In this tough macroeconomic environment, with high interest rates and the looming threat of recession, innovation and cost reduction are crucial for survival.
Businesses must innovate to stay ahead of the competition, but must also keep their cost base low to allow them to weather any economic shocks or downturns they face.
Innovation and cost-trimming are often seen as a trade-off, but as Forbes suggests, leaner organisations often find it easier to innovate. Indeed, with IT, there is a way to significantly reduce IT expenditure while also freeing up resources for innovation.
The secret sauce is the consolidation of your IT services. Businesses often have too many vendors in their tech stack, with enterprises using up to 23 different IT and software providers! By partnering with a single Managed Service Provider (MSP), businesses can save a lot, which can be directly reinvested into projects that drive innovation.
This article will explore how consolidating IT services with an MSP can unlock these benefits and, along the way, we’ll give you some actionable tips to start your consolidation journey!
The Challenge of Rising IT Costs
The challenging, sustained period of high inflation over the last few years has hit all parts of life, and business IT is no exception.
This rise in IT costs impacts businesses’ ability to innovate, compete, and even maintain essential operations. As IT becomes increasingly central to every aspect of business, managing these escalating costs is becoming a top priority for those seeking to compete.
What is driving these higher IT costs? Here are some exacerbating cost factors to be aware of:
- Increasing Complexity of Technology: New technologies are emerging at a rapid pace, such as serverless computing, AI, big data, and the Internet of Things (IoT). While many of these innovations offer efficiency improvements, they often require specialised expertise to integrate. Implementing this can become tricky and expensive without the right IT partner.
- Escalating Cybersecurity Threats: In Q3 2024, the frequency of cyberattacks increased by a staggering 75%. Protecting your business from cyber threats can cost an arm and a leg, and the cost of a data breach if it all goes wrong can be devastating (averaging £3.58m in direct costs per UK business in 2024).
- Shortage of Skilled IT Professionals: There is a global shortage of skilled IT professionals, particularly in areas like cybersecurity, cloud computing, and data science. This drives up salaries, making it difficult for businesses to find and retain qualified IT staff. Outsourcing helps here, but managing multiple outsourced vendors can be equally as costly.
- Keeping Up with Legacy Systems: Many organisations still rely on legacy systems that are outdated and difficult to maintain, and as official support from suppliers ends, it’s often far too expensive to maintain. But, without the right IT partner to help facilitate a full migration, many businesses are stuck paying too much to maintain for outdated systems.
Benefits of Consolidating IT Services
We believe the biggest contributing factor to rising IT costs is indeed the lack of consolidation of IT services. Driven by the desire to make the most out of new features and technologies, businesses often accumulate large tech stacks with too many vendors.
Consolidating your IT services with a single Managed Service Provider (MSP) can solve this problem, unlocking significant benefits across multiple areas of your IT operations. Let’s explore these in more detail!
Cost Savings
Consolidation directly eliminates redundancies and helps businesses leverage economies of scale. Often, different vendors offer overlapping services, leading to unnecessary expenditures. Consolidation eliminates this duplication, ensuring you only pay for the services you actually need.
A single, larger contract with an MSP provides greater negotiating power, often resulting in more favourable pricing than managing multiple smaller contracts with individual vendors.
Managing multiple vendors requires significant administrative time and resources. Consolidation streamlines billing, contracts, and communication, reducing administrative overhead and freeing up your staff.
MSPs often offer better support and expertise, removing the need for dedicated IT support contracts, and can even reduce the number of IT staff you need on your payroll.
Streamlined Operations
Consolidation can also unlock significant operational efficiencies. Businesses can benefit from a single point of contact for all their IT resources. This simplifies communication and makes it easier to resolve issues. Integrating disconnected systems from multiple vendors can be a major challenge. Consolidating services with an MSP ensures seamless integration and improved data flow.
MSPs typically implement standardised processes and best practices across all their clients, leading to greater consistency, reliability, and predictability in IT operations. Finally, MSPs offer proactive monitoring and maintenance, minimising operational downtime by preventing potential issues before they bite.
Improved Vendor Management
Firstly, businesses can deal with a single, consolidated agreement and billing process instead of managing multiple contracts and invoices. Also, with a single MSP responsible for all consolidated services, who’s accountable is clear and unambiguous.
Consolidating with an MSP fosters a stronger, more collaborative partnership focused on achieving shared business goals. This is a big improvement on the often transactional relationships built with individual SaaS vendors.
How Cost Savings Can Fund Innovation
By streamlining your IT operations and eliminating unnecessary spending, you can free up crucial resources that can be directly channelled into innovation initiatives.
Freed-up capital can be used to explore and implement cutting-edge technologies like AI, machine learning, cloud computing, and automation. Cost savings can support dedicated research and development (R&D) projects. This allows you to explore new product ideas, improve existing offerings, and ultimately stay ahead of the competition.
Savings could be directed towards enhancing customer-facing technologies and services, such as developing new mobile experiences, improving website functionality, or implementing better customer support systems. Freeing up funds to focus on the customer experience (CX) is a brilliant growth strategy.
How We Can Help
In this tough macroeconomic climate, businesses need to both control costs and drive innovation. Consolidating your IT services with a single MSP offers a powerful solution.
By streamlining operations, eliminating redundancies, and simplifying vendor management, consolidation unlocks significant cost savings that can be directly reinvested into innovation initiatives. This fuels growth and helps you gain an edge over your competition.Ready to transform your IT from a cost centre into an innovation engine? Get in touch with us today to learn how our MSP services can transform your IT!