According to a January 2021 report by global research and advisory firm Gartner, global IT spending is expected to reach $3.9 trillion this year. That’s a 6.2 percent increase in tech spending, as Gartner predicts companies will invest in hardware such as mobile devices and personal computers along with business software.
Despite growing IT budgets, resources are still tight, and companies — whether intentionally or not — waste precious dollars due to inefficiencies, poor planning, and lack of oversight. Here are five ways your company could be wasting money on technology and what you can do about it.
1. One-Size Fits All Workstations
Even before remote work made in-office workstations obsolete, many companies were overpaying for equipment and software. According to a 2016 report, U.S. companies waste an average of $247 per desktop on unused or rarely used software. While it might seem efficient to equip each workstation with the same software and hardware, each employee doesn’t need the same tools to do their job. For example, high-powered PCs might be essential for some employees, while lightweight laptops work better for others.
Companies should evaluate their needs and customize technology to meet the individual needs of their employees. This includes examining the software on each workstation to determine whether it is necessary. Careful planning can also ensure unused software doesn’t get purchased in the first place, saving valuable resources.
2. Solutions That Overlap
Companies often waste money on technology by procuring a number of solutions that overlap. This can occur when organizations go through mergers and acquisitions, and inherit legacy technology. It can also occur when organizations are fragmented, and different departments adopt new technology without communication to the entire organization.
A 2019 study found that companies spend $13,000 per employee on SaaS annually, but $4,000 of that spending is unnecessary.
In order to reduce overlap costs, companies should conduct regular software assessments that examine the functionality of each solution employees are using. For example, customer relationship management software and enterprise resource planning software, often intersect. When duplication is present, tech administrators can determine which solutions provide the most value and which can be eliminated.
3. IT Infrastructure Hardware
Many companies hold onto legacy hardware that is no longer necessary and the cost can add up. Maintaining and updating IT infrastructure often involves managing physical servers, which includes the cost necessary to power and cool them.
The cost of managing this infrastructure also tends to increase over time. For example, a 2017 report found that by the time a typical server is five years old, the cost of maintaining it has increased by 148%.
New advancements in technology can often eliminate the need for this costly hardware. Today multiple servers can be hosted on a single piece of hardware, and critical business applications and databases can be stored in the cloud. While some of these efforts require upfront investment, they can be more financially viable in the long run.
4. Inefficient Data Storage
Despite the benefits of cloud data storage, this technology does come with it’s own potential for waste. If your company uses Google Workspace backup or Office 365 cloud backup solutions, the cost can add up.
Cloud storage is essential to the disaster recovery process, but the more data companies backup, the more it can cost them since fees are often tied to usage. Today, the average company holds onto 162.9TB of data and storing it in the cloud can be costly. One 2018 report found that 26% of large enterprises spend more than $6 million a year in the cloud.
This is another area where companies can cut costs by eliminating overlap. IT teams should monitor data backups to uncover whether duplicate data is being stored. Companies must also establish policies for how long data should be kept. While maintaining an accurate backup of company data is essential, it might not be financially viable to store everything in the cloud forever.
5. Unused Licenses
A substantial portion of any company’s tech costs often goes to paying for software licensing fees. However, according to research, 38% of enterprise software licenses actually go unused, which can cost businesses upwards of $34 billion annually.
Companies can save money by eliminating license fees for employees who are no longer with the company, but this can mean losing important data tied to those accounts and violating data retention compliance requirements. Retaining this data can cost companies between $20-$30 per user month.
In an effort to eliminate this cost, companies should routinely audit their license usage to determine how many unused licenses they are paying for. Once IT departments have a clear picture of how much they are spending, they can determine whether a solution for backing up the data tied to these licenses would be more cost effective.
The best way to eliminate unnecessary license fees is to implement a third-party backup solution like Backupify which allows you to backup archived users and transfer data from past employees. Backupify’s Google Workspace backup and Microsoft 365 cloud backup solutions eliminate the risk of losing historical company data or backups due to deprovisioned licenses while saving you money.
To find out how much your company is wasting on departed employee licenses, check out our data retention cost calculator.