How To Reduce IT Costs

On the surface, it seems like IT should be more affordable than ever – after all, businesses are shifting to software-as-a-service (SaaS) and cloud-based infrastructure, computer power is increasing, and IT expertise is on the rise.

But the numbers tell a different story: this year alone, IT budgets have reached their highest point in history, and Gartner expects spending to grow almost 10% over the coming year. And while 78% of small business leaders state that IT is a top spending priority for them, few are equipped to extract the maximum value from their IT assets – even fewer are prepared to weather the disruptive challenges that confront them every day.

So what gives? For every challenge technology solves, it generates new ones, including cybersecurity threats, the need for maintenance, and an influx of data. Plus, IT expertise can’t grow fast enough to keep up with demand, leading to talent shortages and salary inflation.

Now more than ever, you need IT assistance in the face of economic uncertainty, talent shortages, and increased cyber threats. You also need IT leadership to align your in-house IT staff with business priorities and long-term goals.

A Storm of IT Challenges

Businesses – especially small-to-medium sized businesses (SMBs) who lack the budget of a large enterprise – are facing disruptions to IT strategy on many fronts, encompassing both internal and external risks.

A deluge of tools – organizations are drowning in tools: according to one study, the average organization is using more than 250 software-as-a-service (SaaS) applications on a regular basis. That’s a lot to keep track of, and many of those apps end up being used by only a fraction of users.

Mountains of data - today’s organizations are storing hundreds of terabytes of data. However – while 93% of organizations are continuing to spend on data and analytics – much of that data is unstructured, and poorly organized. Most businesses have a hard time finding all their data, let alone using it effectively.

A storm of cyber threats – according to IBM, the average cost of a data breach in 2021 was $4.37 million, a number which has been steadily climbing every year – and that’s not counting the cost to brand equity and consumer trust that comes with a serious breach. Today, trust plays a major role in business resilience and longevity: without cyber preparedness, maintaining that trust is impossible.

An avalanche of connected devices – with the Internet of Things (IoT) swiftly climbing to 15 billion devices, organizations have more programmable surfaces connected to their network than ever before. While many IoT devices suffer from risks, they also offer untapped, transformative potential through the data they generate and the control they offer over processes throughout your business.

A freeze on technological transformation – according to McKinsey, 79% of organizations are still in the early stages of technological transformation, leaving them in the dust when competitors embrace cutting edge IT. In many cases, delayed transformation is simply due to lack of expertise: upgrading legacy IT systems can be extremely difficult without the help of a specialized expert who not only understands how those systems work, but also how to replace them with something better.

In isolation, each of these risks has the potential to reduce productivity, resilience, and revenue; altogether, they constitute a storm of challenges that can cripple an organization over the long term.

All the aforementioned challenges could potentially be navigated by a skilled IT team; unfortunately, it is increasingly difficult to find, afford, retain, and lead IT professionals.

Hard to find – 73% of IT leaders say that filling open tech positions is a major difficulty in 2022; meanwhile, more than 3.5 million cybersecurity positions are expected by 2025, which vastly exceeds the current well of cybersecurity talent.
Hard to afford – scarcity has accelerated wage and salary inflation beyond 20% for key tech roles: today’s IT professionals are in demand, and expect to be paid well for their expertise.
Hard to retain – thanks to a climbing attrition rate amidst ‘the Great Resignation’, businesses who are able to fill IT positions will soon have to fill them again, with cybersecurity positions sometimes taking longer than 6 months to fill.
Hard to lead – even organizations with a good internal IT team struggle to keep their skills current, set priorities, prepare for cyberattacks, and align IT strategy with business goals.

Thanks to their unique combination of experience – and low cost compared to full-time technology officers – our vCIOs are uniquely situated to help you navigate the rising tide of challenges facing your organization today, both from technological disruption and the struggle to fill IT positions.

What is a vCIO?

vCIOs are expert consultants, who serve the same function as a full-time chief information officer (CIO). They guide a company’s decisions in a vendor-agnostic way, based on a combination of technological and business considerations. More than that, they are

Problem Solvers
Trusted Business Partners
Fine-tuners
Long-term Decision Makers

Most importantly, they perform all these functions while aligning technology with business objectives. Through guidance based on tactical and strategic decision making, a vCIO is one of the most valuable outsourced IT partners an organization can hire: they save businesses time and money, build resilience, increase security and raise revenue over the long term.

Time Savings

An experienced vCIO is continually improving business process for greater efficiencies, leading to significant time savings: hours can be shaved off a single task using better techniques, software, and automation strategies. While identifying these improvements in a vacuum can be difficult, our vCIOs bring them to light through metrics and past experience.

A vCIO can also save time by handling certain tasks directly, like negotiating your company’s relationship with vendors and other IT partners, planning your IT budget, and supervising major projects that require a high level of planning and detail. In most cases, they will also be able to do these tasks more effectively than non-experts in your organization, leading to overall improvements on top of time savings.

Cost Savings

It’s obvious that time savings translate to cost savings – but our vCIOs can also save you money by eliminating unnecessary costs. For instance, you may be considering an expensive solution when there is a more affordable option, or a way to repurpose existing solutions: by accounting for these factors in your IT strategy, a vCIO can optimize for the most cost-effective approach to any problem.

Conversely, a vCIO can tell you when a “cost cutting” measure is actually costing your business more in the long run – for instance, when your technology stack falls behind industry standards, leading to reduced performance, competitiveness and productivity. This phenomenon is called “technical debt,” and according to McKinsey, it costs large organizations hundreds of millions of dollars per year.

Finally, nearly half of small businesses didn’t have a budget in 2021, let alone an IT budget. By planning and budgeting your IT spending with the future in mind, vCIOs not only reduce your IT expenditure in the short term but align IT spending with business goals for maximum cost savings in the long term.

Today, much of the money businesses spend on IT is completely unnecessary. According to one study, the average company wastes more than $135,000 per year on unused or redundant SaaS tools. Finding and eliminating this unnecessary software is just one-way our vCIOs have reduce expenses for their clients.

Sometimes, eliminating unnecessary expenses comes down to negotiating a better deal with your vendors. One of our vCIOs helped a client to bring down the cost for their Internet and phone services, saving $500 per month in the process.

Other times, it comes down to finding a better solution than what’s currently on the table: another of our vCIOs helped a client to avoid a $40,000 HVAC expense by reducing their client’s on-premise computing infrastructure, and moving them towards the cloud.

Finally, businesses can reduce their costs by using existing tools in a smarter way, rather than acquiring new ones. One of our vCIOs saved a client from making a costly software investment by finding the feature they needed in an existing tool and working with the vendor to set it up.

Better Resilience

“Business resilience” is a measure of your organization’s ability to adapt and survive in the face of disruptions, whether they originate from the marketplace or changing technology landscape. In 2020, non-resilient businesses were caught off guard by the COVID pandemic which increased remote employment – resilient ones quickly adapted with the help of remote collaboration software.

Our vCIOs will improve your business resilience by proactively finding use cases for emerging technology and preventing your business from falling behind disruptive trends. They also ensure that aging or deprecated systems are updated or replaced whenever necessary, keeping your business on a constant track to modernization, and avoiding reduced performance.

Today it is especially important for businesses to have a disaster response and recovery plan – by maintaining a list of procedures for worst-case scenarios and keeping your data safely backed up, a vCIO can help your business to recover in the event of a ransomware or phishing attack which could otherwise bring mission critical operations to a halt.

Technical debt – which describes the loss in performance, competitiveness, and productivity businesses experience when their technology stack falls behind industry standards – can feel like an abstract concept, until you find a concrete example.

Despite its high-tech economy, many businesses in Japan still rely on fax machines, paper documents, Internet Explorer and other technologies largely abandoned in the wider world. Consequently, the country struggled to implement remote working during the COVID pandemic and has the lowest business productivity of all G7 countries.

While U.S businesses may not rely on fax machines, 79% are still behind on technological transformation. Due to legacy IT systems, one of our clients had issues staying connected to the Internet and conferencing with their remote headquarters – it delayed meetings and communication, prevented work from being shared in a timely way, and slowed down critical processes.

A vCIO from MainSpring was able to assess the problems that had amassed over many years of technical debt, and create a modernization roadmap encompassing new networks, servers, Enterprise Resource Planning (ERP) software and telephone services – best of all, it only took 12 months to implement.

Stronger Security

When it comes to cybersecurity, vCIOs can do more than plan for the worst: they can also maintain an inventory of your IT assets, identifying weak points in your company’s infrastructure that represent likely targets for malicious cyber actors. By hardening your internal and public facing networks with an emphasis on the most vulnerable targets, they can protect your company’s sensitive data and assets from compromise.

vCIOs can also vet your IT vendors to ensure that they prioritize security in their products and services. Rampant vulnerabilities in Internet of Things (IoT) products are partially attributable to negligent design from vendors who prioritize profits over safety; by eliminating low quality vendors and communicating your security policies to technology partners, vCIOs can ensure that they are implemented throughout your organization with every new project.

The right way to save money can be far from obvious: a costly investment may bring long-term benefits, and a seemingly necessary one may turn out to be unnecessary on further inspection.

Drawing on their expertise, vCIOs can help decision makers to account for hidden variables, educating them on the pros and cons of each decision, and recommending choices that will save money over the long term – not just the short.

One of our vCIOs worked with a client who was hesitant to spend money upgrading from critical software they had been using for almost 15 years. Another client was hesitant to buy new servers based on high upfront costs, despite the problems they were having with their existing infrastructure.

In both cases, our vCIOs were able to sit down with executives, show them the relevant projections, answer questions, and give them the clarity they needed to move ahead. Without direction and expertise, businesses can delay necessary changes long after they have already lost invaluable time and productivity.

The Qualities of a Great vCIO

While all vCIOs serve the same basic functions, many claiming the title of ‘vCIO’ today provide different standards of service based on their professional experience and practices. The best vCIOs are distinguished by five qualities every business should look for in an outsourced IT leader.

An IT Veteran

Jolene Says… “At the end of the day, a vCIO is someone you can throw the kitchen sink at when your IT infrastructure is overwhelming. We create a positive impact by putting client satisfaction first, creating order from chaos and building user-friendliness into our solutions.”

IT expertise might seem like a no-brainer for any IT centric role – but today, it is no longer considered essential for full-time CIOs at large corporations. Consequently, many vCIOs today act more like account managers or sales representatives than expert IT consultants – but that’s not good enough, especially for SMBs with limited IT talent to supplement the role.

A good vCIO has an extensive background in IT support or IT strategy – many of the best get their start in L2 or L3 support before transitioning to a vCIO role. Not only do they understand the technology that drives your business, along with the short and long-term implications of any decisions they make, but they are also aware of the changing IT landscape, and how new technologies may fit into your organization’s portfolio.

Business Acumen

Josh Says… “a vCIO is looking for the source of an organization’s problems – not just the symptom – whether that’s outdated equipment, lack of modernization or something else. By approaching our clients holistically, we are able to reduce their expenses and increase efficiency for the long term”

A vCIO without business awareness or knowledge of your industry may be useful for putting out fires, but they will not be a strategic partner who can give your business the resilience it needs to survive changing market and technology trends for the long term. A great vCIO not only understands IT, but also the challenges faced by decision makers with every new budget change or acquisition: they see the strategic capabilities of new tech, and how they can be leveraged to meet your business goals.

To that end, a great vCIO will also commit to understanding the ins and outs of your organization, meeting with executives on a regular basis to keep track of changing directions and priorities. This enables them to plan your IT budget effectively while meeting monthly, quarterly and annual benchmarks. It also ensures that the solutions they recommend are cost-efficient and tailored to your needs.

Leadership Ability

Cleon Says… “vCIOs make IT decisions with a focus on long-term business objectives and scalability. We look at a client’s infrastructure and ask ourselves how they can leverage what they already have more effectively versus where they need improvements”

As soon as they walk through the door, a great vCIO is ready to take ownership of your IT infrastructure. That means tackling issues in a systematic way and getting to the root of technical issues rather than addressing symptoms. It also means looking down the road and constantly seeking new opportunities to leverage emerging technologies. Ultimately, this approach requires a leadership mindset driven by a vision that inspires your employees to take responsibility for carrying it out.

A great vCIO also isn’t afraid to step on toes or “rock the boat” when necessary: as an outsourced role, vCIOs can provide a fresh set of eyes and a more objective point of view than you’ll get from an internal team – this allows them to address old technology problems from a new perspective and solve issues your business hasn’t had the resources to handle on its own. But all of this requires the ability to think creatively, assess resources, leverage expertise as necessary and drive a better culture that leads to continual business improvements.

Results Focus

Jeremy Says… “As a vCIO, you’re never satisfied with ‘good enough’ – you are constantly working to refine your client’s strategy and stay ahead of trends. Although it's hard work, results build trust. I take real satisfaction in knowing that many clients will sign off on our recommendations automatically, because they trust the process – they know it works”

As a leader, a great vCIO will never ask you to measure their value based on past experience or credentials: instead, they will prove that value through results, continually auditing performance based on KPIs, and refocusing those KPIs over time to keep them aligned with your changing business priorities.

A great vCIO is a perfectionist and fine tuner, constantly seeking out new ways to improve your IT strategy and business outcomes in both the short and the long term. They allow metrics to drive their recommendations, providing insights grounded in concrete outcomes like time and cost savings, increased revenue and more.

People Skills

The vCIO position demands outstanding communication skills, and the ability to be a team player. For instance, vCIOs will often have to communicate with executives and other decision makers both to explain their recommendations and address any concerns. At the same time, they must maintain good relationships with key technology vendors, “code switching” as needed, and distilling technical concepts in simple English.

A great vCIO will also leverage the experience of your employees, seeking out feedback and using it to shape their strategies and solutions. This requires integration with your business, along with a detailed understanding of its unique culture, products and mindset. Ultimately, the ideal vCIO is a people person: someone who listens and communicates well, while inspiring trust through their interactions and demonstrating a genuine concern for your mission.

The process which has led to IT disruption in the present isn’t slowing down, and trends on the bleeding edge of technology – such as artificial intelligence (AI), automation and the blockchain – can be expected to change business dramatically in the future. But without the help of an IT expert, knowing the difference between legitimate disruption and hype can be difficult.

For instance, opinions on AI from business leaders are mixed, and contradictory – 44% believe that their industry is adopting AI too quickly, and 73% believe the technology is overhyped. At the same time, a nearly equal percentage believes that AI will help deliver more efficient business processes. Ultimately there is probably some truth in all of these assessments – but knowing how that should guide your IT strategy in the long term can be difficult.

vCIOs not only solve your problems in the present – they also help you to solve them for the future. As long-term strategists and decision makers, they can find the intersection between your organization’s mission and technological trends – they provide the vision and leadership to guide investment in cutting edge technology, align your IT strategy with long-term business goals and promote resilience against disruption.

The Final Word

In today’s rapidly changing world, a good vCIO is one of the most valuable outsourced IT partners your business can have – they are problem solvers, trusted business partners, fine-tuners and long-term decision makers. They assist with planning, budgeting and risk management outcomes, all while aligning IT with your business objectives.

A great vCIO will apply the lessons learned from success and failure, continually tracking key metrics and outcomes to learn what works. At MainSpring, our vCIOs put the success and satisfaction of their clients first, continually working to achieve strategic goals, reduce costs, and improve results over the short and long term.