IT Cost Reduction as a Way to Enhance Business in Crisis Times

The world is going through a global recession. The world’s three biggest economies, the US, China, and Europe, show consistent signs of weaker growth reflected in the prism of trade relations, gross domestic product (GDP), international financial systems, consumer confidence, production, unemployment and manufacturing rates, and business income as a consequence.

The economic crisis directly affects the well-being of businesses and their growth. How should companies act to at least stay afloat and, at most, to reformat and use the crisis as an additional springboard in the development of the company? Should organizations resort to reducing costs through mass layoffs or use more far-reaching and effective strategies for evolution, like the involvement of IT technologies, which can reduce operational and IT costs? This is the topic of discussion in this article.

Catalysts for the Onset of Recession

Crises are cyclical in nature. Analysts saw this crisis on the horizon; however, several external factors accelerated its progression, which was difficult to foresee. The big picture of crisis acceleration is the following:

The first stick in the wheels of the global economy was the US-China trade war, which began in 2018. The US imposed duties on imports from China, ranging from solar panels to aluminum and steel. China responded by raising trade duties on 128 goods imported from the US Among them are nuts, fruit, and wine, subject to a 15% duty. In addition, China introduced a 25% duty on American pork. The economic confrontation between the two giants echoed around the world.
COVID-19 dealt the second punch. While it’s difficult to tell exactly what the economic damage from the global COVID-19 coronavirus pandemic has been, it’s had severely negative impacts on the worldwide economy. For example, in 2020, the world’s collective gross domestic product (GDP) fell by 3.4 percent. To put this number in perspective, global GDP reached 84.54 trillion US dollars in 2020, meaning that a 3.4 percent drop in economic growth results in over two trillion US dollars of lost economic output. In addition, many industries literally could not function during the pandemic. Tourism, air travel, cruise ships, cinema, and theaters are prime examples. Add to this the disruptions in the supply of goods due to the collapse of supply chains and production disruptions.
As soon as the world economy began to spread its shoulders, Russia invaded the territory of its neighbor, Ukraine, and attacked the country. And once again, the trade chains and world logistics collapse, only this time because of the sanctions the civilized world imposes on the aggressor country.

Layoffs: The Easy Way isn’t Always the Best

All of these events have brought global business to where we are now. Most companies built their plans with a growing economy in mind and were not ready for a worst-case scenario—a sharp downturn in sales and profits, curbed credit access, and even bankruptcy.

The common thing that may occur in the context of budget savings for companies is redundancy. We all witnessed a series of layoffs that swept the world late last year and continue this year. Companies of all industries and sizes—from Google, Amazon, and Microsoft to tiny startups—are laying off employees. A few impressive examples include Alphabet, who cut about 6% of its global workforce or about 12,000 positions. Microsoft’s layoffs totaled 10,000 employees. Salesforce cut 10% of its workforce, more than 8,000 employees. Meta participated in the same fashion, laying off 21,000 employees in the last six months.

Did it allow these companies to cut costs? Definitely, yes, but this is a rather short-term and short-sighted strategy. Did it harm the companies in some way, including reputational loss? Sure. Did it help companies improve their efficiency? Unlikely.

When it comes to employee layoffs, one might say, ”The times, the means.” Objection. Let’s look at alternatives that don’t offer immediate results but more than pay off in the long run. And as a bonus, your company will not be classified as an evil corporation.

Not a Dilemma: Change or Disappear

After the pandemic, more and more companies began to gain momentum. They scaled up production and expanded their staff, keeping the growing economy in mind. Now companies urgently need to adapt and address two challenges which solutions are on different scales. The first was taking steps to cut costs quickly. The second was maintaining the same growth rate without losing ground. The only option for a business to live is to change and adapt rapidly to the world’s realities; otherwise, it will disappear from view completely.

Even though finding a balance is a realistic task. As a software development company with three decades of experience in IT, NIX would like to share with you the ways to enhance your business via technologies and get over this crisis with the most minor losses. Developing software from scratch, improving existing software, and optimizing business workflows through tech means to decrease costs in the long run.

If you’re looking for a way to lower the costs of software development or decrease expenditure on corporate ecosystem support or maintenance, or if you’re considering any opportunities to save your budget, you’re in the right place.

Optimization is a Life Raft for Cost Reduction

Especially in times of crisis, companies need to bring spending down quickly, but in a smart way, taking into account multiple aspects. The reason for some irrational spending of your company’s budget may lie in the lack of efficiency of your digital systems. To detect weak spots in your business processes and detect where budget drains, you will need to perform an audit of internal processes and, based on this, implement optimization strategies.

Audit results will highlight the full arsenal of measures to reduce operational and IT costs and assess possible risks, getting a clear point of view on how the situation unfolds. After audit calculations, you may find out that certain investments for web development services or mobile app development services are needed for your company to succeed. Here are some business branches which can be optimized quickly with minimum costs of software development, but can provide real help to you while in a financial crisis:

Process Optimization

Efficient processes help businesses adapt to changes in the market and respond to customer needs, which is essential for staying competitive in today’s fast-paced market environment. The key word here is efficient. How efficient are your company’s processes?

Business process optimization is rather gentle but more potent than radical changes, and it covers the urgency for transformation. Process optimization of operational, employee, and customer workflows through tech solutions allows you to kill two birds with one stone, growing your company and simultaneously reducing IT costs in the time of world crisis and beyond.

To keep a pulse on your business results and tendencies and track how digital transformation correlates with IT cost reduction, choose relevant KPIs and compare them periodically. Pay special attention to process performance and financial metrics, such as liquidity ratios, profitability ratios, production efficiency, total cycle time, throughput, error rate, quality rate, etc.

To succeed, process optimization strategies must be built with the following principles in mind:

Embrace automation needs as a strategic priority across the whole organization, not just in silos as a way to solve a few isolated processes.
Technology must run for people, not the other way around, thus, companies get enhanced workflows and significantly reduced IT costs.
Investing in the optimization of business operations models and productivity is the new normal due to its extreme performance, even in recession periods.

Here are just some tech solutions for your business workflows optimization:

Intelligent process automation (IPA) takes care of time-consuming, routine processes, enabling employees to concentrate on their core tasks and reduce IT costs in the long run..
Natural language processing (NLP) is used for chatbots giving machines the ability to understand text and spoken words in the same way humans can. NLP-based app development will cost you a bit more, but it will engage customers better and automate chat operations, which is a win in the long run.
Enterprise resource planning (ERP) systems increase organizational efficiency by streamlined management of day-to-day company activities like accounting, project management, risk management and compliance, procurement, and supply chain operations.
Serverless computing solutions like software as a service (SaaS) and platform as a service (PaaS) lead to digital transformation, helping simplify employee onboarding, customer service management, sales and marketing processes, and more. Here you can read more about how solutions like Salesforce development services and ServiceNow integration services can transform your business processes.

Process optimization results in:

Reducing the burden of time-consuming manual processes, creating more opportunities for growth
Better collaboration between business participants
Real-time collaboration across a company, providing enhanced teamwork and employee satisfaction
More resilient business structures for better marketability
Minimized performance downtimes and fewer delays and bottlenecks along with cost reduction in IT efforts

IT Infrastructure Optimization

IT infrastructures are the lifeblood of companies, combining components needed for IT service operation and management. Many organizations have some IT infrastructure, although the size, complexity, and cost can vary greatly. For example, some may have just one server or a small virtual machine, while others operate data centers.

Organizations should consider moving some or all of their resources from on-premise to cloud systems to reduce expenses. Due to misleading beliefs that this could be a cost drain, many organizations continue to use obsolete IT systems, ignoring their negative impact on business efficiency. Although in reality, IT infrastructure optimization helps to enhance overall performance while reducing IT costs.

An audit is necessary to determine how the system can best meet the company’s needs, whether downscaling, upscaling, or migrating. NIX solution architects conduct thorough audits to identify the root of the problem and provide several possible solutions for reasonable cost of developing software. A reliable IT infrastructure is dynamic and resilient as well as secure. If your company strives to thrive in a competitive market economy, you need to invest in IT infrastructure optimization.

When opting to improve your IT infrastructure to build your growth strategies, rely on the following aspects:

Streamline and automate administrative, routine, and time-consuming tasks—this is a first commandment in times of crisis. As a result, you cut the time spent on complex infrastructure management while improving its uptime and reliability.
Build strong connections between IT teams and business to fully cover your challenges. This approach improves enterprise-wide cooperation and increases IT performance, improving speed-to-market and bringing better investment returns.
Leave legacy systems outside the board as they are cost-draining. Farewells can be painful, but it’s a proven step. Opt for a modern, flexible, and scalable infrastructure with high-security compliance.
Embrace cloud capacities to get a flexible and secure infrastructure center with simplified procedures, improved data management, and compatibility across applications and systems. Moreover, this step lowers your capital expenditure and brings cost reduction in IT, as you need to pay just for used resources.
Harness the power of predictive and preventive analytics. This helps to detect existing and potential issues by monitoring systems, networks, and end-user devices in real time.

Here are just some tech approaches to empower your IT infrastructure:

Turn to Infrastructure as Software (IaS).This is a type of cloud computing in which the hardware is virtualized and provided and managed by an external provider. Based on the pay-as-you-go principle, this approach leads to significant IT cost reduction, as well as better scalability, minimized hardware maintenance, and reduced downtimes.
Use APIs or similar solutions. If you have monolithic legacy software that doesn’t meet modern business requirements and its refactoring may be prohibitively expensive. In this case, leveraging APIs or solutions like Mulesoft, which provide the ability to mutually integrate any system, can be a cost-saving solution.
Reach out to DevOps practices that encourage smooth communication between app development team (Dev) and IT operations team (Ops) counterparts. As a result, your business gets better products and faster releases to customers. Automation lies in the basics of DevOps approach, thus, you definitely will be able to reduce app development cost and redirect some funds on other priorities.
Reach out to FinOps methodology, which enhances collaboration between financial controllers, business analysts, and IT teams. The final goal of this initiative is to maximize value from cloud investments, enhancing financial accountability, making financial forecasts, and identifying waste areas, balancing between trade-offs and savings.

Benefits of IT Infrastructure optimization are the following:

Improved and strengthened network performance
Agile and scalable IT environment with reduced downtimes
Enhanced data management
Strong information security across all company branches
Reduced expenses with enhanced services

Data Optimization

Today’s companies generate vast amounts of information; even small startups can work with volumes related to big data, not to mention enterprising-level companies. However, not all organizations use this treasure trove of helpful knowledge to their advantage. In a highly competitive climate, an IT system that captures and stores records is a valuable business asset and a provider of continued success.

Data optimization maximizes the comprehensiveness, speed, and effectiveness of information collected from different sources to be extracted, examined, and utilized. Without allocation in a single place, proper processing and management of these assets—usually containing redundant records with mistakes and inconsistencies—will be hardly helpful for business development and budget revision.

Each company has their own data management flow, but there are some underlying principles to build your data strategies:

Align your business strategies with data. Strive to create a data-driven culture in your company, fusing tech solutions with people and processes—don’t plug holes in weak boat spots, but build robust data frames.
Establish a standard of data trust and observability, engaging experienced experts including data architects, engineers, analysts, and scientists.
Ensure data governance by adopting metadata policy—this allows you to standardize information usage across the whole company, synchronize data operations, make collected information consistent, and keep up with your business goals.
Invest in cyber security to keep your digital assets out of the wrong hands, avoid system breaches, and keep your reputation crystal clear.

There are many ways to enhance your data optimization efforts, including:

Self-service business intelligence (BI) data tools. Records are processed and visualized without BI and IT teams’ direct involvement, allowing them to react in more agile and faster ways to changes in the ever-changing market. This leads to significant company savings and the ability for further reinvestment in other areas.
DataOps practices. The aim is to enhance data management operations, improve data processing speed and quality, and streamline its delivery.
Artificial intelligence (AI) tools. AI-powered systems automate data processing, improve accuracy of records, provide predictive analytics, and make digital experiences personalized. Companies can significantly reduce IT costs and free up human resources for their priorities.
Big data tools. Advanced analytics allows for gathering massive amounts of digital assets, recognizing patterns of network threats and predicting cyber-attacks.

Benefits of data optimization include:

Greater flexibility and less risky decision-making
Strong matching with customer demands
Boosted business reputation
Increased ROI due to better data performance and reduced IT costs
Better error and fraud detection

Software Development Outsourcing

Outsourcing web development and app development tasks is a wise strategy for business growth and reducing IT costs in times of a world crisis and beyond. However, today, the whole team does not need to sit in one room for the work to go efficiently. An experienced software development company like NIX can take care of your business needs, including data, process, and infrastructure optimization.

Software development outsourcing may be the best solution for you due to the benefits it provides:

You can stay in the epicenter of your core business functions while outsourced vendors create robust and demanded products so you can operate more efficiently.
You can offload time-consuming and resource-intensive tasks, reducing the burden on your in-house team, allowing them to switch to their core competencies and strategic initiatives. This can help organizations achieve greater performance, productivity, and success faster and cheaper.
You get access to a wide pool of tech talents and you can hire a dedicated software development team, able to build best-fitting solutions for your needs for reasonable app and web development cost.

You don’t spend time and money to hire people, train them, and take care of their social benefits. And you don’t have to fire people if something goes wrong. It’s a great way out for cost reduction in IT and continuing to develop your R&D.
One main advantage of outsourcing services is the rapid scalability of the team. Today you need ten people; tomorrow, 50, a week later, 20, and in the case of solid outsourced software development providers, these changes happen painlessly for you and in almost no time compared with an in-house team interaction.

Payoff from investment in outsourcing can be substantial if you take into account the cost of developing software and its real value, and it can serve as a lifeline in tough times of world economics. If you’re interested in this approach but don’t know where to start, read our article about how to find a skillful software development vendor with 6 expert tips.

Piecing Things Together

To summarize, layoffs are not the only way to not drown during a recession. Instead, we believe that focusing on optimizing business processes and automating operational, employee, and customer workflows with the help of tech solutions will preserve and enlarge your budget, increasing the overall efficiency, attracting new customers, and maintaining growth.

Reach out to NIX for consulting and software development services. We know how to strike the perfect balance between performance and IT costs to maximize the value of your IT assets and investments in times of crisis or prosperity.