Author: Yogi Schulz

All indications are that 2009 is a challenging year for many businesses. Falling consumer demand is likely to shrink revenue while increasing pressure to boost the bottom line.

With this difficult outlook, it may be tempting to simply ask IT to share the pain through an arbitrary budget cut. Such a simplistic approach will most likely undermine staff productivity and customer service precisely at the moment when the business needs to move in the opposite direction. But what are the low-cost or no-cost IT opportunities that management should identify and pursue to help control operating costs?

Addressing these 10 IT cost reduction opportunities can help control operating costs and steer the business through challenging times

1. Host applications externally: Hosting applications externally rather than internally can contain operating costs when the required internal staff cannot be justified. Applications to consider for external hosting include Microsoft Dynamics CRM.

2. Outsource IT infrastructure operation: Outsourcing the operation of your IT infrastructure can reduce your IT operating costs. Candidates that are most likely to produce cost reductions are Wide Area Network operation and desktop support. Outsourcing Wide Area Network (WAN) operation can help because most mid-sized business don’t need and can’t afford the talent required for effective WAN operation. In addition, organizations can look to outsource desktop support because growing businesses don’t have the scale required to reduce unit costs.

3. Consider Software as a Service (SaaS): Some businesses see operating a computing infrastructure and its associated application portfolio as a distraction from their mission. SaaS offers a way to use a supplier’s remote computing infrastructure and its associated application portfolio for a flat per month, per seat fee. SaaS reduces IT investment by shifting IT costs from fixed to variable. SaaS also makes it easy to scale up or down on 30 days notice. For more information, read Microsoft Platform and SaaS.

4. Favor buy vs. build for applications: Buying application functionality for your business is frequently cheaper than building applications. For a widely-used example, consider Microsoft Dynamics.

5. Push for best practices for software development: If software development is unavoidable, push for best practices for software development to reduce cost and risk. Best practice techniques include software module re-use and agile development practices. Consider best-in-class software development solutions such as Microsoft-based tools. For simpler applications consider a tool like Microsoft InfoPath.

6. Collaborate to enhance productivity: Product development and problem resolution typically require the interaction of your staff from multiple disciplines. Improve staff collaboration to reduce your cycle times, to improve customer service and to reduce the cost of doing business. Products like Microsoft Office SharePointWindows Meeting Space and Microsoft Office Communicatorenable effective collaboration.

7. Expand virtualization: Virtualization consolidates applications running on many physical servers onto a smaller number of larger servers to reduce IT capital and operating cost. Virtualization achieves these goals by improving utilization of your computing infrastructure investment.

8. Promote green IT for cost reductions not altruism: The no-cost way to cut your IT electrical power consumption is to make sure that every desktop and laptop has its power management features enabled. It’s useful also to turn them all off for weekends and perhaps overnight. When you enable more power management, you will reduce your air conditioning volume, cutting your IT electrical power consumption further. Reducing your data center growth rate will also contain your IT costs for space and electrical power consumption. These actions reduce IT costs and build green credibility for your business.

9. Enhance the value of existing IT investments: Use more of your currently licensed software functionality at no cost. Typical Word users do not leverage features like tables, mail merge, table of contents, hyperlinks, running headers and footers. Typical Excel users do not leverage features like multiple worksheets, links, formulas and formatting. Typical Outlook users do not leverage features like tasks, rules and links instead of attachments. You’ve licensed all these features that produce productivity benefits. Build awareness of the features and benefits within your business. Collaboration and ERP software typically integrate with the Microsoft Office system to add value to your existing investment.

10. Encourage data quality: Data problems embarrass businesses every day. They make businesses look inept or worse to its customers. Encourage attention to data quality by making reference to it in the performance evaluation process for employees. Improved data contributes to the quality of products and service as well as reduce errors and cost of re-work.