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Insight urges customers to examine costs closely before cutting jobs

Channel player is concerned customers are laying off IT staff when savings could be made elsewhere in the business

Insight is urging customers to review their software spending to check for savings before swinging the axe on staff.

There is a temptation to issue P45s in response to the strained business conditions that some are experiencing because of the pandemic.

But research from channel player Insight has shone a light on ways that users can save money without having to trim the staff budget, largely by taking a closer look at what they are spending on software licences and IT assets.

Insight’s findings revealed that enterprises spend an average of £2.13m a year more than they should on software licensing as a result of covering the costs of unused licences. That equates to the wages of 45 skilled IT specialists.

Since the first lockdown in March, half of those firms quizzed have reduced headcount, with 27% taking the axe to the IT department. Some are opting to sweat IT assets and consolidate offices.

Insight’s research should encourage resellers to not only address licensing issues for customers, but also help them navigate the current challenges without resorting to cutting staff. The fear is that decisions made today could undermine users in the years ahead.

“IT departments need to make savings, but there’s a very fine line between cutting costs and reducing the ability to operate”
Emma de Sousa, Insight

“IT departments need to make savings, but equally there’s a very fine line to walk between cutting costs and reducing the ability to operate,” said Emma de Sousa, senior vice-president for Europe, the Middle East and Africa (EMEA) at Insight.

“Organisations have been struggling to address systemic challenges around cost management for several years. If they double down on their cost-optimisation efforts, they could avoid making decisions that will almost certainly impact their ability to execute digital transformation plans. There are countless opportunities for organisations to optimise their costs and save money without harming their ability to operate effectively,” she said.

Insight also found that some of the problems with lines of business spending without transparency on cloud services had added costs and most customers lacked the knowledge to deal with vendor licensing negotiations.

There were also signs of duplication in tools, a problem well known on the security side of the industry, with the channel also having the potential to play a role in advising on the consolidation of IT assets.

“The challenges we’ve faced so far in 2020 are in no way over, and IT departments have a key role in supporting their organisations,” said de Sousa. “Cost optimisation isn’t easy and often requires specialist skills and knowledge, but now is the time to eradicate waste and drive more efficient operations.”

“Cutting IT jobs means the removal of talent, careers and institutional knowledge – in comparison to IT waste which is removing unused or unwanted resources”
Martin Thompson, ITAM Forum

The call for more cost awareness around licensing got the backing of others in the industry, which urged greater examination of those costs before decisions on staffing were made.

IT asset management [ITAM] seeks to optimise spend on the IT environment, so it has a very compelling business case during a recession where jobs are at risk. Organisations that implement ITAM can save at least 5% on their IT and software costs every year. Most projects save much more than that, especially in the first year. If these savings are applied towards talent retention, ITAM could protect hundreds of thousands of jobs in IT and elsewhere,” said Martin Thompson, founder of ITAM Forum.

“Before IT departments slash critical projects or lay off staff, we urge them to look at their IT spend first to see where savings could be made. Cutting IT jobs means the removal of talent, careers and institutional knowledge about IT infrastructure – in comparison to IT waste which is removing unused or unwanted resources with no impact whatsoever on delivery of services,” he added.

“The average IT team is not growing, teams are being forced to do more with less, so staffing levels are unlikely to ever return if they are cut now.”

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