Business owners can optimize their infrastructure, leverage the cloud, and take other actions to cut IT costs and streamline their budgets. Reducing technology spending requires significant preparation and assessment to avoid costly consequences in the future. Learn more about the benefits and risks of cutting IT costs for company budgets and operations.
Is it a good idea to cut business IT costs?
Whether the economy is in good or bad shape, you and other business owners are likely looking for ways to optimize your budgets throughout the year. Technology expenses are typically one of the first items on the chopping block, but doing so is rarely a cost-effective move in the long run. Brian Schlechter, Director of IT at Bit-Wizards, explains that the main reason companies slash their IT spending is their perception of it.
"Many times, business owners consider IT expenses as just costs instead of benefits—something that needs to be paid instead of an investment that can improve your business," he says. "Replacing a computer is only seen as a $1,000 expense, even though it would help you work more efficiently and boost your profits."
Some of the misunderstandings about IT costs relate to how well technical personnel can explain the value. The long-term results are another aspect, as the payoff of a technology investment is rarely immediate. Combined with other factors, IT budget cuts are mistakenly made without a complete understanding of the impending impacts.
What are the risks of putting off IT costs?
Schlechter compares delaying IT spending to postponing car repairs. If your car starts making a funny noise but still gets you to and from work, you could keep driving it without getting the issue checked. The repair would've been affordable early on, but leaving it caused additional damage that raised the cost exponentially. Schlechter emphasizes that leaving IT issues unresolved can create hidden problems and costs.
"If your computer is slow but doesn't have other issues, you could kick the can down the road and wait until it works at a snail's pace to replace it," he says. "What you may not realize is that the slowness of your computer is causing lost productivity, meaning you're losing time and money just to avoid an inevitable expense."
Are there risks for eliminating certain IT expenses?
In the same comparison, stopping certain payments for aspects of your IT can be like canceling an insurance policy. Going a few years without an incident can make it seem like car insurance isn't worth it, but the cost of getting in an accident without a policy can be catastrophic. If you get rid of cybersecurity protections, Schlechter believes it's incredibly more difficult to recover if you experience an IT security failure.
"From phishing attacks to other trending cyber threats, the risks of becoming the newest victim of a cyberattack or data breach are always on the rise," he explains. "Any measures that boost the security of your data are vital, even if you don't think they're worth it, because it's almost guaranteed that something will happen that compromises your business."
What IT costs should stay in my budget?
While some expenses can be avoided, IT costs that protect your data should be considered necessary and automatically included in your budget. Any measures in your business continuity and disaster recovery (BCDR) plan that shield your employee and customer files from bad actors should remain part of your budget. Schlechter says one of the biggest budget mistakes business owners often make is cutting their backups.
"If a company pays for backups for five years and never has to restore their files from one, they may think they can stop paying for them since they've been unnecessary until then," he explains. "Your backups cover you in the event of a hurricane, cyberattack, or other incident, so they're the last thing you should cut to save money on your IT."
What are some productive ways to cut IT costs?
Before you look for ways to reduce your IT spending, it's essential to identify and evaluate your current expenses that go out on a monthly, quarterly, and annual basis. Having a clear understanding of what you pay for is the only way to make meaningful cuts that help you save money. Once you're prepared, here are 4 ways you can cut your business IT costs and prioritize expenses that add value to your operations.
1. Check for untouched or overlapping software and licenses
Licenses and subscriptions for programs like Microsoft 365 are often paid based on the number of users. Additionally, many programs offer similar features that may overlap with other licenses you pay for. Schlechter says a great place to start with IT costs is by regularly right-sizing your recurring software expenses to meet the needs of your team.
"As employees are onboarded and offboarded, you need to check that the licenses you pay for are actually being used," he shares. "You should then go a step further by checking for any duplicate functionality, as some tools offer features that enable you to consolidate payments and eliminate redundant programs."
2. Use the cloud as much as you can
The cloud offers cost benefits for many industries and situations, so it's a great tool to leverage when making productive adjustments to your IT budget. Instead of purchasing and maintaining on-site servers to run your email or other IT elements, using the cloud instantly helps reduce capital expenses. Schlechter believes one of the more cost-effective traits of the cloud is how it boosts your scalability.
"If your business depends on an on-prem solution, it takes a lot of time and money to adjust if your team expands or shrinks," he says. "With the cloud, you can click a few buttons to adjust your operations and processes within minutes instead of days or weeks."
3. Replace outdated devices and programs
Using outdated hardware and software can seem like a money-saving move, but the resulting downtime can quickly result in significant amounts of lost time and revenue. If you're using laptops or programs that are past their "best by" date, consider replacing them to ensure your business runs at full speed. While the cost of buying replacements seems excessive, Schlechter says doing so often boosts your operational efficiency.
"You may be tempted to buy a replacement part for an older device or go without support for a legacy program, but it almost always costs you more in the long run," he explains. "If you take IT troubleshooting out of the equation, your employees can work faster and more efficiently without being held back by slow technology elements."
4. Evaluate if you're overpaying for IT resources
While you're often told to get the latest and greatest in internet speeds and device models, it's not always necessary or well-suited for your business. Top-of-the-line IT resources usually come with matching costs, so it's essential to ensure you're only paying for the resources you truly need. Schlechter says one of the first things to check is your internet speed and whether your network uses all of it.
"We've onboarded clients that were paying for internet speeds of 2 Gigs, not realizing that their firewall could only handle speeds of 1 Gig," he shares. "You may not realize that your infrastructure isn't compatible with what you're paying, so looking there first is an easy way to check if you're overspending and can reduce the expense."
Get the most value from your IT with Bit-Wizards
Reducing your IT spending can feel like playing a game of Minesweeper - if you make the wrong move, your business could suffer short and long-term consequences. When you're not sure where to turn, working with a managed service provider (MSP) can give you expert guidance while reducing operational and security risks. If you want to take these benefits to the next level, Schlechter recommends outsourcing your IT.
With Managed IT Services (MITS) from Bit-Wizards, your business can leverage cost-saving assistance that goes above and beyond standard MSP offerings. Our Wizards can help you understand what you're paying for beyond the price tags and invoices, ensuring you have cost-effective solutions. Combined with a fixed expense that includes help desk support and more, your IT costs are more stable and easier to anticipate.
Ready to stop overpaying for IT that doesn't work? Get in touch.