Technology and SMBs
Contrary to what you may read, IT costs don’t necessarily have to skyrocket as your business grows. Small and medium sized businesses (SMBs) just have to be more cognizant of where their technology investments are going and what they’re truly getting as return on their investment. As businesses rely more than ever on technology for day-to-day functions, managers realize that they simply cannot afford the lost productivity, lost revenue and the negative impact on business reputation that comes with a downed system or network. At the same time, many businesses can’t justify the costs of employing any full or part-time IT support given today’s economy. In fact, many small-to-medium sized businesses choose to pay for on-site support on an as-needed basis as opposed to having one or several dedicated IT employees on payroll.
With the recent buzz about the potential benefits and cost savings of virtualization software and cloud computing, many SMB executive teams are rethinking how their technology investments are currently allocated. Two things you’ll find many technology dependent peers focusing on today are a greater return on investment (ROI) and a lower total cost of ownership (TCO).
ROI is calculated by dividing the cost reduction and avoidance realized over a period of time by the total amount invested over that same time span.
Total Cost of Ownership (TCO) is most commonly related with four categories in the business/tech world.
- Downtime – Smart executives ask themselves “What does it cost my business when my employees, extended teams and/or our customers can’t get to the data they need.” Downtime includes ALL costs linked to server downtime – both planned and unplanned – along with mostly hidden soft costs that aren’t necessarily easy to quantify such as lost employee productivity and business as a result of downtime.
- Hardware and Software – The price of the server, hardware and software purchases, contracted tech support and maintenance, training services, upgrades, and backup and virus protection software.
- IT Operations – Network and storage infrastructure, server deployment and configuration, data center power and cooling, and other system-related administrative tasks.
- Business Administration – All costs related to business processes like labor costs, purchase approvals, vendor contract negotiation and procurement process tracking.
As referenced earlier, small-to-medium size companies can be severely understaffed when it comes to IT support. With so many technology changes emerging in recent years, this puts your businesses at an increased risk for network failure, data loss and security threats – all of which can be enough to put an ill-prepared company out of business.
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