The Hidden ROI of Strategic IT Cost Management
Jay Cuthrell
Chief Product Officer
IT costs are rising fast, but the real challenge isn’t just how much businesses spend—it’s whether that spending drives real value. With cloud services, cybersecurity, and AI-driven infrastructure set to see major price increases this year.¹ businesses are under pressure to invest wisely.
For three out of four fast-growing companies, software spending is on the rise.2 However, without a clear strategy, it’s easy to invest in technology that goes underutilized while overlooking the tools that truly enhance efficiency, security, and innovation. Unused software, outdated infrastructure, and reactive security measures quietly drain budgets, while smarter opportunities—such as hybrid cloud, automation, and managed services—go untapped.
Smart IT cost management isn’t about cutting corners—it’s about making every dollar work harder. When investments align with business goals, they fuel growth, improve efficiency, and free up teams for high-impact work instead of constant troubleshooting. The companies that get this right aren’t just saving money—they’re uncovering untapped value and positioning themselves for long-term success.
The Hidden Costs That Add Up
IT cost management isn’t just about reducing expenses—it’s about making smarter investments. The most effective approach prioritizes efficiency, innovation, and long-term growth. With a proactive strategy, you can free up resources, boost performance, and help your IT team focus on high-impact initiatives instead of getting stuck in routine tasks.
Here are five ways you might be losing money without realizing it:
1. Overpaying or missing the mark on software and hardware
Price and security are top priorities for B2B software buyers, yet 59 percent regret at least one purchase in the past 18 months.³ This often leads to costly vendor switches. Meanwhile, AI-driven infrastructure spending is surging, with AI-optimized server investments set to double to $202 billion this year.⁴ Without proactive planning, businesses risk overspending on unused capacity or missing out on AI-driven efficiencies that could provide a competitive edge.
2. Keeping too many workloads on-premises
Some workloads belong in-house, but relying too heavily on physical infrastructure can drive up costs. On-premises solutions often have fixed pricing, but underutilized resources lead to waste, and scaling requires expensive hardware investments that may take years to pay off. Cloud solutions offer flexibility with pay-as-you-go pricing, but careful monitoring is essential to control unplanned expenses. Strategically balancing workloads across cloud and in-house environments enhances cost efficiency, scalability, and long-term value.
3. High operational costs with uncertain ROI
Maintaining IT in-house comes with significant costs—including hardware, software, licensing, and specialized staff. Without a structured plan, these investments can shift from assets to financial burdens. Unplanned downtime, outdated systems, and reactive spending turn IT budgets into unpredictable expenses rather than drivers of business growth.
4. Security risks that lead to bigger expenses
Cyber threats don’t just compromise data—they disrupt operations, damage customer trust, and create costly compliance issues. Last year, the average cost of a data breach surged to $4.88 million,⁵ and ransomware downtime can result in millions in lost revenue per hour.⁶ Companies that underinvest in proactive security measures risk far greater financial and reputational damage in the long run.
5. The cost of IT turnover and burnout
Losing IT talent is expensive, with recruiting and replacement costs ranging from 50 to 200 percent of an employee’s annual salary.⁷ The bigger challenge? More than half of IT professionals feel overwhelmed by daily tasks, and have the capacity to support only 85 percent of their workload on average.⁸ Without relief, overworked teams struggle with longer resolution times, reduced productivity, and higher turnover. Offloading routine tasks and reducing burnout isn’t just a workforce strategy—it’s a cost-savings imperative.
The Shift: From Cost Cutting to Cost Optimization
IT spending can easily spiral out of control without a proactive approach. Some costs are obvious, while others gradually chip away at budgets, going unnoticed until they add up.
How businesses optimize IT spending:
- Smart software and hardware procurement – Shadow IT and license sprawl can lead to unchecked spending on redundant or unused applications. Standardizing software purchases, consolidating licenses, and negotiating vendor contracts help businesses reduce unnecessary costs. Strengthening visibility and governance ensures organizations only pay for what they need while optimizing software investments.
- Hybrid cloud solutions – A hybrid cloud model blends on-premises infrastructure with cloud services, reducing upfront hardware costs while providing on-demand scalability. Businesses can scale cloud resources based on actual demand, preventing unnecessary spending on excess capacity while maintaining control over critical workloads.
- Right-sizing AI investments – AI is transforming IT efficiency, but costs can escalate without proper planning. Generative AI (GenAI) and agentic AI require scalable cloud resources, high-performance computing, and advanced security measures. With AI-driven spending continuing to surge,⁹ businesses must balance performance, compliance, and cost to ensure AI delivers measurable value without overspending.
- Optimizing IT operations – Streamlining IT processes through automation, proactive monitoring, and strategic resource allocation improves efficiency and reduces operational costs. Offloading manual, repetitive tasks allows IT teams to focus on innovation while ensuring infrastructure remains secure, scalable, and aligned with business goals.
- Proactive security and risk management – Recovering from a security breach is far more expensive than preventing one. AI-driven threat detection, compliance management, and risk mitigation solutions help businesses strengthen their defenses while avoiding millions in potential losses tied to cyber incidents, downtime, and regulatory fines.
Some workloads belong in-house, but relying too heavily on physical infrastructure can drive up costs. On-premises solutions often have fixed pricing, but underutilized resources lead to waste, and scaling requires expensive hardware investments that may take years to pay off. Cloud solutions offer flexibility with pay-as-you-go pricing, but careful monitoring is essential to control unplanned expenses. Strategically balancing workloads across cloud and in-house environments enhances cost efficiency, scalability, and long-term value.
For a future post, I’ll be exploring the state of the union for initiatives and projects like Technology Business Management (TBM) 10and FinOps shift-left with Infracost. 11
Partnering for Smarter IT Spending and Long-Term Growth
If your IT spending feels unpredictable, it’s time for a smarter approach. NexusTek helps you optimize IT investments to improve efficiency, strengthen security, and drive business growth. With expertise in cloud, cybersecurity, automation, and managed IT services, we help cut waste, reduce disruptions, and ensure your technology fuels business success.
By offloading recurring IT tasks, stabilizing teams, and optimizing security strategies, you gain greater visibility, stronger protection, and a more cost-effective environment. IT cost management isn’t about cutting corners—it’s about making technology work for you.
- CIO Magazine, Sharply Rising IT Costs Have CIOs Threading the Needle on Innovation, January 2025.
- Gartner, 2024 Tech Trends: How Fast-Growing Businesses Will Buy More Software (and Regret It Later), January 2024.
- Gartner Digital Markets, 2025 Software Buying Trends, Accessed March 2025.
- Gartner, Gartner Forecasts Worldwide IT Spending to Grow 9.8% in 2025, January 2025.
- IBM Security, Cost of a Data Breach Report 2024, July 2024.
- Forbes, The True Cost Of Downtime (And How To Avoid It), April 2024.
- SHRM Executive Network, The Myth of Replaceability: Preparing for the Loss of Key Employees, January 2025.
- CIO Magazine, Burnout: A Chronic Epidemic in the IT Industry, December 2024.
- Forbes, AI Spending To Exceed A Quarter Trillion Next Year, November 2024.
- Technology Business Management (TBM) https://www.tbmcouncil.org
- Infracost https://www.infracost.io
About the Author
Jay Cuthrell
Chief Product Officer, NexusTek
Jay Cuthrell is a seasoned technology executive with extensive experience in driving innovation in IT, hybrid cloud, and multicloud solutions. As Chief Product Officer at NexusTek, he leads efforts in product strategy and marketing, building on a career that includes key leadership roles at IBM, Dell Technologies, and Faction, where he advanced AI/ML, platform engineering, and enterprise data services.