The True Cost of Technology

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The True Cost of Technology
By: Nancy Sabino

Small businesses have different needs at different points in time in their life cycle. The same decisions that worked when you’re at a startup or on decline won’t work when you’re in growth mode or expansion. When you are a startup or in a decline you band-aid things together to keep costs low. As you enter growth or expansion, your mentality needs to shift to efficiency, minimizing risk and planning for the next phase.

Technology is usually one of the things that companies overlook during growth and/or expansion because they feel if it’s working it can keep going until something breaks or that they can keep the same methodology as before, without investing in a proper infrastructure, systems that can truly support the business, and ongoing maintenance and end user support. The problem with that is it will cost you more than you know and it’s limiting how well you can grow to business maturity.

Gartner, Inc (www.gartner.com) research shows that businesses should be looking at Total cost of ownership when it comes to their technology. Total cost of ownership includes both direct cost (hardware, software, operations, administration) as well as indirect costs (end-user operations and downtime).

Most small businesses believe their direct costs end at the sticker price of hardware or software. But it is only 20% of it’s total cost. Support, Maintenance, labor, downtime, and payroll loss makes up the other 80%. Putting it a different way, when you decide to adopt a pet, you don’t just consider the adoption fee. You consider other direct costs like food, water, vet visits, toys, etc. AND you also consider indirect costs like the time it will take for you to walk the dog, brush the cat, the time vet visits take and so on.

Computers require constant configuring and maintenance as well as support from time to time. Someone is dealing with it whether you know it or not. And it’s taking time and energy which means money being spent in the wrong places. For example, on average employees spend 30 minutes per week trying to fix an IT problem or helping their colleague with one. Not only are you losing out on their payroll but the revenue they could be producing which only adds to the average $5,000 annual cost for an unmanaged pc. You’re talking over $55K for an office of 10 users among both not having managed pcs and employees spending their time. Gartner recently found that a well-managed computer is 37% less expensive than the example above, often saving several thousand dollars per PC, per year.

Now ask yourself, can your business really afford to not invest in the right technology in the right way at the right time? Technology changes quickly and if you want to thrive today’s world, you need to move as quickly as technology does. If you don’t, your competitors will because whatever can create efficiencies in a time of growth become competitive advantages.

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