The topic of IT costs can be quite contentious. There is a general feeling that it’s difficult to effect costs without dropping quality levels. Certain myths have developed around this subject which can be discussed.

You need to buy in volume, get multiple quotes and take the cheapest to save money.

Not true. Whilst volume purchasing can produce discounts, it doesn’t create the greatest savings in the long run. The downside is that you will need to spend your capital and a few years later you will have to do it all again when the technology is outdated. Getting multiple quotes isn’t necessarily the best option either, because whilst you may be able to get a lower priced quote, it is unlikely to be significantly lower and you will be saving pennies rather than pounds.

Opinion

Make sure you combine best practice procurement with market opportunities. Also use the most reputable suppliers. Improving the management of your processes you can save you more than they would be able to achieve by volume purchasing or competitive tendering. This can be done without reducing quality.

You’ll save money if you move applications or services into the cloud rather than installing them in the office.

Cloud usage can save money but there are many aspects that you need to consider both in accurate measurement of costs and confirming what your targets are. Some cloud solutions can actually be more expensive than comparable internal solutions. Costing internal solutions must include the costs of the resources required to enable them to work correctly, including staff. People costs are borne by cloud providers in their charges. However these charges add up and some businesses are reverting to in-house solutions due to much higher than expected added costs of cloud deployment.

Opinion

Get a comprehensive and independent review of the costs and benefits of any potential cloud or in-house solution. An analyst will make recommendations to assist in the decision-making and implementation. This may not be purely a cheaper perspective but from the need to put the client in possession of all the facts, so that you can take a key decision. An independent review offers a fresh perspective and acts as a valuable sanity check on what may be a critical investment for your company.

Businesses cannot reduce costs with suppliers because their product or service supply is monopolistic.

Sometimes this is the case. However, that is generally because the client has signed a contract committing them to an unfavourable position, not because the vendor has engineered the situation. There are possible ways to renegotiate terms that can assist both client and vendor to achieve a mutually beneficial outcome.

Opinion

If a contract has been signed, in which the terms are felt to be unfavourable to the client, and costs are too high, consider areas of renegotiation. Changing the terms may also not be ideal, as it will probably require other concessions. By using a negotiator at an earlier stage of procurement and contract discussions unfavourable terms can possibly be eliminated or at least re-negotiated.

In conclusion, unless you fully understand and account for all of the costs and benefits in each scenario, you can’t be sure of taking the correct choice and vendors of cloud-based solutions are very adept at presenting their solution as a low cost, low commitment answer to business problems.

For further information on any of these issues contact Chorus Business Advisers for free consultation on 0845 8671263 or email info@chorusadvisers.co.uk