Purpose
Technology spend grows silently. A software subscription added. A cloud service scaled up. Unused licenses kept "just in case." Within 18 months, a 20-person startup's tech budget can inflate from $5K/month to $15K/month—not because they need more, but because they stopped paying attention.
This guide explains how to identify and eliminate waste without sacrificing capability.
Context & Assumptions
Who this is for:
- Finance managers and business owners
- Operations teams responsible for budgets
- Anyone concerned about technology spending
Key assumptions:
- You're already maintaining systems (see Maintenance Strategy)
- You want to reduce costs without compromising security or uptime
- You may not know where your technology money is actually going
The Three Categories of Technology Spending
1. Essential Spending (Must Keep)
- Infrastructure for core business operations
- Security controls
- Regulatory compliance tools
- Example: Email (business-critical), database backups, MFA tools
2. Valuable Spending (Worth Keeping)
- Tools that improve efficiency or reduce labor costs
- Vendor relationships that drive business growth
- Example: CRM, project management tool, analytics platform
3. Wasteful Spending (Cut or Reduce)
- Tools no one uses
- Redundant capabilities
- Over-provisioned capacity
- Unused licenses
- Example: Unused Slack Pro subscription, over-sized cloud server, forgotten SaaS trial
Goal: Maximize value, minimize waste.
The Cost Optimization Audit
Conduct a quarterly review.
Step 1: Gather Your Bills
Collect billing from the past 12 months:
- Cloud providers (AWS, Google Cloud, Azure)
- SaaS subscriptions (email, CRM, project management, etc.)
- Software licenses (Microsoft, Adobe, etc.)
- Hardware (computers, monitors, servers)
- Services (support, consulting, maintenance)
- Internet/connectivity (ISP, mobile data)
Total monthly average: This is your baseline.
Step 2: Categorize by Purpose
Create a spreadsheet:
| Service | Category | Monthly Cost | Annual Cost | Justification |
|---|---|---|---|---|
| AWS (EC2 servers) | Infra | $800 | $9,600 | Production database |
| Google Workspace | Essential | $600 | $7,200 | Email, docs for 30 people |
| Salesforce | Valuable | $500 | $6,000 | CRM for sales team |
| Slack Pro | Valuable | $250 | $3,000 | Communication for 25 users |
| Figma | Valuable | $120 | $1,440 | Design tool for 4 people |
| Adobe Creative Cloud | Questionable | $100 | $1,200 | Is this used? |
| Dropbox Business | Wasteful | $400 | $4,800 | Could use Google Drive (already owned) |
| Unused developer tool trial | Wasteful | $50 | $600 | Forgot to cancel |
Total: ~$2,820/month or $33,840/year
Step 3: Identify Waste
Ask these questions about each service:
| Question | If "No" → Action |
|---|---|
| Do we actively use this? | Cancel it or downgrade |
| Do we use the tier we're paying for? | Downgrade to lower tier |
| Is there a cheaper alternative? | Switch or consolidate |
| Is this overlapping with something else? | Consolidate; cancel redundant one |
| Are we paying annually when paying monthly would save money? | Request annual discount (typically 20–30% cheaper) |
| Did we negotiate the best price? | Contact vendor; ask for discount |
| Are there volume discounts we're missing? | If 10+ users, likely yes; negotiate |
Step 4: Consolidate & Negotiate
Look for opportunities to consolidate:
Example 1: Consolidate Communication Tools
- Currently: Slack ($250/month) + Zoom ($200/month)
- Alternative: Microsoft Teams (included in Microsoft 365, which you already have)
- Savings: $450/month or $5,400/year
Example 2: Consolidate Storage
- Currently: Dropbox ($400/month) + Google Drive ($30/month for extra storage)
- Alternative: Increase Google Workspace storage instead
- Savings: $400/month or $4,800/year
Negotiation example:
- You're spending $6,000/year on Salesforce
- You get a quote from HubSpot for $4,500/year
- Email Salesforce: "HubSpot is offering a comparable package for $4,500/year. Can you match that?"
- Salesforce often says yes to avoid losing you
- Savings: $1,500/year (25% reduction)
Step 5: Right-Size Cloud Usage
Cloud providers charge for what you use. Common waste:
| Waste Type | Example | Solution | Savings |
|---|---|---|---|
| Over-provisioned server | Running m5.2xlarge server at 20% utilization | Downgrade to m5.large | $400/month |
| Unused data storage | 500 GB allocated but using 50 GB | Reduce allocation | $50/month |
| Always-on development servers | Dev servers running 24/7, needed only 8 AM–6 PM | Auto-shutdown script | $200/month |
| Unused elastic IPs | Reserved static IPs that aren't in use | Delete | $10/month |
Action: Review cloud dashboards monthly. Most providers have cost analytics built-in.
Step 6: Optimize Licenses
See License Management for detailed guidance. Quick wins:
- Downgrade tiers: If you're on Pro but only use Starter features, downgrade
- Use free tiers: Figma has free tier, Canva has free tier. No need to pay if you don't need Pro
- Consolidate to cheaper provider: Sometimes switching vendors saves 30–50%
- Negotiate volume discounts: 10+ users often qualify for 15–30% discounts
Step 7: Calculate Savings & Act
Document potential savings:
| Opportunity | Current | Target | Annual Savings | Implementation Effort |
|---|---|---|---|---|
| Consolidate to Teams (drop Slack) | $250/mo | $0 | $3,000 | High (migration) |
| Drop unused Adobe subscription | $100/mo | $0 | $1,200 | Low (just cancel) |
| Downgrade Figma Pro to free tier | $120/mo | $0 | $1,440 | Low (no payment needed) |
| Downgrade AWS server | $800/mo | $500/mo | $3,600 | Medium (requires testing) |
| Negotiate Salesforce discount | $500/mo | $375/mo | $1,500 | Low (one call) |
Total potential savings: $10,740/year
Prioritize: Tackle low-effort, high-savings items first (unused subscriptions). Then tackle medium-effort items (downgrades, negotiation).
Continuous Monitoring
Monthly Cost Review
- Review cloud billing dashboard
- Check for new charges or unexpected increases
- Verify all services are still in use
- Alert budget owner if spending >10% above forecast
Quarterly Optimization
- Review quarterly costs vs. budget
- Identify any new services added (intentionally or accidentally)
- Compare usage to previous quarter
- Negotiate renewals or cancellations
Annual Budget Planning
- Forecast next year's spending based on historical data + planned changes
- Identify optimization opportunities
- Negotiate annual contracts (30–50% cheaper than monthly)
- Plan for any known increases (e.g., headcount growth)
Preventing Waste in the First Place
Controls to Prevent Waste
- Approval process: Require approval (manager or finance sign-off) before subscribing to any new tool
- Regular audits: Quarterly review of all subscriptions and services
- Auto-cancel reminders: If signing up for a trial, calendar a reminder to cancel before billing starts
- Team awareness: Communicate cost optimization importance; team can help identify unused tools
- Consolidation policy: Prefer tools that integrate with existing systems vs. adding new ones
Communication Template
Share this with your team quarterly:
"Here's our current technology spending: $X/month. Here's how we're optimizing:
- Consolidating [old tool] into [new tool] = $X savings
- Negotiated [vendor] discount = $X savings
We're reinvesting savings into [capability]. If you notice tools we're not using or overlapping capabilities, let [owner] know."
Common Pitfalls
- "It's only $50/month" — Small costs compound. 10 services at $50/month = $6K/year.
- "We might use it later" — Cancel unused tools. You can resubscribe if needed.
- "We paid annually, so we should keep using it" — Sunk cost fallacy. If not used, cancel now and don't renew.
- No visibility into cloud costs — Cloud bills are complex. Set up cost alerts and dashboards.
- No consolidation strategy — Five communication tools is waste. Consolidate to one.
- Not negotiating — Vendors expect it. Always ask for a discount.
- No budget enforcement — Anyone can sign up for anything. Require approval process.
- Ignoring regional differences — Cloud costs vary by region. Host in cheaper regions if latency allows.
Practical Example: 40-Person Startup
Initial spend: $8,500/month
Audit findings:
| Issue | Solution | Savings |
|---|---|---|
| Slack + Teams + Discord | Consolidate to Teams (already own) | $800/month |
| Dropbox + Google Drive | Consolidate to Google Drive | $400/month |
| Unused Adobe license | Cancel | $100/month |
| AWS server over-provisioned | Downgrade size | $300/month |
| Salesforce at old price | Renegotiated discount | $150/month |
| Figma Pro at $120/user for 8 users | Downgrade 5 users to free tier | $75/month |
New spend: $6,675/month
Savings: $1,825/month or $21,900/year (21.5% reduction)
Reinvest savings into:
- Better monitoring/alerting tools (+$200/month)
- Incident response software (+$150/month)
- Leftover savings to bottom line
Related Documentation
- License Management — Detailed license optimization
- Maintenance Strategy — Overall budgeting for maintenance
- Vendor Reviews — Evaluate vendor value regularly
This documentation is for informational purposes only and does not constitute financial or procurement advice. For complex vendor negotiations or contract terms, consult with procurement or legal specialists.