COST OPTIMIZATION VS. COST CUTTING

These days it’s not uncommon to hear folks use the terms “cost optimization” and “cost cutting” interchangeably.  But in actuality, they mean very different things. Still others seem to interpret “cost optimization” as a fancy way of saying “cost elimination” or “cost reduction.” That is also very misleading. 

So what exactly is the difference, and which can help you when your boss slashes your corporate mobility budget?

Cost Cutting refers to more immediate, direct one-time actions aimed at reducing corporate expense levels. The most effective cost-cutting efforts for IT organizations define an exact dollar amount to be saved and identify a specific date by which the savings must be achieved.  Most of the common tactics that companies employ to achieve cost reductions are related to employee management, such as layoffs, pay cuts, benefits reductions and so on.  IT analyst firm Gartner estimates that more than one third of a typical IT budget is related to staff, so it makes sense why organizations first cut costs around employees. Other initiatives could include downsizing to a smaller office, creating work-at-home options for employees, shortening hours of service, or restructuring debt.

Cost Optimization is defined a continuous effort, specifically designed to drive spending and cost reduction while maximizing business value. An ongoing theme of optimization is ensuring that a company gets what they are paying for, or “get the most bang for their buck.” Activities that are commonly part of IT Cost Optimization efforts include continually verifying that IT purchases – from hardware to software to network connectivity - are both necessary and utilized; assessing that all products and services are procured at the best available rates and terms, and verifying that actual consumption – in terms of things like landline bandwidth and mobile data usage – is in line with what is being paid for.

Unlike cost cutting, cost optimization isn’t a one-time, immediate activity. Instead, it provides a long-term solution for your IT budget.  Automated systems and tools can help companies  managing their IT inventory, aligning consumption with costs and verifying those costs with contacted rates.

With the dramatic increase in importance of mobility in today’s workplace, wireless devices and services have become a significant cost center for businesses. Gone are the days of administering mobile assets manually via spreadsheets or e-mails, or only investigating new service plans after contracts expire. Today, mobility optimization and management must be done proactively on a regular basis, and tools and automated processes are necessary to keep businesses on top of their providers, their users and their costs.

For over 10 years, vMOX has been helping business optimize their mobility spend, while also helping them better managed their mobile devices. Using patented technology, we ensure that your usage is always aligned with the best available rates and plans.  An online portal  automated all of the processes included in a device’s lifecycle from procurement to retirement: workflows, work orders, approval processes… which not only optimizes your spend – it optimizes the time of your team.

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