Maximizing IT Budgets through Managed Services

Now that we’ve entered the fourth quarter of the fiscal year, most organizations are getting serious about budget planning for 2024. As usual, it is a critical process for IT organizations. Accurate budgeting is essential for prioritizing technology investments, optimizing resource allocation and aligning technology initiatives with broader business objectives.

While many hope to earmark funds for new business-enabling technologies, that isn’t always possible. Year in and year out, about 80 percent of the typical IT budget is spent on sustaining operations. After taking care of basics such as security updates, server maintenance, software licensing, cloud services, telecommunications and staff salaries, there’s not much left for innovation.

Working with a managed services provider (MSP) is an effective way to keep a lid on operational expenses. Companies using managed services for day-to-day infrastructure operations can reduce IT costs by as much as 42 percent, according to IDC research.

Here are eight ways leading MSPs help organizations stretch their IT dollars:

1. Predictable Costs

The subscription-based approach shifts technology spending from a capital expenditure (CapEx) to an operating expense (OpEx) approach to technology spending, which offers extreme financial flexibility. In some cases, hardware, software and service costs can be combined in one contract with one monthly payment, enabling you to improve cash flow, preserve capital and manage a predictable expense.

2. Tax Benefits

Because operating expenses can be fully deducted in the year they are incurred, the opex model reduces your income tax burden for the year and increases cash on hand for other initiatives. It also eliminates the cost of depreciating aging resources.

3. Reduced Waste

An MSP can take inventory of all your hardware, software, licenses and subscriptions to ensure you aren’t overprovisioning or underutilizing resources. Providers also help optimize cloud spending by monitoring resource consumption and adjusting services accordingly. Additionally, proactive monitoring and maintenance help minimize waste associated with downtime and recovery efforts.

4. Lifecycle Management

MSPs manage the entire lifecycle of IT assets, from procurement to retirement. This includes regular upgrades and replacements, ensuring that outdated and inefficient technology is phased out. Strategic upgrades not only reduce the risk of downtime but can save money by eliminating the need for expensive maintenance contracts on aging equipment.

5. Access to Expertise

Leading MSPs have deep benches of IT professionals with certifications and real-world experience in a broad range of IT disciplines. Hiring a team of full-time IT specialists would be cost-prohibitive for most businesses, but working with an MSP gives you access to the skillsets you need without the need to budget for salaries and benefits.

6. Test and Development

MSPs help organizations optimize their test and development environments by providing just the right amount of infrastructure resources needed for specific projects. This allows you to try new applications without committing significant resources. Solutions that don’t meet expectations can be easily scrapped or modified without creating a huge budget hit.

7. IT Modernization

Leading MSPs are well-versed in cloud computing, automation, data analytics and other emerging IT trends that drive digital transformation and modernization efforts. They can assess your existing infrastructure, identify opportunities for improvement and recommend tailored solutions to optimize operations and enhance efficiency.

8. Improved Focus

MSPs allow customers to redirect their internal resources toward core business activities. This increased focus on strategic objectives and revenue-generating initiatives can lead to greater profitability and growth.

Conclusion

A significant portion of the IT budget must always be dedicated to keeping things up and running, but strategic initiatives are key to ongoing business development. Let IronLogix work with you to optimize your environment, reduce risks and prioritize investments to help meet your key business objectives.