Most business owners and managers are concerned about their bottom line amid rising costs and economic unpredictability, so now is the right time to look at reducing your cost of goods sold (CoGS) and overheads. The goal: redirect the savings into revenue-generating activity like sales and marketing to futureproof the business (or simply secure margins).
Reducing your IT and business costs
See the tried-and-tested cost-optimisation method in action, then work through the step-by-step guide below.
One of the most important things to review is your IT budget, especially if it keeps growing each year. As an additional resource, you may want to request a free IT invoice assessment for expert guidance on reducing IT costs.
What you should know about IT cost reduction
IT cost reduction (or IT cost optimisation) isn’t just about slashing budgets, it’s a healthier approach to financial management and smarter spending. Effective strategies balance short-term savings with long-term investment: cut waste, eliminate underused tools, and shift funds toward technology that delivers real business value. Align IT spend with business needs, prioritising solutions that drive profitability. Common levers include cloud computing and automation, vendor consolidation, and optimising software licences.
The Power of One
The Power of One is a fantastic exercise from Gazelles CEO Verne Harnish, explained in his book Scaling Up. It shows the benefit to cash and profit of a 1% change in one of the seven financial levers every business has, here we focus on Cost of Goods Sold (CoGS) and operating expenses.
How to start saving
We used this successfully at a previous company, three people from Procurement and Finance, aiming to save at least 1% on CoGS and overheads. It took about fifteen hours of work across three people in a month to increase profits by £72,000 a year, just five hours per person.
First, compile a list of all recurring monthly (at least three months’ worth) and annual overheads, every cost across the business, regardless of department. Then apply these four questions to each item:
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What is it used for?
A critical first step that confirms a simple thing: does anyone actually know what this is? Old software, subscriptions and services often linger, with everyone assuming someone else knows what they’re for.
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Who 'owns' this, and is it in their budget?
Give a department or manager ownership of a cost (especially in their budget) and suddenly everyone cares about it. Assign responsibility for every cost to the right person and make them reconsider the need for it.
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Is it still needed?
Determine whether it’s still required or used. You’d be surprised how many subscriptions, licences and services are no longer used because workflows, service delivery or your client base have shifted over time.
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Can we reduce the cost?
For what you must keep, explore savings: unused software, overlapping subscriptions, redundant infrastructure. Downgrade subscriptions, switch providers, consolidate suppliers, or renegotiate contracts and commitments.
Top tips
Every business is different, but here’s what we’ve learned:
- Credit-card purchases often skip the sign-off process invoices get, we found subscriptions and monthly licences that hadn’t been reviewed in ages.
- Some subscriptions could be downgraded to a lower tier while keeping the features we needed.
- Consolidating similar services (deliveries, in our case, from 4 suppliers to 1) got us a better price and fewer vendors to manage.
- Committing more (or future) spend to a supplier created room to negotiate a lower price or improved service.
- Some suppliers had tiered pricing by volume that we simply needed to apply for, or use increased spend to negotiate.
- Expired, rolling contracts could be recommitted for a reasonable period to get better pricing or a newer version.
- Switching providers for utilities (credit cards, insurance) unlocked new-customer discounts.
- Never assume something is in use, always check who actually uses it. A manager insisted an app was essential; no one had logged in for 4 months, so we cancelled it.
- A quick Google and price comparison on small-item services is worth it, prices often fall over time. We saved nearly £100 a month on the office fruit order alone.
- Review the features included in tools you already pay for, we found a tool we paid for was now free within another supplier’s package. A well-optimised stack eliminates redundancies.
- Still want a deeper view of profitability and sustainable growth? Consider a specialised business mentor focused on business health and profitability.
Examples of IT cost savings you can make right now
One of the first things we do for a new partner is review their IT invoices for savings, and we routinely find significant overspending no one was aware of. It’s hard to know what you need, or whether the price is fair, when you outsource IT and don’t get the right advice from your IT provider. For a free IT invoice review, please contact us. Use this as a checklist to see if you’re overspending:
- Right-size Microsoft/Google licences, ensure correct licence types and only license mailboxes that need to send; make receive-only mailboxes (sales@, admin@, hello@) Shared Mailboxes, which don’t need a licence.
- Review website domains and hosting, cancel domains bought for old projects or brand protection that auto-renew; hosting costs have fallen a lot, so switching could save substantially.
- Audit licences, subscriptions and cloud storage regularly, and fully use what you have. Microsoft apps that replace paid alternatives: Teams (Slack), OneDrive (WeTransfer/Google Drive), Shifts (time-logging/holiday tools), Tasks (Trello), Visio (Lucidchart), Bookings (Calendly).
- Warranties on all devices cost a fraction of replacement components and avoid nasty surprises.
- Consolidate cyber security services under one provider for a cheaper price or better service.
- Consolidate IT-related suppliers, a good IT partner can provide most services in one place at a reduced price (internet, phones, print, hardware/software procurement).
- Apply volume discounts, know your provider’s tier structure and apply now or plan for it.
- Increase the commitment term for services you’ll need long-term to create negotiation room.
- Review expired contracts, renegotiate or switch to a better, more cost-effective provider (internet connectivity and IT support are clear examples).
- Spring-clean cloud storage, variable costs fluctuate with data stored; archive cold data to cheaper storage for significant savings.
- Automate admin-heavy processes, ask your IT provider what to automate to save cost and reinvest the time in revenue generation.
- If you don’t already outsource your IT support and management, it’s a huge cost-reduction opportunity in its own right.
Get a free IT invoice assessment
For free advice on where to start cutting IT costs, schedule your free IT invoice assessment with one of our knowledgeable advisors. To understand what working with Sereno looks like, and how we help reduce IT support costs, reach out on 0203 089 0141 or hello@serenoit.co.uk.
From Sereno IT
The Sereno IT team
Sereno IT is a London-based managed IT support provider helping businesses across the UK stay secure and productive. Read more in the IT Strategy section.
