Cost-cutting is never easy, but the private industry has made an art of it.
Government agencies such as the Department of Defense and the Department of Homeland Services, and new firms struggling with the economic downturn, might want to take a few lessons from these downsizing pros, according to a recent XSi blog post.
“There are three consistent strategies used in private industry: defer plans for equipment purchases; cancel new development projects; and find lower cost vendors for non-mission critical products and services,” noted the blog.
The first strategy is deferring equipment purchases over personnel.
“Most staff appreciate that they are not being sacrificed ahead of new equipment,” wrote the blog. “This tactic ties neatly into other cost-cutting strategies since keeping older equipment in service beyond the warranty period allows the use of lower-cost and competitively bid support vendors, adding to the savings.”
The second strategy commonly employed by cost-cutting veterans is pausing new development. Hold on the new software, hold on the purchase of useful but non-essential new hardware—which also means not hiring new staff.
XSi suggested that looking at using the cloud or an outsourced or hosted solution can go hand-in-hand with pausing new development, sometimes without having to sacrifice the gains from new development since the operational burden is shifted to others.
Third, a downturn is the right time to reevaluate support services and competitively bid all support services. This includes help desk, service desk, post-warranty break-fix and post warranty software support.
The budget savings from competitive bidding can save a minimum of 30 percent on the service, according to the XSi blog post.
In particular, post-warranty support should be considered for competitive bid.
For instance, “CISCO SMARTnet is primarily a problem resolution and patching service with a minor function of parts replacement,” wrote XSi.
“By the end of three years, it is rare for a product to have any net new problems requiring patches,” it wrote. “SMARTnet software repair for older products is often overkill as new patches are not needed and parts replacement is much more effectively done outside of SMARTnet where repair contracts can be let flexibly than by dealing exclusively with CISCO.”
SMARTnet has its advantages, since Cisco (News - Alert) obviously knows its hardware and software inside and out. But savvy firms also know to check out the alternatives when budgets are tight.
“Working with an independent service providers that is also multivendor qualified greatly reduces the need to contract individually for service and support by product or manufacturer,” noted XSi. “Many opportunities exist to engage with qualified third parties to take advantage of efficiencies of scale, dramatically reduced costs, and ease of operations.”
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Edited by Rachel Ramsey