Head in the Clouds – Common Reasons Why IT Costs Go Sky-High

Three Business Blog Team
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On: 9 Apr 2015
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IT budgets have been frequently frozen or even cut in recent years, while the CIO is still expected to deliver the same level of service. Little wonder then that so many businesses blow their IT budgets year after year.

In a cost-conscious world, budget compliance is essential. Just like any other business function, IT has the potential to go spectacularly over-budget. So what are the common reasons for IT overspend to be wary of?

Inefficient systems

One of the biggest drains on your IT budget is maintaining existing, ageing technology. This leaves only a small amount of budget to cover emergencies or more importantly, business growth. Worse still, this high spend on existing infrastructure stifles innovation, leaving almost nothing for investment in future technologies that could deliver greater cost savings or efficiencies in the long-term.

The answer is to replace and consolidate systems that are disproportionately expensive. This could mean upgrading software, retiring aged and inefficient systems, or adopting new cloud technologies that cut costs and shift towards an operational expenditure model.

Failing to embrace BYOD properly

Mobile devices are amazing for boosting productivity and there’s certainly an increased expectation among employees to be able to take their own smartphone, tablet or any other device into work. However, controlling access to corporate resources to reduce the risk of data loss or theft is incredibly important. The benefits of Bring Your Own Device (BYOD) are many, but they must be tempered with a proper management strategy.

Businesses that do not embrace BYOD are missing out on cost-savings, efficiencies and productivity boosts. Those that do adopt BYOD without proper controls will find their IT administration costs quickly escalate to budget-breaking levels.

“A huge problem of the BYOD phenomena for IT personnel is that handling BYOD issues diverts IT attention from other important projects”

 Cisco research

Insufficient support provisions

Like any resource, too much or too little directly results in budgetary waste. Where many businesses try to lower IT costs by operating with a skeleton staff, they could in fact be incurring unnecessary costs as a result.

“IT debt is defined as: the cost of clearing the backlog of maintenance that would be required to bring the corporate applications portfolio to a fully supported current release state.’”

 Gartner

Some reports suggest that IT project backlogs increase by 20% per year, meaning that a fifth of projects are never completed due to insufficient staffing levels. Think about it; businesses are not only failing to keep up with and capitalise on technology developments, they are constantly falling behind more and more. Headline IT costs may be lower but the wider cost to the company could be massive.

Less is always less

The reality is that simply cutting IT budgets will always lead to reduced levels of service and additional costs elsewhere within the business, unless budget cuts are backed by a proper strategy. To avoid these common budget busters, your business must:

  • Replace existing, inefficient systems.
  • Create a managed BYOD policy that balances the needs of users and the business.
  • Re-assess IT headcount reduction against the IT backlog.