5 STEPS TO MANAGING IT COSTS

Written on the 11 April 2011

5 STEPS TO MANAGING IT COSTS

UNDERSTANDING an appropriate annual budget for technology is an ongoing challenge for many SMEs. Often there is no budget set, or the budget is based only on the previous year’s expenditure.

IT Leaders Group founder and general manager Scott Jones, says SMEs tend to over or under spend on technology, leading to profitability and productivity issues.

“Ultimately you want IT to be as predictable as possible for both outages and expenditure, yet also provide the maximum possible leverage of your staff time,” says the 2010 Gold Coast Young Entrepreneur of the Year finalist.

“When you under invest in technology and have the attitude of spending the bare minimum, then business risks increase and productivity decreases. Smarter corporate firms think hard about optimising their IT spend, and SMEs can learn several things from this approach.”

With clients ranging from small business owners right up to large corporations, Jones shares his insights into how SMEs can optimise their IT spend.

1. Don’t keep key pieces of equipment past the warranty expiry. Conducting repairs on equipment that is out of warranty makes spending unpredictable and it’s not unusual for a whole batch of equipment to fail at once. Replace equipment by its warranty expiry date or, if facing cost restraints, seek an extension on the warranty.

2. Spending on IT increases productivity. Old IT often means wasted productivity. Consider that spending $50,000 on PC upgrades that will last three years is only half the price of a single employee on minimum wage.

3. Decide and budget projects in advance. Projects like server replacement, network upgrades or bulk PC replacements are different to daily/weekly IT support and need to be planned and costed separately.

4. Moving to the cloud? Do your research. Cloud computing isn’t right for every business so do your research and don’t fall for a sales pitch. Watch out for bad cloud providers and review your options to minimise your cost and infrastructure burdens.

5. Understand the importance of IT support staff. Under-spending on IT labour increases security risks, disaster recovery risks and downtime incidents, while decreasing productivity and efficiency. Successful companies know IT labour is essential to support people and equipment.  Spending less does not indicate more efficient expenditure, so hire an internal network administrator and/or outsource IT help when necessary.


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