Six Strategies to Reduce Software & IT Costs in 2024
There’s no denying we’re currently in a tough economic climate. Inflation is currently soaring to the highest levels seen in decades, while high interest rates are leading many businesses to cut spending. Many companies are facing stagnant sales, declining revenue, and higher borrowing costs, leading them to look for ways to reduce costs and generate more revenue.
For tech companies, product and engineering departments usually make up the bulk of expenses on the balance sheet. Poorly planned or unsuccessful software ventures can exacerbate financial challenges. To put things in perspective, unsuccessful software projects cost companies $260 billion in 2020, while operational failures in software systems totaled $1.56 trillion in losses.
Now more than ever, companies that can reduce expenses and increase the runway of working capital are positioned to outperform their competitors. In this article, we’ll discuss the importance of creating a realistic and comprehensive budget, and share 6 recession-specific tactics for optimizing your budget in challenging times.
Scroll to the end for an infographic of the tips!
Table Of Contents
- Strategy #1: Develop a Comprehensive and Realistic Software Development Budget
- Strategy #2: Optimize Your Costs by Reviewing Subscriptions and Cloud Costs
- Strategy #3. Plan Your Feature Roadmap According to Market Demand and Revenue Potential
- Strategy #4. Adopt of Improve Your Agile Software Development Practices
- Strategy #5: Re-evaluate Your Budget Regularly
- Strategy #6: How Staff Augmentation Can Help You Reduce Software Development Costs
- Final Thoughts on Reducing Software & IT Costs
Strategy #1: Develop a Comprehensive and Realistic Software Development Budget
Many companies underestimate the cost of software development. This is true for startups building their first market-ready product, but it’s also possible for established businesses launching new features.
There are many reasons costs can grow more quickly than expected: “hiccups” in the development process that lead to longer timelines, unforeseen business or technical complexities, or subscription fees for cloud services, for example. As teams grow, data can also become scattered across various places, making it challenging for leaders to gain full visibility into their expenses. This can cause leaders to allocate funds to unused or duplicated software and systems.
Some of this can be resolved with a centralized system for managing expenses. But unforeseen expenses that crop up during development can be more difficult to plan for and mitigate. A comprehensive budget is truly your best defense against being unprepared for potential risks and challenges in software development.
