How Much Does Bad IT Cost?
You are the decision maker. Whether deploying a new server, upgrading your switches, migrating to Office 365, or virtualizing your datacenter with VMware and Veeam, you may see the price tag and instantly balk. $10,000? $75,000? For IT?
It is important to make wise investments and choose the right solutions. Spending money on unnecessary solutions is wasteful, so work with some IT consultants to choose the right solutions for your company, and how your company works.
The IT Decisions
Here are the decisions that you must decide on:
IT’s Role in Your Business
Is IT a partner in your business, or a janitor? Will IT be cleaning up your business or helping you manage it?
Value in Agility and Speed
What is agility and speed worth in your company? Is there value in added productivity? If so, then there is probably an opportunity to invest in some wins that will increase productivity and give you some returns on your investment.
In the world of management systems, there are several which advocate a concept called “continuous improvement” or “continuous improvement process.”
This allows you to seek improvements that add value to your end product (e.g., shorter delivery times or better quality). Do you believe that continuous improvement should apply to your IT systems and processes as well? If you are using kaizen on your factory floor, then shouldn’t you involve IT in improvement? If IT said, backed up with data, “We can make these top 3 problems go away by using XYZ,” then wouldn’t XYZ be something that needs to be analyzed as an investment option?
What are your future needs, and what small chunks of those needs must be done first? Again, this is where you should bring in your IT consultant or project manager to help roadmap your future so that things can be taken in bitesize chunks.
Level of Service
Do you want a stable platform to grow on that will yield you agility and business continuity, or do you want a minimal viable solution? Many clients go for the minimal, cheapest solution as an initial kneejerk reaction, then end up paying three times the cost to keep things running down the road. Minimal solutions end up costing more in the end.
Failure Response Time
How long can your business (sales, production, shipping, billing, etc.) operate and afford to be down without your IT systems? A week? 1 day? 1 hour?
Failure Response Quality
How much data can you afford to lose in a hardware failure? If backups run every night, then a failure can mean a full day of data lost. That’s accounting data, design data, production data, order shipping data, sales order data, etc. Can you afford to lose a full day of data? A week of data? 2 hours of data? 15 minutes of data?
IT is Integral to Your Business
Business today relies so heavily on IT for everything that you are investing in your business. You aren’t buying a stapler. Everything that your company needs to operate (phone system, email, files, accounting application, line of business software, shipping software, etc.) relies on that technology. There are a lot of investments to be made to avoid lengthy downtimes: better switching, redundant servers, business continuity efforts, virtualization, cloud-hosting apps where appropriate.
Yes, $75,000 might get you another estimator for a year. That $75,000 investment will also drastically improve the estimation system that your estimators (and the rest of your team) rely on for several years to come. You have to work with your consultant and decide the value. Having another George for a year might help drive up some revenue. Improving the network, the server infrastructure, and the business continuity solutions increase speed and productivity for everyone, give you a better and faster backup and restore solution, and give you some redundancy in the event of failure. Hardware or software failure happens to everyone, no matter how sweet the system is. The winners can bounce back and be up and running very quickly when a failure happens.
IT is your business now. You depend on it to enable you to work at a modern pace. IT planning and budgeting should never be done in a vacuum. Have your IT consultants work with you and your board to come up with your five-year plans.
Your Business Needs More Agility
You need IT to move at the speed of business. You’ve got some great marketing ideas, and you need IT to deploy a new system, but they are tied up with supporting Janet’s old version of Outlook and Bill’s printer. You need to install a new document management system, but your IT team is fighting with problems after your ERP system upgrade. Your new app must be launched. You need to extract sales reporting data. You need a lot done, and IT is scurrying. It is most likely that poor planning and decision making has led to this point, and much of it revolving around cost.
Look at all the scurrying and the failure to deliver and decide the cost to the business.
Unrealistic IT Expectations
You need IT to do more and more, faster and faster. At the same time, IT budgets and the sizes of IT teams are getting smaller. There is incongruity here. I noticed many companies buy spare forklifts and forklift batteries, investing hundreds of thousands of dollars, but they won’t invest in server upgrades or new switches.
One customer said, “I know tech is changing, but I cannot be expected to replace hardware every five years.” My response to that was, “Servers have usable life expectancy of 3-5 years these days. Running your business on a server that is 5 to 10 years old introduces risk, especially without a good business continuity plan in place.”
It scares me that some people consider a new server to be a piece of their infrastructure that will never need to be replaced. They think it is a one-time purchase and that it will outlive them. These sorts of unrealistic expectations almost always make IT look bad, because we can never meet these expectations. Please work with your IT consultant to come up with realistic expectations and a realistic annual budget based on infrastructure investment, software investment, and operational costs.
Cheap IT Vs Good IT
Just keep in mind that sometimes it is better to pay too much for something than too little. If you pay too much for something, you may have overpaid by a couple dollars. If you paid too little for something, it may not be the solution that you need, and it may not work for what you needed it to do. Cheap solutions tend to work as a band-aid but end up costing a lot to keep going in the long run.
When budgeting for IT solutions, just keep in mind where IT is positioned within your business and what areas you need performance from IT.
Involve your IT in your business decisions. Whether you have in-house IT or whether you outsource, have some open discussions and planning meetings with them. Bring in IT consultants or project managers if necessary to help you plan.