Nowadays, every company is using and consuming IT resources. There is too much cost used by too many servers, laptops, storage capacity, and the software license. The license is one of the resources that is sometimes underused, undiscovered, idle, or installed incorrectly, and consumes a lot of funding. A centralized IT team can lead the effort for license optimization by keeping track of used software licenses and retiring additional licenses. They can save costs by negotiating a bulk discount with the vendor.

To increase IT efficiency, you may want to cancel non-compliant projects that take additional funding and resources. Also, you should help teams to revisit the strategy to continuous support or terminate any unused and non-aligned projects. The following methods can be considered for cost optimization:

• Reevaluate project having high spending but may not be well aligned with the business vision. Reshape projects have high values but not direct reports to IT strategy.

• De-prioritize projects that have little to no business value even though they are aligned with IT strategy.
• Cancel non-compliant projects with low business values.
• Decommission or retire unused applications.
• Replace old legacy systems by modernizing them to reduce high maintenance costs.
• Avoid duplicate projects by reutilizing existing applications.
• Wherever possible, consolidate data and develop the integrated data model. You will learn about maintaining a centralized data lake in Chapter 13, Data Engineering and Machine Learning.
• Consolidate vendor procurement across the organization to save cost on IT support and maintenance expenditure.
• Consolidate any system that does the same thing as payment and access management.
• Eliminate costly, wasteful, overprovisioned projects and expenditure.

Moving to the cloud can be an excellent consideration to increase IT resources efficiently and reduce costs. The public cloud, such as AWS, offers a pay-as-you-go model that helps you to only pay for what you are using. For example, the developer desktop can shut down during non-working hours and weekends, which can reduce workspace costs by up to 70%. The batch processing system needs to be brought up only to process jobs and can be shut down immediately afterward. It works just like you switch off any electrical appliances when not required to save electricity costs.

Applying automation is a great mechanism to increase overall IT efficiency. Automation not only helps to eliminate costly human labor but reduces the time spent performing daily routine jobs without error. Automate things wherever possible, for example, by provisioning resources, running monitoring jobs, and processing data.

Make sure to do the right trade-off to improve results while deciding to optimize costs. Let's take an example. If you are going to a theme park where you want to go on lots of good rides, then you are willing to pay a higher price as you can see the value of the money you are spending. To attract more customers, if the vendor decided to reduce the price and make adjustments by lowering the number of enjoyable rides, there is a chance that you will go to another theme park as you are looking for a good time. Here, competitors will gain an edge and attract existing customers, while the current vendor will lose business. In this case, cost reduction is adding business risk, which is not the right cost-optimization approach.

Your goal should be measurable, and these measures should focus on both business output and the cost of your system. The quantitative measure helps you understand the impact of increasing output and reducing the cost. The organizational and team-level goals must align with the end users of the application. At an organizational level, the goals will be across organizational business units. At the team level, they will be more aligned with individual systems. You can set up a goal, for example, to reduce the cost per transaction or output of order by 10% every quarter or 15% every 6 months. Defining the goal ensures that systems improve over their lifetime.