SERENO LEARNING HUB

How to reduce IT costs and business costs in 2025

Published on: February 27, 2023

Last updated on: March 25, 2025

Last Updated on March 25, 2025 by Sereno Admin

Discover a tried-and-tested method for reducing IT costs, cutting other business expenses, and raising profits in the face of current economic uncertainty, with fourteen examples of IT cost optimization in 2025.

We understand that most business owners and managers are concerned about their bottom line considering rising costs and general economic unpredictability. It looks like now is the right time to consider reducing the cost of goods sold (CoGS) and overheads.

The goal is to put the money you’ve saved into revenue-generating activities like sales and marketing to futureproof your business to ensure the company’s long-term success and growth, or just to secure margins during this period.

In my previous company, we saved around £72,000 per year thanks to the exercise described below.

One of the most important things to look at is your IT budget, especially if it keeps growing every year. As part of this exercise, later on we will give you some concrete examples of cost-cutting opportunities within your IT environment. As an additional resource, you may want to think about requesting a free IT Invoice Assessment for expert guidance on how to reduce IT costs.

What You Should Know About IT Cost Reduction

IT cost reduction, also known as IT cost optimization, isn’t just about slashing budgets — it’s about taking a healthy approach to financial management and making smarter spending decisions.

Effective IT cost reduction strategies involve balancing short-term savings with long-term investments in technology — to reduce costs, organisations can cut waste, eliminate underused tools, and shift funds toward technology that delivers real business value. In other words, business leaders must align IT spending with business needs, prioritizing solutions that drive profitability.

Common ways to reduce IT costs include embracing cloud computing and automation, consolidating vendors, and optimizing software licenses.

The Power of One

The Power of One is a fantastic activity that has been used with great success by many businesses, including those where I have previously worked. This exercise comes from Gazelles CEO Verne Harnish and is explained in his book Scaling Up. It details the benefits to cash and profits by making a 1% change in one of the seven financial levers available to all businesses. Today we will be focusing on Costs of Goods Sold (CoGS) and Operating Expenses

How to Start Saving

This is an exercise that we used successfully in my previous company, and I’ll use it as a case study to explain what was involved, how we did it, and provide some tips on areas to focus on if you’re looking for cost reductions.

We began this project with three people from Procurement and Finance (Finance Manager and Admin). The goal was to save at least 1% on COGS and overheads. It took about fifteen hours of work across three people in a month to increase our profits by £72,000 per year without raising our prices, cutting down personnel costs, or changing anything about our business model. That’s only five hours per person in one month, and it’s not a difficult task!

The first step is to compile a list of all recurring monthly (at least three months’ worth) and annual overheads. This list should include all costs across the business, regardless of department or category. Once you have this breakdown, apply these questions to each item.

What is it used for?

This is a critical first step because it confirms a simple question: does anyone know what this is? It’s not uncommon for old software or subscriptions and services to find their way into a larger company, with everyone assuming someone else knows what they’re for.

Who ‘owns’ this and is it in their budget?

This follows on from the first question. When you give a department or manager ownership of a cost, especially if it’s in their budget, everyone suddenly cares about it. It is critical to assign responsibility for all business costs to the appropriate person and force them to reconsider the need for this.

Is it still needed?

Now is the time to determine whether it is still required or even used. You’d be surprised how many subscriptions, licenses, and services are no longer used because workflows or processes change, or because your company’s service delivery and client base have shifted over time.

Can we reduce the cost?

Once you’ve determined which line items you must keep, it’s time to explore the ways to reduce IT costs and business expenses alike. Look at discretionary spending, such as unused software, overlapping subscriptions, or redundant infrastructure. Downgrading subscriptions, switching providers, consolidating services under fewer suppliers, or renegotiating vendor contracts and commitments are all ways to reduce costs.

Top Tips

Even though every business is different and has different operating costs, here are some things we’ve learned:

As credit cards sometimes do not have the same internal signoff process as invoices, we noticed subscriptions and monthly licenses that haven’t been properly reviewed in some time.
Certain subscriptions to services and platforms/apps could be downgraded to lower service levels while retaining the features we still needed.
By consolidating similar services, such as deliveries in our case, to one supplier instead of 4 meant we could benefit from a better price and have fewer vendors to manage.
By committing more spending or future spending to suppliers, in line with the above action, we could negotiate for a lower cost price or improved service.
Certain suppliers had tiered pricing structures based on the number of consumed/resold services which we simply needed to apply for – or you can use the increased spend to negotiate better pricing either way.
Certain contracts had expired and were rolling. By recommitting to the same service for a reasonable period we were able to get better pricing or sometimes get an improved newer version of the service.
Switching providers for certain utilities meant we were eligible for new customer discounts and deals – credit cards and insurance providers were good examples for us.
Never assume something is in use across the business, always check and find out who is actually using it. We found an application a manager told us was definitely required, to find out that no one had logged into it for 4 months. As a result, cancelling this subscription helped us save money without sacrificing any essential services.
By doing a quick google and price comparison on comparable small-item services/products is well worth the time. Prices have often reduced in the market from when you first purchased them and changing this takes 5 minutes – we saved nearly £100 a month on the office fruit order for example!
Review all services and features that are included in the tools/subscriptions/services you use. We identified that a tool we were paying for was now included as a ‘free’ feature by another of our suppliers, leading to unnecessary costs in our IT budget. A well-optimized tech stack eliminates redundancies and ensures that every tool serves a clear purpose. Assessing your current software suite and consolidating overlapping solutions can lead to substantial IT cost reduction.
If you’ve already implemented the above tips and are still seeking a deeper understanding of your company’s financial health, profitability, and sustainable business growth, it may be time to consider hiring a specialised business mentor. These mentors focus on optimising business health and profitability, providing clarity and expert guidance to take your cost management to the next level.

Examples of IT Cost Savings You Can Make Right NOW

One of the first things we do when we bring on a new Partner is reviewing their IT invoices and looking for cost savings. We discovered a significant amount of overspending that was going on without anyone being aware of it. It’s difficult to understand what you actually need or if the price is reasonable when you outsource your IT; this occurs when you don’t get the right advice from your IT provider.

For a free IT Invoice review please contact us. Get free advice from an IT professional on where and how to reduce IT costs.

Here are examples of overspending we see and rectify for our partners. Use this as a checklist to see if you’re overspending or not getting the right advice from your in-house IT department or outsourced IT team:

Microsoft or Google Licenses can be confusing. Ensuring you have the correct license types and are only licensing mailboxes that are needed has proven to be an effective IT cost reduction strategy. Something we often see is licenses added to mailboxes when they aren’t needed. If you don’t need to send an email out from the mailbox, only receive mail into it (sales@, admin@ hello@ etc) then make this a Shared Mailbox, which doesn’t need a license.
Many companies buy website domains for future use, temporary projects, or to protect the brand name. Double check whether these are still needed, or they can automatically renew on an annual basis. If you haven’t reviewed your website hosting costs in a while, now is the time. Website hosting has come down significantly in the last decade, and switching to a new provider could lead to substantial IT cost reduction without compromising performance.
A lot of organisations overspend on IT services without realising it. Encouraging IT departments to conduct regular audits of licenses, subscriptions, and cloud storage can uncover significant IT cost reduction opportunities. We often find that an app or license can go out of use when your staff find alternative ones to use, or the need reduces, but this isn’t cancelled. Make sure you’re fully utilising your existing technology. Here are examples of apps available within Microsoft that can replace paid-for alternatives in use – Teams to replace Slack, OneDrive to replace WeTransfer/Google Drive, Shifts to replace time logging software or holiday management approvals, Tasks to replace Trello, Visio to replace Lucid Chart, Bookings to replace Calendly.
Ensuring you have Warranties on all devices can be a fraction of the costs of replacement components or devices and avoids any nasty surprises.
Many companies have multiple cyber security services in place. Consider a provider who can package them together for a cheaper price or improved service.
Many companies have ‘IT’ related costs and services coming from multiple suppliers. A good IT Support Partner should be able to provide most of the services you need in one place at a reduced price – consider Internet connectivity, Phone costs, print charges, hardware and software procurement etc.
Many providers will offer a discount on an increased number of services consumed – it is well worth knowing what this tier structure is and if you can apply now, or will in the future.
Consider increasing the commitment term for any services you are likely to need long-term. This will often give negotiation room to reduce the price and save money.
Review all your service contracts, once they have expired their initial term you can look to either renegotiate the price or switch to a better and more cost-effective provider. Services like Internet connectivity are a clear example, but also consider your IT support provider.
Unlike fixed costs, variable costs like cloud services fluctuate based on the amount of data that is being stored. Simply reviewing the data you store there, and doing a ‘spring clean’ can help reduce your cloud costs. Looking to ‘Archive’ data that isn’t accessed or required anymore to a cheaper less accessible storage option can result in a significant IT cost reduction.
If you have admin-heavy processes that staff do regularly, it’s well worth speaking to your IT provider as many of these can be streamlined through automation and integration. Or ask your IT provider what they suggest automating to save costs through improved efficiency and productivity, then reinvest that time in revenue generation activities.
If you don’t already OUTSOURCE YOUR IT SUPPORT AND MANAGEMENT, remember that it’s a huge IT cost reduction opportunity, beyond many other benefits.

Get a free IT Invoice Assessment

If you want some free advice on how and where you can start your IT cost cutting process, schedule your free IT Invoice Assessment from one of our knowledgeable advisors.

If you would like to understand more about what working with Sereno could look like, and how we can help you reduce your IT support costs, please reach out on 02030890141 or hello@serenoit.co.uk and chat with one of our expert advisors.