a top way to save, especially with new technologies that make it easier than ever to securely diversify with cost-effective network access methodologies. Two things, however, tend to stand in the way of this savings potential: a lack of internal human resources and a lack of visibility into telecommunications circuits (inventory, services, costs, usage, etc.). Both make it difficult to get network modernization projects up and running.
Telecom saving tips
- Tackle network modernization and cost optimization in one fluid motion. Tech upgrades should pay for themselves or lower expenditures. Consider the expertise and resources you need to quickly exploit the cost-saving opportunities of new offerings like SD-WAN, SASE, and agnostic approaches to connectivity. While human support hurdles can delay returns by months and years, detailed service audits and IT staff augmentation services smooth migration bumps to get initiatives off the ground sooner and dollars back in your budget faster.
- Exploit MPLS price drops: Prices are dropping for MPLS, and many IT leaders aren’t paying attention simply because this wireline network service represents a declining percentage of their portfolio. MPLS is being phased out in favor of cheaper internet services, but sunsetting typically happens slowly, making it a good source of savings. Payouts come from taking the time to renegotiate the network’s most costly services.
Make 2024 your leanest, meanest IT year yet
Without cost governance, IT innovation is a road to technical debt. Now more than ever, companies need to simplify their IT spending with overarching insight into expenses, deep visibility into service usage, and hyper-automation to fuel efficiencies in financial management and cost optimization. Consider the many ways your organization can save money, improve decision-making, and trade technical debt for IT financial health.
References
[1] www.ey.com/en_us/news/2023/05/ey-survey-reveals-innovation-remains-a-major-business-priority-for-technology-companies-despite-economic-disruption
[2] www.cio.com/article/651215/price-shock-ibm-to-increase-cloud-costs-by-up-to-26-from-2024.html
[3] www.eweek.com/artificial-intelligence/how-finops-and-ai-curb-escalating-cloud-costs/
[4] www.networkcomputing.com/networking/managed-services-can-offset-it-burdens-explosion-mobile-devices
