Rock IT

IT: investment or expense?

IT: investment or expense?

Why investment in your IT infrastructure will now save you money in the future

 

IT – from niche to necessity

In 1998 only 63% of businesses had a computer and just 6% had an online presence.* Business owners at the time considered IT a luxury.

By the mid-2000s, practically every business in Australia (97%) had access to the web and 46% placed orders via the internet.†

But while most companies understood the commercial power of the internet, not all of them recognised IT as the essential service it had become.

An unmistakable trend

As an IT provider since 2003, we’ve witnessed a trend over the last decade that’s been hard to ignore. Businesses that have approached IT as a critical productivity tool and invested in it intelligently have invariably grown. Those that have approached IT as a mere expense, a burden or a waste of time have stagnated, and in many cases disappeared.

Why? If your computer died or your server stopped working for an hour, what would be the impact? What about a day? Or a week?

Very few businesses today could say that there would be little or no adverse effect.

Downtime – the $3,000 question

When was the last time you paid more than $3,000 for a new computer? It sounds like a ridiculous question, but consider this simple equation:

A typical employee costs around $65 per hour (if you take into account wages, plus typical costs like power, water, insurance, computer, etc).

If they’re working on antiquated equipment, or if the computer they’re working on is affected by some kind of outage, they are less productive.

Think about a really common situation: a staff member using an old computer that loses you 10 minutes of productivity a day… such as slow to boot up and other slow processing times. Based on the figures above, you’re paying them $2,827.50 every year to sit at their desk waiting for their work day to start. That figure balloons to $4,241 if you lose 15 minutes of productivity a day.

If you have 20 staff who lose 15 minutes a day of productivity due to poor IT systems, that number blows out to over $85,000 a year that you are paying staff to do nothing.

Suddenly the $3,000 computer question doesn’t sound quite so ridiculous.

But what about a much larger failure of the IT system?

IT failure – the full costs

Immediate cost
The immediate cost of downtime – the cost of replacing hardware and hiring IT specialists to repair the outage at emergency rates – is significant. But you also must consider the immediate loss of effectiveness. If your company makes profit when all your employees are working above 80% capacity, how profitable will it be when 50% of the infrastructure is unavailable?

Catch-up cost
Once the outage has been repaired, your company needs to play catch-up. If you’ve lost data, you’ll need to regenerate it. If established customers have been affected, you’ll need to give them even more love and attention than usual. Your resources are focused on damage control, and it may take weeks or months – even years – before you can return to running your business as you normally would.

Long-term cost
It might sound overdramatic, but it’s simply true: most companies never fully recover from a serious failure in their IT infrastructure. According to a study in Financial Services Technology magazine, “80% of businesses suffering a major disaster go out of business in three years, while 40 percent of businesses that suffer a critical IT failure go out of business within a year.” The major reason? Data loss.*

Prevention is better than cure
Avoiding the costs detailed above comes down to how you approach IT. If you see it as an investment, and a preventative measure, you can decrease expenses and increase productivity. If you see it as an expense – something you only need to think about when a situation goes from bad, to worse, to potentially fatal – you put your business at risk.

Choosing an IT service provider 
If you’re reading this you’re probably no longer willing to rely on your “cousin’s best friend” or the local computer shop to provide your business’s IT support. Take your time choosing the right provider. Choose a company that has a good team and most importantly shares the same values as you and your team. Once you’re comfortable with your choice you can focus on what you’re best at – running your business.