Calculating Your IT’s Real Cost

by | Aug 24, 2010 | Articles

Hidden IT costs can be stifling your company and you just don’t know it. It’s important to assess what those costs are and find a way to help your business perform better.

In this day and age, few businesses (if any) can survive without an IT arm. Every business, big or small, needs someone, or preferably a group of people, on hand to fix computer problems, check networks, monitor software – to generally make sure that their operations are running smoothly.

One question, though: have you ever stopped to consider whether the cost of maintaining your in-house IT system is worth it? For instance, consider your internet connection. Let’s say that a conservative estimate of the efficiency of your business without an internet connection is at 50%. And if your business makes a $1 million a year, then $500,000 depends on your internet connection. If your monthly bill for that connection is $500, or $6,000 annually, you earn $500,000 – $6,000 = $494,000. Now, if you decide to switch to a cheaper DSL connection, which is about $50 per month or $480 a year, you get a much higher figure: $499,520.

You could argue that the DSL is the wiser option, but when you look at a deeper level, a slower internet connection may also hamper your company’s productivity – let’s say, by 10%. So with only a DSL connection, your business operates at 90% of its total possible productivity. Considering the previous figures, a loss of 10% in productivity means a loss of $100,000. Subtract that savings from the DSL connection, $5,520 – you get a whopping loss of $94,480. So when you think you’re saving by getting a cheaper internet connection, you are actually losing more money. Inversely, if you subscribe to an even better connection that costs you $10,000, productivity can increase by $15,000.

The same principle applies when your IT infrastructure is not up to date, with slow computers, outdated software, and other problems. In a company with 10 employees who bring in an annual average of $65,000 each, even losing productivity for just 35 minutes a day due to IT handicaps can cost you $47,000. Hardly chump change! But hiring an IT provider who charges $20,000 a year can offset that lost productivity and even make your business run better, by as much as $27,000. It’s also noteworthy to mention that employing an IT firm can count as a legitimate business expense, thereby lowering your tax liability to about $8,000 if you peg corporate tax at 40%.

IT is important to a business. If you doubt that, just try doing without it for a week – just shut the whole thing down. For most, that’s out of the question, but operating with old software and hardware is almost just as bad. However, many businesses cannot spare the resources to continually upgrade their IT systems.

Enlisting the services of an IT firm changes all that. IT Service Providers are constantly on the lookout for better technologies – both hardware and software – that can make your business function much more efficiently and cost effectively. It’s what they do. And the costs are minimal. If you’re wondering how much better your company might operate with an IT Service Provider, we’ll be happy to sit down with you and run some numbers.

Published with permission from TechAdvisory.org. Source.

Related Posts

5 Easy Ways to Ensure Customer Satisfaction

5 Easy Ways to Ensure Customer Satisfaction

When it comes to running a business, popular wisdom says that “the customer is always right.” While this may not hold true in every case, the idea behind it endures.  The customer may not always right, but their satisfaction is necessary for your success.  When...

7 Things to Look for in a Virtual Assistant

7 Things to Look for in a Virtual Assistant

Your busy schedule may have you thinking about hiring an assistant. A virtual assistant is a cost-effective and efficient option to consider. Since you don’t have to provide office space, it’s cheaper than hiring someone on-site. Use this guide as you search for the...

Technology Trends: What to Expect in 2017

Technology Trends: What to Expect in 2017

A new year always brings new predictions for what will be trending and what we can all look forward to in the news, politics, entertainment, and more. In the world of technology, innovations and advancements are a fast, steady stream as developers make everything...

FIND OUT WHAT YOUR BUSINESS SHOULD EXPECT TO PAY
FOR HOUSTON TECH SUPPORT

Give us a call and discover how great local IT services and computer support can be!