How to review your IT costs

Stack of coins and ruler, indicating reduced costsYour IT system is an essential part of your business operations, and therefore worth investing in. But how can you make sure you aren’t spending more on IT than you need to?

In order to assess the cost-effectiveness of your IT, start by simply thinking about what your business uses it for.

“Look at it from a business perspective, rather than a technical one,” says founder of Macnamara IT, Ciaran Kenny. “Your IT is basically a communications system, so think about what data you need, and who needs to access it, including customers or suppliers.”

For example, a shop might only need a till and a PC with an accounts programme, while an architectural practice might need to share 3D design documents and store a large amount of data.

Next, ensure that you and your staff are making the most of your existing IT. “A lot of firms don’t know what the IT they have can do,” says Kenny. “A common mistake is to buy services like ‘Log Me In’ which allow them to access their computers from anywhere, when their server already has this capability.”

Manage your IT costs

You have three options for an IT system. You can install a traditional server onsite, use online, or ‘cloud’, services, or use a mix of traditional and online services.

If you want to keep a network server onsite but use some open-source software services, a range of free online options exist — for example, Google Drive provides account users with up to 15GB of free storage and Microsoft Office Online allows you to view, edit and share documents from anywhere.

“However, with more than five employees, this kind of system becomes difficult to manage, as it involves multiple service providers and log-ins,” warns Kenny.

Cloud services can be effective for firms that don’t deal with large files. They can also help you manage your cashflow better as there are fewer upfront costs, although Kenny warns that they will not necessarily save you money in the long term.

For example, Microsoft’s Windows Server 2012, is physical server software which includes email, file-sharing, security and a basic messaging facility. It costs from around £500 to buy – and you’ll probably have to budget for a hardware server to run it on too.

The company’s small-business cloud service, Office 365, costs just £3.10 per user per month.

“Cloud computing just shifts the way you manage your IT costs and means you’re spending on overheads, rather than capital costs such as a server,” Kenny explains.

He estimates that outsourcing IT maintenance costs between £20 and £50 per user per month. “If you have more than 20 employees, it becomes necessary to outsource your IT as you can’t be an expert in everything,” he adds.

Get your money’s worth from your IT supplier

Focus on whether potential suppliers have an understanding of your business, trusting that they have technical expertise.

“Before signing a new contract you need a period of consultancy where you pay them to spend time with your firm for a few weeks to assess your needs and priorities,” he adds. “Build a relationship to get good value.”

To review your IT system externally, you will need a consultant to come in for around three days, at a cost of around £400 per day.

“An external review could present you with cost-saving possibilities that you wouldn’t otherwise know about,” says Kenny.

“But if you want to do it internally, deciding whether your IT costs are justified goes back to the question of access,” he concludes. “There will immediately be efficiency gains for the business if everyone who needs to get to your information when they need to can do so.”

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