Identifying IT waste can feel like searching for your keys; it’s right in front of you, but somehow easy to miss. IT costs have a way of increasing and quietly chipping away at budgets meant for innovation and growth. 

Opportunities to cut costs are there, but they can feel out of reach. Inefficiencies pile up when overlapping applications and outdated systems linger (queue The Cranberries). Strategies like tool consolidation, cloud adoption, or renegotiating vendor contracts are only effective when backed by data. Success lies in pinpointing waste, simplifying processes, and making smarter financial management decisions.

And guess what? You don’t need an expensive “digital transformation” to see real change. You can make practical tweaks that drive meaningful results. Let’s break down the four steps to cut IT costs while investing in innovation.  

“In 2025, organizations that meet the demand of efficiently running a business while accelerating innovation will experience greater success.”

Tiffany Willis, Chief Innovation Officer 

4 Strategies to Redirect IT Spending to Innovation Initiatives

Some cost-saving opportunities are quick and easy. Others require more time, analysis, and collaboration. We've ordered these strategies from simpler, "low-hanging fruit" wins to higher-effort, long-term approaches. 

1. Question Everything, Including Your ITFM Practices

IT budgets often lose money due to financial missteps, like misclassifying expenses as assets or inflating budgets unnecessarily. Errors such as mismatched depreciation schedules, misplaced entries, or inconsistent accounting practices can slip in over time. All of this generates hidden costs that could otherwise be used for innovation initiatives.

Applying ITFM principles can help pinpoint and address these issues effectively. By using accurate data and aligning IT strategies with business objectives, you can streamline financial processes and free up funds to drive growth.

What you can do now to tie up loose ends with your financial management processes:

• Identify end-of-life assets still incurring maintenance costs. If hardware or software is outdated and no longer essential, retire it.
• Adjust depreciation and amortization timelines for assets that you don’t fully utilize. 
• Review variance to identify signs of overestimated or underestimated IT resources.
• Stop over-budgeting and instead see where you can redirect those “just in case” funds to higher-impact initiatives. 
• Switch from manual ITFM data entry to automated processes.

Related: Learn how a leading CPG brand saved $100 million by automating their claims and deductions management process.

2. Cut Waste and Use Only What You Need

Are you paying for more than what you need? Probably so. IT waste often arises when there’s a gap between spending and actual use. Your financial data might show how much you’re spending, but unless it’s tied to specific IT functions, tools, or business units, it’s tough to know where the inefficiencies lie. 

For example, businesses often lease high-powered servers or create excess virtual machines (VMs) that go unused. It’s also common for software licenses to not get updated when employees change roles or projects end. These inefficiencies add up, straining budgets and locking up funds that could support innovation.

What You Can Do Now to Cut Waste:

• Consider tools like hybrid cloud cost optimization to help you analyze resource use and identify inefficiencies.
• Phase out over-provisioned virtual machines, outdated infrastructure, surplus storage, and unused software licenses.
• Tailor infrastructure to match business needs, such as reserving high-performance storage for critical production tasks.
• Reassess large disaster recovery setups to ensure they aren’t overly excessive.
• Reallocate or adjust SaaS licenses that are idle or incorrectly assigned to make the most of your software investments.

Related: See how a leading satellite TV provider eliminated 8000+ monthly hours by cutting waste with automated system connections, cost calculations, and data aggregation. 

3. Eliminate Redudant Tools and Processes

Duplication in IT systems is another costly problem. This happens when multiple tools or resources perform the same function without valid justification. It’s also common to find duplicate software tools being used across different departments after mergers and acquisitions. 

Same for legacy systems that companies hold onto even after newer apps are introduced. On top of that, storing redundant or outdated data takes up valuable resources, inflates storage costs, and adds unnecessary complexity to data management processes. Poor quality data, often the product of legacy systems or disparate tools, costs an average of $12.9 million every year.

How You Can Avoid Redundancies Now: 

• Identify where redundant apps and services exist and work with the respective teams to choose the most cost-effective option to keep.
• Retire outdated infrastructure (it’s time!).
• Consider consolidating vendor contracts into one agreement with a single vendor providing the same services or solutions.

4. Curb Your IT Service Consumption

The final step involves guiding your users to consume IT services more responsibly. Service consumption tends to spiral out of control when demand goes unchecked. Whether it’s teams bringing outdated practices into new systems or departments using fancy devices and tools they don’t need, it all adds up. Without a clear way to connect IT usage to costs, it can be tough to identify what's driving the increase in expenses.

What You Can Do Now to Curb Your IT Consumption: 

• Understand how teams consume IT services across your organization. 
• Evaluate whether expensive tools or systems can be replaced with more cost-effective options. 
• Implement showback and/or chargeback systems, so business leaders become more mindful about the IT services they consume. 
• Limit self-service options for things like VMs or laptops, making sure only the right level of resources is provided.
• Adopt a pay-as-you-go approach to ensure you don’t overpay for services that aren’t being fully utilized.
• Invest in and properly implement a comprehensive ITFM software that provides financial transparency and helps you align IT spending with business objectives. 

Strike a Balance Between Savings and Innovation

Optimizing IT costs isn’t a one-and-done deal. It’s a continuous process that evolves alongside your technology and business needs. By following these four steps, you can make smart, data-driven decisions that cut costs and drive innovation.

With the right tools and strategies in place, you can strike the perfect balance between savings and progress. That’s where Praecipio steps in. We help organizations optimize their IT environments using clear, data-backed insights. Our approach simplifies decision-making, cuts waste, and ensures you get the most value from your IT investments.

Savings and innovation aren’t mutually exclusive. Learn how you can achieve both in our ebook, Profit by Design: How to Master Cost Optimization.