When organisations come to review their IT support arrangements there is a tendency to rush to the bottom line. However, this approach is fraught with danger. Whilst it is easy and tempting to focus on the annual support cost, this approach hides a much greater cost; the actual cost to the business that result from poor IT management.
So when considering the cost of supporting an IT service it is important to consider the top 4 consequential or hidden costs as follows:
1. Performance Cost
Most business processes now rely on some form of IT service, so when IT runs slowly or stops all together it means that employees are not making the most effective use of their time. Just one hour lost per employee per week can soon add up to a significant sum. For 25 IT users this can cost anything from £20k to £30k per annum.
2. Functionality Cost
IT systems can significantly improve the ability of an organisation to be more efficient and more effective across a whole range of different functions. But poor IT management means that these opportunities are not grasped. By not taking advantage of these opportunities, organisations are incurring a substantial opportunity cost that is not being realised. Again this cost varies according to size and industry sector but could be as much as 30k to 50k in lost cost savings or revenue generation.
3. Risk
A failure to secure and protect data exposes the organisation to substantial risk and cost from security threats as well as systems failure. Well maintained security, backup and recovery infrastructure and best practice procedures ensures on-going business continuity. Failure to maintain this position can result in both financial as well as reputational costs to the business.
4. Capital Cost
If the replacement and future development of IT infrastructure is not thoroughly planned the organisation can incur significant cost. Unplanned or emergency replacement always costs more as does the acquisition of hardware of software that is not actually aligned to the overall IT strategy.
To manage and reduce these costs requires a different approach to IT management. Too often IT support organisations focus their attention in just one area; fixing problems as they arise. As this never identifies, solves and manages the root causes of the problems, the four hidden costs just continue to escalate jeopardising the ability of the organisation to grow, change and become more effective. To reduce these costs requires a much more proactive and holistic approach to IT that looks to identify and anticipate the underlying causes of IT downtime as well as plan for future change. IT will then be supporting the business day to day, reducing risk, increasing efficiency as well as enabling future growth and change.
