Cost Optimization

Understanding digital transformation is essential, given that information technology is transforming every industry worldwide. Digital transformation, according to Gartner, can encompass various activities, including IT modernization (such as cloud computing), digital optimization, and the creation of new digital business models.

The market is flooded with tools and technology, making it difficult for businesses to discover, pick, and use the best ones to get the best outcomes. It can be challenging to keep up with the latest trends because they significantly impact business expenditures. For this reason, it’s crucial to employ proper cost optimization approaches to balance the prices of IT investment with technological advancement.

Technology-based solutions are constantly complex because new technologies and services are always developed. The current trend is using shared services, open-source databases, and simple access to technologies like Kubernetes, containers, microservices, and the cloud. High-performing networks and auxiliary hardware systems become more and more necessary, and the overall cost ultimately suffers. 

We now experience quick and frequent deployments due to the new agile working style. Operations have become more complicated, and deployment failures have grown. All of these factors have further boosted the technology’s complexity and price.

The Changing Scenario Of IT Infrastructure

Any IT system needs a network connection that is quick and dependable. Modern network innovations that handle multiple devices simultaneously, such as 5G connection, SASE (Secure Access Service Edge), and Internet of Things services, might lessen reliance on various network systems for optimal bandwidth. However, this might result in more sophisticated, technologically integrated solutions.

Any business journey toward digital transformation has been significantly impacted by the development of hybrid IT and multi-cloud platforms. Older tools for comprehensive resolutions may seem outdated because they won’t be set up for the most recent changes. Full-stack management is more necessary for accurate problem identification when a system’s complexity rises due to its multi-functionality.

The system’s complexity, security, effectiveness, and productivity under review are challenged due to these new trends. Additionally, as there will be a greater need for seamlessly managed systems and a greater number of applications, SLAs will become stricter and demand the highest levels of uptime and reliability. 

Any downtime will have a negative impact on business and must be avoided at all costs or minimized. Cost optimization must therefore be a top focus. It can be accomplished by consolidating tools, automating processes, enhancing performance, increasing productivity, and preventing downtime.

Best Practices for IT Cost Optimization

The following are a few best strategies for IT cost optimization:

Align Initiatives with Business Priorities

Increased cost awareness, just-in-time provisioning, rightsizing, and auto-scaling are a few initiatives that positively affect your business performance. The bottom line profit will rise by reducing spending. However, it’s crucial to consider IT’s goal of promoting top-line growth.

IT is frequently the main force behind expanding market penetration, cutting lead times, and stimulating innovation in the age of digital transformation. The main corporate goal of revenue growth may be compromised by only considering the expense side of the equation. 

It’s crucial to regularly assess optimization efforts in comparison to these goals. Finding the proper cost, not the cheapest, is what “optimizing” cost refers to.

Communication is a crucial factor to take into account in order to gain support from the business. It’s essential to communicate the goals and logic behind these activities. The best-laid plans can be derailed if there isn’t enough support for the changes you want to make. IT will be badly impacted if the business is not consulted, and the point that IT exists to help the company will be missed.

Gain Awareness Of Your Hybrid It Environment

Visibility of every component engaged in the service delivery is necessary for optimizing the cost of IT services. However, lacking this visibility is something that businesses do quite frequently. All service components have been moved to public cloud services or have been introduced there. The new norm for practically every firm is hybrid IT, which combines traditional on-premises data center operations with public cloud services.

The placement was frequently opportunistic and not part of a thorough master plan (because of provisioning lead time, cost, security, etc.). Due to this, individual company services now frequently cross several platforms and service providers.

In a similar vein, no solid hybrid IT strategy was employed to choose the management tools that were being deployed. Each provides a partial picture of the environment or a particular technology. 

You need a platform that provides unified visibility and analysis for the entire environment if you want to comprehend how hybrid services are used and performed. Data collection and analysis are challenging and time-consuming due to silo limitations.

Set Cost Structures Clearly

You must establish the cost structure for your operating environment to accurately quantify cost savings. By dividing the cost into its parts, you can swiftly evaluate several options and ensure that the financial impact is highly important. 

Without ongoing financial effect analysis, optimization efforts risk becoming purely technical exercises and losing sight of their primary objective, which is cost reduction.

The cost per instance, transaction, user, etc., is the basis of the business agreement and subscription conditions for cloud-based services (IaaS, PaaS, or SaaS) provided by a third party. 

The same holds for situations in which hosting and management of private infrastructure have been contracted out to a third party. However, in both cases, the structure may need to consider some of the agreement’s terms, such as volume-based discounts or term obligations.

You often need to prepare a little more for traditional on-premise infrastructure hosted in your own data center. 

You must define the costs of the following to assess the cost of running a system as a whole or the cost of each resource used by it:

  • specialized hardware parts
  • Hypervisor and OS
  • administration and upkeep work

Usually, these three are the most expensive goods, so pay attention to them first. You might add the cost of network connectivity through shared resources, facilities (electricity, cooling, floor space), and software licenses for a more precise estimate. But it’s crucial to avoid becoming bogged down in constructing the ideal framework. Start with a basic model that can be improved over time by adding additional layers.

Identify Inefficiencies Safely

Every firm tries to avoid over-provisioning its infrastructure, but this is much easier said than done. The first difficulty is determining the best number of resources to allocate to new workloads and applications. 

No matter how hard you try, you’ll probably still be off by a certain percentage. Even when you get it right the first time, the circumstances in which your applications are executed will likely change over time.

Due to the seasonality of the business, workload intensity will change. The demand for services is affected by modifications to corporate operations. Adapting the resources allotted based on forecasts to the actual results is necessary. This implies that you still need to continuously assess, optimize, and decommission overused resources. 

It’s vital to incorporate enough historical data to cover the entire business cycle of each evaluated task for finding surplus allocations.

Align Costs Depending on Activity

You can significantly lower the amount of waste by routinely reviewing the resources allotted and choosing appropriate courses of action.

However, suppose there is no cost attached to how the various business units in an organization use IT resources. In that case, there is a risk that each team will keep using the resources to maximize its potential advantage, to the detriment of the organization as a whole. Charging each business unit according to its use is a simple technique to further guarantee the efficient use of resources.

Once adopted, a well-designed allocation strategy requires little overhead and oversight since it promotes cost transparency in the workplace and encourages sensible business decisions across the board. 


Any firm over IT cost optimization should never prioritize overgrowth prospects made possible by technology and information-driven initiatives. 

The best course for organizations is to adopt new technologies, embed resource optimization into company culture, review and improve current processes, consolidate where practical, gather and analyze data from all relevant sources, and advance relentlessly along the path of digital transformation.