Worldwide IT spending is projected to hit $5.74 trillion in 2025. Still, many organizations are being told to rein in costs. In an environment of economic uncertainty, tighter budgets, and rising IT demands, the traditional “big bang” IT overhaul isn’t always realistic or necessary.
The smarter path? Incremental modernization. By optimizing what you already have, eliminating waste, and making targeted investments, organizations can stretch today’s budgets while building a foundation for future growth.
Why organizations should consider IT cost optimization
When budgets tighten, IT often looks like the easiest place to cut, but that can backfire fast. Inefficient workflows, downtime, and security gaps quietly drain resources and increase risk. The smarter approach is optimization: making incremental improvements that free up cash and capacity for long-term growth.
Consider Goodwill Industries of the Chesapeake. Facing ambitious goals, like launching a tuition-free high school for adults, they partnered with SC&H to modernize systems and reduce manual work. By centralizing data and introducing Power BI dashboards, Goodwill cut reporting time in half and gave program leaders back 15 hours each month.
“It was actually surprising to me—some managers and directors were spending a third of their time just getting and manipulating data to report to donors,” said Scott Hollingsworth, CFO of Goodwill Industries of the Chesapeake. “We eliminated that. We basically gave program leaders a third of their time back so they can focus on the mission.”
This kind of incremental optimization pays off in multiple ways: lower risk, measurable ROI, more productive staff, greater budget flexibility, and stronger resilience. And those quick wins set the stage for the deeper modernization strategies CIOs and IT leaders can act on today.
Incremental IT modernization: How to get started
Modernization doesn’t have to be a disruptive, all-or-nothing overhaul. The most sustainable gains come from treating it as a programmatic journey, making phased improvements that deliver immediate impact while laying the foundation for future growth.
Here are eight key steps CIOs and IT leaders can take to modernize incrementally while controlling costs:
- Audit and roadmap first. A tech assessment provides visibility into how systems are actually being used. Reviews often uncover quick wins that can be eliminated before major investment is required, like outdated file servers, underutilized licenses, or duplicate tools.
- DIY, or get extra help? We recommend bringing on an external partner to remove bias and avoid overloading your team (we can help you with this. Check out our tech assessment services!). If you want to DIY it first, start by running a system usage audit with built-in tools like Microsoft 365 Admin Center license usage reports or AWS Cost Explorer.
Microsoft 365 usage reports give you visibility into system activity to identify underutilized resources.
- DIY, or get extra help? We recommend bringing on an external partner to remove bias and avoid overloading your team (we can help you with this. Check out our tech assessment services!). If you want to DIY it first, start by running a system usage audit with built-in tools like Microsoft 365 Admin Center license usage reports or AWS Cost Explorer.
- Eliminate waste and duplication. Redundant spend is one of the most common issues uncovered in assessments. For WareSpace, expensive cookie-cutter MSP contracts were replaced with flexible IT management, saving $100K annually while supporting rapid growth.
- How to do it: Create a simple inventory spreadsheet, and ask each department which apps they actually use monthly. Then map your IT invoices against actual user headcount. Look for mismatches like “200 licenses, 120 employees.”
- Review existing contracts for hidden functionality. Many organizations pay for third-party tools that duplicate features already included in current subscriptions. Goodwill Industries of the Chesapeake reduced security costs by 60% by consolidating endpoint protection under Microsoft Defender—part of their Microsoft license but previously unused.
- Where to look first: Clients often double-pay for device management and security features. For example, if you’re a Microsoft user, you can eliminate third-party tools like McAfee or Symantec with Microsoft Defender or Microsoft Intune. Line up your software contracts next to your core platform (Microsoft 365, Google, etc.) and check overlap.
- Streamline vendors and hold them accountable. Consolidate overlapping tools and contracts to reduce complexity and boost negotiating power. With fewer contracts to manage, IT leaders can demand better pricing, set clear performance expectations, and hold providers accountable.
- How to do it: Start by negotiating performance SLAs with each vendor. Don’t just pay for “24/7 support.” Insist on clear metrics like uptime guarantees, maximum response times, and defined resolution windows, and tie them to credits or penalties if vendors miss targets.
- Balance cost and performance. The cheapest solution isn’t always sustainable. Modernization efforts should weigh total cost of ownership, business impact, and scalability, ensuring systems can meet future demands without introducing risk or slowdowns.
- A cautionary tale: Just because technology is new, doesn’t mean it will solve your problem. One of our clients upgraded their print systems to save $500 per copier—only to lose 4+ hours of productivity every day. Moral of the story: ALWAYS run pilot tests first.
- Strengthen cybersecurity basics. Security doesn’t require overspending. Multifactor authentication (MFA), employee training, and endpoint consolidation reduce risk while lowering licensing costs.
- 3 tools I recommend starting with:
- MFA tools, such as Duo Security or Microsoft Authenticator, add an extra layer of security by requiring a second form of verification.
- Single sign-on controls, like Microsoft Entra ID or Okta, allow users to log in once to access all connected systems.
- Real-time scanning of links and attachments, such as Microsoft Defender and Mimecast, protects your organization from phishing and malware attacks.
- 3 tools I recommend starting with:
- Optimize infrastructure and cloud spend. Proactive hardware refreshes, virtualization, and disciplined FinOps practices, like shutting down idle resources or using provider discounts, help control costs and avoid outages or runaway cloud bills.
- You might be wasting more than you think, and you’re not alone: According to Flexera’s State of the Cloud 2025, 27% of annual cloud spending is wasted on idle or overprovisioned resources.
- Automate and rationalize. Automate repetitive tasks to free staff for higher-value work, and rationalize applications to eliminate shadow IT. These are often the fastest ways to cut costs while boosting productivity.
- Our favorite AI use cases: Automating note-taking and meeting recaps with tools like Teams Premium or Otter.ai is a quick win that saves time immediately. Using AI to review documents or invoices is another huge time-saver.
When to optimize vs. replace
Not every legacy system needs to be scrapped right away. The key is knowing when continued optimization still delivers value, and when replacement becomes the smarter long-term investment. Legacy systems should be evaluated in the same way as new solutions: if they are modern enough and still supported, optimization may make sense; if they are outdated or at end of life, replacement is usually the better option.
Factoring in the full cost picture is essential. Vendor fees and the impact on people and performance must be considered. Upgrading often pulls staff away from daily responsibilities, meaning organizations may need temporary resources to backfill while the transition takes place.
I recommend evaluating your legacy system alongside two new solutions, giving the current vendor a chance to prove if it can meet evolving requirements. That side-by-side review reveals the true costs: not only licensing and support fees, but also the staff time required for migration.
These hidden costs of legacy systems like high maintenance, lack of vendor support, or manual workarounds that eat up employee hours often outweigh the marginal gains from patching. A structured cost-benefit analysis makes those tradeoffs clear.
Frameworks like Gartner’s TIME model (Tolerate, Invest, Migrate, Eliminate) can help categorize systems systematically, while SC&H’s fractional and co-managed IT services ensure operations continue smoothly during transitions.
Consider outsourcing IT services
Sometimes the most cost-effective modernization move isn’t new technology, it’s tapping outside expertise.
Outsourcing can fill gaps with co-managed help desk support, vendor oversight, or specialized cybersecurity services. For organizations that need leadership but can’t justify a full-time role, a fractional CIO or CTO provides strategic guidance at a fraction of the cost.
This model works well during leadership transitions, rapid scaling, or when teams need temporary backfill. Because support can be ramped up or down, SC&H helps clients get exactly the coverage they need, without locking into oversized contracts.
Ready to stretch your IT budget further? Talk to SC&H’s technology team about flexible outsourcing options.
