IT Roundtable: Leadership and Cost Optimization in Challenging Times | Ep 15
Episode Summary
Three fractional IT executives discuss cost optimization strategies during economic downturns, including cloud infrastructure waste, vendor management, and strategic hiring decisions. They share specific examples of reducing AWS spend by 50-75%, eliminating unused software licenses, and the risks of cutting technical staff without preserving domain expertise.
Pull Quotes
On discovering $600/month in unused Office 365 licenses for employees who left the company months earlier
“Death by a thousand cuts can be quite painful. It's interesting that many times the operations of IT can go just sort of unnoticed but meanwhile there's a lot of opportunity for cost savings.”
On VMware's pricing changes after acquisition
“I've got a friend who said that at his company they are looking at an increase of 18 times, not 18%, 18 times. They've got two years left on their contract at the existing rate and he has said there's no way, even as a Fortune 500 company, they can afford an 18x increase in cost for that one utility.”
“They were spending 60k a month for their AWS solution. They're running about 400 different EC2 instances and when I started looking at them, a lot of those, it seemed like the average CPU load was about 5%. So they're paying for 100% CPU and they're using 5%.”
On a private equity firm that cut technical staff but kept ineffective leadership
“They decimated the staff they were stuck with the leadership who was actually a problem in running the company because those leaders were the only people left who knew anything about how the business ran. And it's a complicated business, very technical. So they sort of shot themselves in the foot.”
On offshoring strategies that eliminate domain expertise
“I've seen entire software products almost decimated by doing that because they cut all but the best people and then they put those best people as, you know instead of, yeah they were the best developers and now they were like okay you can't develop, you're just a liaison to a team of people that this offshore team that's going to do the development work.”
Transcript
Hi, welcome to Tales From The Sky Lounge, it's a podcast about business consulting and venture investing. We get out there in the world and we talk to people who are making it happen and we get their stories. So today in the Sky Lounge we have an IT crew panel. Welcome to the Sky Lounge, Ian, David, and Paul. How are y'all today?
My name's Ian Fley. I'm based in Boston. I'm a partner at TechCXO and I help to run our fractional CIO practice. Most of the work that I get engaged with today is really in two buckets of activity. One is I am a fractional CIO for a number of different companies. That just simply means I spend some time with each company and that amount of time varies depending on how much time they need. So that's one bucket of activity. The second bucket of activity that's spent a fair amount of time is doing technology health assessments for companies. That's really going in and doing a project that looks at their whole IT platform, whether it's systems, processes, external vendors, costs, and then gives them a report and says are you doing well, are there areas that you can improve, and then we talk through what those areas of remediation might look like.
My name is David Johnston. I'm based in Charlotte. I'm a principal on Ian's team so I do most of the same things that he's mentioned. Right now I'm working for one client that has me leading their application development work, another client that we just wrapped up a technology assessment for, and another client where we finished helping them with their infrastructure. They were handling close to half a petabyte of data a day and obviously you can't do that in the cloud, so they've got an on-premise data center and it needed some work.
I'm Paul King. Unlike these guys, I'm not as much in the core IT. I work with software development a lot. My background has been product development, building up software solutions for the last 30 plus years, and I've gotten involved with cloud stuff a lot and DevOps and so that's kind of led me to this discussion here. I've seen a lot of ways to optimize costs. The clients that I work with typically are either developing a product or optimizing their cloud infrastructure and so I get involved with all kinds of projects from that standpoint, working with a variety of clients that we can help them get to the next level. I also do some due diligence projects as well, evaluating different companies and what their technology infrastructure looks like, both from the development and cloud perspective.
Well, y'all are a great panel to bounce a couple of questions off of. Number one, I think first and foremost, everybody's got business cycle on the brain. SVB kicked it off and we went into a bit of a retraction in tech. I think tech always sees it first. It's not been a great year for venture-backed companies or investment. People seem to be retrenching. We hear about a lot of layoffs. What are you guys seeing in the clients that you serve, in the businesses that you're a part of, in terms of how are people thinking about the business cycle right now?
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