As organisations across the country approach the end of another financial year, all eyes are on budgets. Assessing spending over the last year and crunching the numbers for the year ahead is the name of the game right now.
For housing providers, sensitivity to cost is crucial and it always has been. We know from our work in the sector that housing providers continue to be challenged by budgets; needing to cut costs. However, making sure there isn’t a negative impact on the delivery of day-to-day operations from any cost cutting is just as important. And as the sector starts to plan for the next financial year, those pressures are a talking point once more. We look at two key topics that are on the minds of many across the sector at this time of the year.
Organisations of all shapes and sizes are increasingly shifting their focus to an operational expenditure model and reducing their capital expenditure. Compared to an on-premise IT solution, a cloud-based IT solution can offer the perfect opportunity to do just that, with no costly up-front costs for on-site infrastructure, instead working to a subscription-based model for the service you are using.
This approach gives housing providers in particular the opportunity to demonstrate their sensitivity and commitment to cost reductions, by seriously considering the avoidance of capital expenditure from an IT perspective. We all know that buying IT kit is expensive; moving to a subscription-based model with access to a cloud-based system to store and access data spreads the cost, with no upgrade costs as technology evolves.
But it’s more than that. Moving to the cloud is not and should not be a decision based only on shifting IT costs around the budget. What if we were to tell you that by moving to a cloud-based IT model, you could not only reduce those IT budget line-items but potentially increase productivity too?
The right technology can enhance the business on a wider scale; improving both end-users and customers’ experiences as well as the organisation’s bottom line. Lower costs for IT operations, convenience for employees and a greater agility make cloud solutions an all-round viable option for a housing association.
Increasing operational efficiency
Last year, the NHF and HouseMark published a report exploring housing associations’ efficiency between 2008 and 2015. In it, they suggested that housing providers have maintained high service standards in their core operations while reducing many key costs. This is a positive picture for the sector and highlights that keeping an eye on costs is important, but not at the sacrifice of doing the job itself.
However, we know that the cost of operational expenses versus their wider impact is always on the agenda for housing associations. The technology you use can have a significant effect on both capital and operational expenditure. It is for this very reason that the introduction of fully-outsourced IT solutions and cloud economics are gaining popularity, helping housing associations to be cost efficient and operationally efficient too.
While outsourcing your IT might seem to be the more expensive option at first glance (due to ongoing subscription costs and paying for server space), the costs associated with managing your IT in-house can quickly eclipse those of third-party IT or cloud solutions. That’s because the most significant contributor to costs in in-house IT is often the purchase, maintenance and upgrading of hardware, which is of course completely removed by opting for a cloud service instead.
That’s not all. The costs of IT staff salaries, equipment repairs, increases to the electricity bill and the inevitable cost of system failure (both in terms of budget and efficiency) quickly add up. Outsourced IT solutions, by contrast, can provide an all-encompassing service at an up-front cost. Should your data needs change with time, you can adjust your cloud subscription accordingly, without the need to completely replace your hardware.
Of course, outsourcing the management of your IT assets still comes with operational expenses, but without the additional burden of capital expense in the form of new equipment. With technology continuing to evolve, IT solutions are no longer a one-off cost; upgrades are a necessity, and often at a high cost where an on-premise system is involved. By contrast, upgrades are usually included and absorbed within a cloud-based subscription package.
More than ever, housing associations are working across multiple locations too – and these sites need to be managed and with a seamless approach. It’s not always an easy process, and can certainly be hampered by an IT solution that’s not up to scratch. There are lots of value considerations that come into play, such as the speed, accessibility and scalability of an IT system to name a few. Even if your organisation works from just one central office, it’s likely that your staff will log in remotely from time to time. Is your system able to fully deliver on the challenge?
It’s perhaps no surprise that more and more housing associations are using an outsourced IT solutions provider to reduce risk and capital expense. This transition has a clear, positive effect on their budgets and overall organisational efficiency. That’s certainly what we saw in our work at Action Housing, who were sensitive to an ageing infrastructure and with a desire to increase workforce flexibility. Our cloud-based solution led to a 36 per cent reduction in IT infrastructure operating costs and a heightened user experience.
Good budget management in a challenging climate isn’t just about reducing spending, it’s about the best result for the business from that spending.
As English biologist Thomas Huxley said, “Economy does not lie in sparing money, but in spending it wisely”.
Paul Oggelsby is managing director of Riverlite.