Rightsizing Technology for Business Goals
Technology solutions – particularly those related cloud storage and data management – can be transformative for your business. But how do you know when you’re paying for more technology than you need?
According to researcher Jonathan Koomey, technology that is not rightsized for your business needs can be expensive, wasteful, and ill-suited to the value you want to drive for your clients, customers, and partners.
Here’s what you need to know about rightsizing technology to better meet your business goals.
Why Rightsizing Technology is Important to Your Bottom Line
Koomey found that companies pay for, on average, about 36 percent more cloud space than they need. In hard currency, this represents about $62 billion in IT costs. The reasons for this, Koomey reported, are simple.
The majority of companies migrating their systems to the cloud have the wrong idea of how much capacity they actually need. The companies are over-estimating the amount of cloud capacity they need to pay for because the in-house data centers they’ve been relying on are poorly configured. (from Business Insider)
Overpaying for technology that isn’t rightsized impacts more than your balance sheet, it also impacts the environment. Koomey’s research shows that roughly 8 out of every 10 data centers have more server capacity than needed, which is simply a waste of electricity and cooling resources. Overbuilt technology is leaving a deep carbon footprint.
And finally, technology that is out of alignment with your business needs may also be out of alignment with your company’s value proposition. Let’s talk about some real-world examples out team has identified recently.
Real-World Examples of Technology That isn’t Rightsized
Here are two recent examples of clients that struggled with issues related to rightsizing technology.
A financial firm reached out to Saxony Partners to identify why they were losing approximately $3 million per month. An assessment of the firm’s people, processes, and technology turned up two serious issues.
One, there was a significant amount of wasted technology in play. Too much money had been spent on custom development tools, data initiatives, and app dev projects. More than $2.5 million had been invested in a cloud data warehouse that was not built to process the types of data the company typically accumulated.
Moreover, the technology they invested in was not built to deliver the value their customers needed and expected. In a specific example, lack of real-time market data was putting the company at a competitive disadvantage against firms and costing them money on certain investments.
Our team quickly assessed what a rightsized technology stack would look like, and how to ensure that existing technology aligned with both the client’s and their customers’ expectations. Quickly, we pared down the company’s cloud spend by roughly 90 percent. The cloud database was reconfigured to align with the data it needed to process. (Part of that configuration involved creating a custom digital solution to allow for incorporation of that real-time market data, eliminating a competitive disadvantage and boosting revenue.)
Within 18 months, that client began turning a profit.
Shortly thereafter, another client approached Saxony Partners with a similar issue. They had enlisted an offshore vendor to build out their cloud database, but that vendor had overestimated their ability to configure the database within the Microsoft Azure environment. In order to deliver a somewhat functional product, the vendor massively overbuilt the environment, augmenting it with patches and workarounds that required more bandwidth than necessary. More bandwidth equaled more monthly operating costs.
Saxony Partners sent in an Azure expert to assess the environment, determine what could be turned off, what could be saved, and what needed to be rebuilt. The resulting product was a cloud database that was rightsized to meet the client’s current needs – but scalable to account for future growth. This company went from spending tens of thousands of dollars monthly for cloud services to just a few hundred dollars. At the end of the day, this project literally paid for itself.
Rightsizing Technology Begins with a Trusted Partner
Let’s go back to that original question: How do you know when you’re paying for more technology that you need?
Having a trusted consultant assess your digital footprint and determine if it aligns with your company’s needs is a great way to find out if your technology is rightsized.
Beginning with a thorough review – with an emphasis on people, processes, and technology – consultants can identify gaps in your technology strategy, and/or areas where you have overspent.
If you have overspent, the solution may be as simple as paring back on space or solutions. But even more complex solutions – such as what Saxony Partners delivered for the Azure-reliant client above – can make such a profound impact on your bottom line that they easily pay for themselves.