The new millennium saw IT landscape disrupt the organizational operations across the world. Organizations became more and more amenable to adopting computer systems at an organizational level, partly to improve the efficiency of the operations, and partly driven by the necessity forced by the need to stay relevant. For an entire decade, people with IT skills and knowledge were hunted with vigor by the organizations. The talent was limited and the demand high. Further, the demand for IT hardware also skyrocketed. Not just the servers, but also the backup systems, fail-safe systems, and so on, became the talking points of IT budget discussions. However, all these things are again in discussion, but for opposite reasons. After a decade and a half of heavy investments into digital infrastructure and IT staff hiring, organizations are now moving towards smarter strategies. Of course, the change does not come without a bloodbath. Budget cuts by organizations are affecting the IT departments the hardest.
Hardware to Thin Clients
Organizations, which had the necessary budget to spend, invested quite lavishly on building their own IT infrastructure. Each of the staff was provided their own PCs, even when the organizations had a common server, which could have been fitted with workstations that did not require as much hardware investments. Each of the PCs would take anywhere from $600 to $1000, depending on their configuration. Moreover, these systems would require regular maintenance and replacement every few years, raising the budget significantly. However, all that is changing now.
Organizations are now waking up to the option of setting up thin clients. Thin clients are low configuration computer systems that rely heavily on a central server. They cost significantly less than PCs, but the end user does not notice any difference in the experience, while using such systems. Thus, the organizations are able to cut their budgets without actually compromising the quality.
Hardware to Cloud and SaaS
Organizations are doggedly looking for ways to reduce their investment and expenditure into IT infrastructure development and maintenance. With the rise of cloud computing and cloud storage solutions, it makes less and less sense for organizations to invest in building their own hardware. Moreover, it is not just about the hardware. Online systems require safe and secure systems. This is another area of investment for companies. On the other hand, cloud services make the investments by organizations into hardware as well as their security systems unnecessary. Most cloud services have ultra-secure systems that most organizations can’t even match. In addition to this, cloud services cost only a fraction of the hardware investments that the companies would otherwise make. By all definitions, it is much smarter to adopt cloud services. Moreover, the cloud services offer a far better quality of systems and services, than what most organizations can develop by themselves.
Another cost-reduction technique that many organizations are pursuing is to do away with buying software products, and instead go with Software as a Service model. In case of software purchases, although it is a one-time investment, there could be other considerations. First, software becomes obsolete with time, as new updates and versions hit the market. Also, the future updates come with security fixes, bug fixes, and performance enhancements, which the organizations cannot avoid. Because of this, companies which sell softwares, also charge annual maintenance charges or sell new versions and updates as separate products. This puts the organizations which bought previous versions as a disadvantage, as they cannot take advantage of the improved systems. In lieu of all these issues, organizations are going with the SaaS model. If new software versions are released, they can always go with them without incurring any significant extra costs, or without having to abandon their previous investments.
Hiring Freezes and Layoffs
Last, but not in any way least, is the decrease in staff expenditure by the companies. In fact, over the past 2 to 3 years, whenever organizations think about budget cuts, the IT staff is the first one to face the axe. A yearly reduction of about 10% in the IT headcount has become a norm. Although this might sound harsh, it comes with dual advantages. As salaries account for an average of 30% of all company expenses, layoffs can reduce the company’s expenses significantly. Also, such layoffs create a situation of emergency in the organization, compelling the remaining employees to work harder to avoid the axe. However, the companies should be smart about this and avoid frequent layoffs. Otherwise, it might send the signal to the most productive staff that the company is a sinking ship, and force them to look for employment somewhere else.