How to Reduce Hardware Costs Without Sacrificing Functionality

Studies reveal that on average, trade businesses spend around $74,000 on hardware and software every year. Moreover, Small-to-Medium businesses (SMBs) report that 6.4% of their annual revenue is allocated toward such expenses. As such, one of the top concerns facing business leaders today is how to cut costs on such systems without sacrificing the speed of business, user functionality or employee retention. With financial pressures mounting, IT managers are understandably on the lookout for ways to cut costs without cutting corners. Here are a few strategies to try.

1. Understand what comprises the total cost of ownership.

When it comes to an IT investment, there are typically four separate costs to consider. They include the cost to acquire, maintain, retire and finance the piece of hardware or software in question.

In short, this means that there will be separate costs to consider when it comes to researching and ultimately selecting the item in question. Then, you’ll need to perform routine maintenance and troubleshooting to correct any issues that may occur while it’s in use. When you’re ready to move onto the next generation, there are costs to retire that current piece as well. Moreover, in the event that you have to finance a system, you’ll likely pay interest and those fees are a separate expense.

2. Find ways to reduce your acquisition costs.

To begin, you may want to consider if there are any ways you can reduce the amount of money you’re currently spending on bringing new technology into your organization. For instance, if you’re currently spreading your orders across multiple vendors and only giving each one a small fraction of your overall investment, it might be more cost-effective to reduce the number of vendors you’re using and instead, place a larger order with only a select number of them. Many vendors will offer a discount on bulk purchases, allowing you to save money in the long-term. Yet, think twice about signing an up-front discount contract with any vendor. It will often work better to negotiate a discount each time you place an order, rather than agreeing to set terms up-front.

Or, it might work in your favor to buy directly from the manufacturers themselves and cut out the middle vendor. With the speed at which technology changes, this is often your best bet and can keep you on the cutting edge of new updates. Piggybacking on this idea, it’s helpful to keep a technology roadmap of the systems that you currently use or anticipate using in the future. This will help you get the most out of every investment and can often open up windows of opportunity you didn’t know existed. For instance, while “End of Life” usually means that the equipment in question is being discontinued and will no longer be sold, you might find that some EOL parts, like Cisco switches, still have plenty of life left within them and can be secured at a discount rate, which you can read more about here.

3. Allow the manufacturer to handle repairs.

As a rule, manufacturers realize that if their equipment is in good working order, odds are high that you’ll secure a repeat purchase from them. As such, many are willing to work with you and help repair or replace faulty items for free or a reduced cost. Go ahead and get the manufacturer’s extended warranty when you can, as many will cover breaks and offer premium support for not too much more. By allowing the manufacturer to take care of a majority of repair issues, you can reduce the need for in-house teams and you’ll add to the cost-effectiveness of each piece.

4. Find strategic ways to liquidate assets.

When it comes time to retire a piece of technology equipment, there are myriad avenues you can take to reduce the costs of doing so. You can list the items on an online marketplace or even consider an employee sale to eliminate the excess. While these routes might be unexpected, when you consider how much it costs to sell or liquidate your assets, they appear as valuable alternatives.

This is especially true when you consider the time it takes to assemble all of the equipment, remove all proprietary information from it, pack and then ship the items. Before you simply toss them out, consider if there are any ways the items could be useful again and find ways to contact those communities that might consider them as such.

While there might not be a definite way for companies to cut back on hardware and software costs, starting with these four principles can help organizations determine where they can reduce expenses, and how. Moving forward, savvy IT leaders will be those who apply these strategies as early as possible, helping to set their companies up for financial freedom with every asset they accrue.