KILL THE COST MONSTER
In challenging economic times, the strength and ingenuity of every company is put to the test. Those who can reduce their costs while still providing excellent service are most likely to survive.
Information Technology can be a great source of costs, which many businesses struggle to cut. Without the technical know-how to respond to warnings from software and hardware vendors about what is allegedly necessary or best practice. We help our customers to balance cost-saving with keeping business running reliably and safely.
What we can do to save you money is specific to your situation and business. However, here are a few examples of how we've saved money for small to medium business clients in the past.
1. Saved by the Dell
Back in 2018, an overseas client came to us with an annoying situation. Their business had purchased large numbers of desktop computers over the years from several local suppliers. Unknown to them, these computers were pre-installed with counterfeit copies of Microsoft Windows and Microsoft Office.
Microsoft became aware of the issue, and offered to sell the client Windows licenses for each affected machine at the recommended retail price. They also saw the situation as a sales opportunity, suggesting a significant purchase of additional hardware and software that the client did not need but felt pressured to buy.
We spoke to Microsoft and then found a much more cost-effective solution. Many of the computers without valid Windows licenses were worth less than the cost of a new license. Instead of licensing the existing machines, we recommended that the client replace them with corporate ex-lease Dell computers from Australia. These computers came with a suitable Windows 7 license, and were eligible for a free upgrade to Windows 10 at no extra cost. They were faster, more reliable, and cost about the same amount each as it would have to buy a Windows license from Microsoft. We thoroughly tested and reconditioned each machine.
Our client saved thousands of dollars during a Microsoft software audit, by buying ex-lease computers that came with the required Windows software license, and by replacing Microsoft Office with LibreOffice for some of their employees.
2. Fee, fee, fee, free: Why pay every month?
One of our clients was a heavy user of Microsoft Office 365, which left them with an incredible monthly bill for their large team. Most users did not use, need, or even know about the advanced features of Office. By installing the free open source LibreOffice package, this cost was eliminated.
Another client was a frequent user of Google's G Suite product, paying a significant monthly bill for a large number of users. Replacing G Suite with an in-house email server brought this serious expense down to the much more attractive monthly cost of $0. Breaking these 'cloud' addictions might involve some initial withdrawal symptoms, but as long as you are serious about data backup and disaster recovery, bringing your applications back in house may save much money in the long run.
Some of our new clients come to us paying twice the reasonable price or more for everything from their business phone system to domain name renewals. Such 'money leaks' may not attract attention during good economic times when it seems to make more sense to focus on customer acquisition and sales. In more challenging times, getting rid of these monthly fees quickly can make all the difference.
For many companies, the most excessive cost is the office lease. Working without a physical office may only be practicable for some businesses and some employees. However, if even a portion of your team can work from home or co-working centres, the cost saving will be tremendous. In days to come, a small core office supported by a team working online from co-working spaces or from home may be a sign of a lean and efficient business that can give value for money to its customers and shareholders.
Monthly fees can creep up on your business. When cash flow matters, many of them can be eliminated. We have helped our clients reduce and even eliminate many monthly fees while maintaining or improving their IT and telecommunications.
3. Why Buy New?
In more difficult economic times, many small and medium business and families will buy their motor vehicles second hand. The same is true with desktop computers and application servers, which are less likely to break down and much easier and less expensive for competent professionals to repair.
One of our clients had just spoken to Dell, HP, and IBM about a set of new servers to run Microsoft Windows Server and related applications. They had a 'wonderful' quote for over $10,000 per machine, and an 'even better' leasing deal to pay off this equipment over five years so interest charges could be added to the bill.
We found that substantially identical servers, only a couple of years old, were available on the second-hand market for about 20% of the new price. These systems had fast processors, and more memory and greater storage capacity. With our ability to assess, extensively test, and recommend the right servers to buy, our clients were able to get the equipment they needed for about $2,000 per machine.
These second-hand systems did not come with long term warranty. However, several years later, not even one required repair or replacement. This did not surprise us since the most significant cause of equipment failure is product infant mortality where manufacturing flaws do not become apparent during the manufacturer's quality assurance process and remain waiting to annoy the buyer.
Once a computer or even a software application has overcome its infant mortality period, it can be reliable for many years or even decades with responsible maintenance. As computer hardware ages, parts such as fans, mechanical hard drives, and capacitors may fail. Lithium batteries also run out of charge and need to be replaced. However such failures are trivially easy to repair, with the reasons being well understood and spare parts being cheap and readily available. With software pages, problems that were once obscure are well-understood after years of real-world experience.
A lot of expensive IT technology can be purchased second hand, saving your business money and allowing for more powerful and higher quality equipment.
4. Phone system? Which phone system?
A client based in Australia had a very expensive 'PABX' phone system they purchased a couple of years previously from the local phone company. It was no longer usable due to the rollout of Australia's National Broadband Network (NBN). The phone company was very happy to quote them for another new and even more expensive phone system suitable for the 'new digital broadband world.' The replacement involved handsets and technology tied to their network. A mandatory three-year contract would have left them ineligible for price savings later offered to other businesses.
Speaking to several smaller and newer suppliers, we were able to arrange a 'virtual business phone system'. It used high-quality YeaLink handsets that could be plugged into any internet connection, and would automatically configure themselves and be ready to use. With these handsets, our client's bill went from $80 per line per month down to $10. The new phone company has an experienced local technical support team that answers the phone within a few rings instead of an outsourced overseas call centre where customer service assistants read from prepared scripts on a web page.
If additional handsets are needed, these can be ordered, arrive by mail, and work as soon as they are plugged into any internet connection.
Bottom line: Our client avoided paying many thousands of dollars for a new phone system, and cut their monthly phone bill by almost 90%
5. Pirates of the High Fees
One of our consultants recently got a panicked phone call in which a new client had lost their old website. The company that had hosted the site had gone into liquidation, and the site had been taken down. A former employee of that company claimed to have a backup of the site but was demanding $3,000 by the end of the day, or else he would delete it.
We quickly got involved and spoke with the former employee. He claimed he had no obligation to assist until we showed him a copy of the website on the Internet Archive Wayback Machine, which could let us recover enough images and text to rebuild the site with some additional effort, without paying him. We spoke to him kindly and with some empathy, but also pointed out what his current actions could do to his future career if our client made the situation public.
The former employee quickly changed his mind and provided a full backup of the site free of charge. It turned out the site was written using some obscure and outdated technology, and we needed to modify it so it could be hosted on our client's existing server, which we were able to do overnight. Once this was done, our client no longer had to pay monthly web hosting fees.
A renegade employee from a bankrupt web hosting company had tried to confiscate our client's website and hold them to ransom. But NetExperts do not negotiate with pirates, and got the website back.
6. No More Bank Fees?
One of our e-commerce clients purchased significant quantities of products from overseas clients and paid their supplier bills using a combination of bank transfers and their bank-issued business credit card.
While their bank offered 'fee-free' international credit card payments, they were not fully aware they were being charged a 5% margin on the foreign exchange rate, and that payment via wire transfer cost up to $20 each time.
We made our client aware of an alternative bank that had a plan allowing them to pay by credit card at a 0.5% margin on the mid-market exchange rate, effectively reducing the cost of each purchase by 4.5%. We also suggested an international payment provider who again had better exchange rates than their bank and sent money faster and with no fees.
Over several years, this change will save them tens of thousands of dollars, even before the discount we negotiated on the percentage they pay when accepting cards from their customers!
At NetExperts, we help our clients to save money and make their businesses more efficient, effective, and profitable. We would love to help you. Just give us a call.