With the possibility of a recession looming, many businesses are reviewing their budgets and cutting costs for the year ahead—and it’s unlikely tech teams will be immune. Looking for areas where they’re overspending on redundant services and other unnecessary expenses is a difficult process for any leader, but it’s especially challenging for tech leaders, who must trim costs while continuing to fund new initiatives and essential internal tech functions.
The members of Forbes Technology Council have learned how to effectively manage their teams and operations even during lean times. Here, they share 14 smart and efficient ways tech leaders can begin the process of “trimming the fat” from their businesses’ tech budgets.
Members pictured from left to right.
Photos courtesy of the individual members.1. Identify Your Most Profitable And Costly Business Segments
Companies must create machine learning models to detect (and if possible, predict) their most profitable and their most costly business segments. The profitability segmentation models should be business-understandable and include competitor and market information and variables for business actions to reduce losses. Profitability varies based on short- and long-term business goals, hence multiple models are needed. - Zehra Cataltepe, TAZI AI
2. Delete Some Data
When organizations don’t know what data they have stored, they struggle to manage the cost and risk of keeping that data almost indefinitely. “Trimming the fat” through the defensible deletion of data that isn’t needed or is duplicated can not only reduce costs associated with the storage and security of this data but also reduce privacy and other cybersecurity risks. - Claude Mandy, Symmetry Systems Inc.
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3. Optimize Your Infrastructure’s Performance
Many businesses will try to cut their cloud costs, but most of the juice has already been squeezed from the low-hanging fruit of unused instances and renegotiating with the cloud service providers. Sophisticated cost management in the cloud entails optimizing the performance of your infrastructure. It’s simple: Faster code equals less compute equals a smaller cloud bill. This trims fat today while investing for future growth. - Scott Sellers, Azul
4. Consider Outsourcing Your Customer Service
While it might seem counterintuitive in a recession, outsourcing customer service is a great way to cut costs. Partnering with a BPO removes risk while boosting agility and efficiency. With experts running the show and access to candidates in new markets, companies can save significantly on overall program costs and reduce head counts without sacrificing quality. - Fara Haron, Majorel
5. Manage Cloud Costs Through Enterprise Cloud Footprints
Cloud will surpass non-cloud IT spending this year; however, a study by Andreessen Horowitz found enterprises spend 20% more on cloud than they had expected. Getting full visibility into enterprise cloud footprints enables companies to see and manage cloud costs. Enterprises can eliminate dormant cloud resources and justify cloud spending when it’s tied to employee productivity and business use cases. - Mehul Patel, Prosimo
6. Dump Redundant SaaS Platforms
Consolidate duplicate or underutilized software as a service platforms. You’re likely using way too many today, and some of them perform the same functions. Find platforms that do more than one critical function and negotiate reduced long-term commitments. Look for vendors that integrate multiple functions into a single platform to cut software and maintenance costs. - Nick Newsom, Ytel Communications.
7. Review All Your Contracts
You can theorize all you want about which function or area to look at first, but the reality is that it depends on what’s in your contracts. With a recession around the corner, you should begin by getting an overview of your contracts and their contents. Which deals can you leave at the lowest expense? Sometimes it’s that practical. - Niels Martin Brochner, Contractbook
8. Don’t Get Emotionally Invested In Sunk Costs
Be clear-eyed about how likely different projects are to succeed. Thoroughly interrogate every project and make a dispassionate assessment of its worth. If a recession rolls around and something isn’t delivering value today, don’t be afraid to ax it for the greater good. You can always resurrect killed projects when times are better. - Vinay Gidwaney, OneDigital
9. Rationalize Your Application Estate
By understanding the relevance of applications to business needs and actual usage, tech leaders can make strategic decisions about support going forward, including what to consolidate or remove. This will allow them to reduce both software license costs and resources required to support these applications. - Paul Deur, ReadyWorks
10. Don’t Cut Departments That Directly Impact Revenue
Focus the budget on the departments that directly impact revenue and customer experience, as these are what will help you weather financial storms. Indirect business functions, such as HR and finance, can scale leaner with the smart deployment of SaaS products. - Jeff Fettes, Laivly Inc.
11. Revisit Your Profit And Loss Strategy
Tightening your business’ P&L strategy across all functions is a necessary approach for recession-proofing your tech business. While logically, mission-critical functions would take less of a hit in this step, those functions that are responsible for horizontal management can be optimized greatly, given this area’s potential for automation and adoption of new technology. - Sayandeb Banerjee, TheMathCompany
12. Go ‘Phygital’
The pandemic has taught us that leaning into the virtual element of your business, in tandem with in-person engagement, has serious benefits for your company goals and your bottom line. Advancements in augmented reality and virtual reality technologies have made it possible to transport events such as fashion shows and retail marketplaces online, extending accessibility for customers and saving time and money. - Kristin Savilia, JOOR
13. Start By Determining Who Is Crucial To The Business
Another way to look at this is to ask, “Who are the people who are critical to the business’ success, and how much can we invest in them to fuel motivation and retain them?” Once that is determined, set aside a solid budget for that. You will need them to maintain business as usual and realize future strategic interests. From there, make the usual cuts (travel, marketing, underperformers and so on). - Daniel Leslie, Bennie Health
14. Tighten The Reins On Remote Employees
Crack down on team members abusing remote work by enforcing an individual weekly progress report. Ensure cross-functional transparency and accountability throughout reporting lines. Define expectations for deliverables and triggers for either pay cuts or termination. - Oscar Segurado, ASC Therapeutics
