Every business goes through cost cutting. When there is a downturn in the economy, cutbacks are a way to keep a company afloat. So when the global pandemic shut down the US economy, company leaders must have thought long and hard over where they could cut costs.
While many Florida business owners decided to put their employees first, that meant slashing costs in other aspects of their businesses. And the IT department isn’t immune to cutbacks. A lot of business owners view technology as an expense that can be put off or downsized — buy secondhand equipment, turn to cloud computing, or use open-source software, to name a few examples.
However, IT cost cutting is quite challenging, because you need to save on costs without sacrificing the essentials.
What are the common mistakes when cutting IT costs?
IT departments often cut costs because upper management instructed them to. The usual practice is to cut across the board. But this leads to indiscriminate slashing that often harms essential IT operations.
If you need to tighten your IT budget, you need to make intelligent choices. And knowing what not to do is as important as knowing what to do. Here are the common pitfalls to avoid when cutting IT costs.
Mistake 1: Cost cutting evenly across the board
This kind of cost cutting is lazy and does not consider priorities. There are essential technologies that cannot be sacrificed. So you need to decide which technologies are your must-haves and only cut the ones that aren’t a priority.
Mistake 2: Letting go of your staff because of automation
It’s a common mistake to view automation as the reason for letting employees go. In reality, automation speeds up mundane or repetitive tasks, allowing your employees more time to work on things that matter. So you shouldn’t get rid of your valuable employees. Instead, keep them and move them to other aspects of your business that also maximize their strengths.
Mistake 3: Eliminating your training budget
Like all departments, IT requires training, whether by attending seminars and conferences, purchasing books, or taking online courses. Technology changes rapidly — just look at how the Internet of Things and 5G are shaking up the tech world. If you choose to do away with training your IT staff, your business will fall behind your competitors.
Mistake 4: Slashing research and development (R&D) budgets
R&D fuels the rapid changes in technology. Yet it’s often the first one to be reduced or eliminated. Same as with your training budget, keep your R&D budget intact because it will keep your business thriving.
Mistake 5: Taking a shortsighted view of the cost cuts
When thinking of which costs to slash, you should always remember important future costs that your business cannot do without. For example, if you take out your maintenance budget, you’ll end up in deep trouble should a piece of critical equipment malfunction.
Mistake 6: Overextending the use of old hardware
It’s risky to delay replacing old hardware. It will cost you more if it breaks down on you. Don’t put off replacing hardware even if it’s still functioning. You’re not really saving money — you’re setting yourself up for a more costly mistake that can disrupt your business or cause further damage to your network.
Mistake 7: Reducing your cybersecurity
Many business leaders look at return on investment (ROI) to justify cutting costs. A common victim of this line of thinking is cybersecurity. IT leaders cannot justify cybersecurity’s ROI — that is, until their business experiences a data breach or a cybersecurity attack.
Mistake 8: Failing to get customer feedback first
In a budget cut, the IT department decides which goes and which stays. Unfortunately, IT leaders often fail to consult the very audience they need to satisfy — the customers. As competition heats up, customer loyalty becomes a bigger priority. So before making any changes, do a test run with customers first and get their feedback.
Mistake 9: Settling for cheaper, low-quality services
During cost cutting, the cheapest bid often wins over the best bid. Avoid falling into that trap. After all, the cliche “You get what you pay for” holds true here. You’ll end up disappointed and paying more in the long run.
Mistake 10: Choosing the wrong outsourcing partner
It’s tempting to outsource everything as a way to cut costs. But if you’re not careful in choosing your outsourced IT partner, you may end up with one that provides you with cheap products and services that, in the long run, are costlier to manage and maintain.
Making intelligent choices — it applies to both IT cost cutting and picking the right outsourced IT partner. For the latter, you can’t go wrong with choosing a managed IT services provider that’s been trusted for over 20 years in the Tampa, Sarasota, and Orlando areas. Let our IT specialists at HERO Managed Services, LLC help you with your IT cost cutting, making sure you don’t commit any of the mistakes listed above. What’s more, we’re a one-stop shop that can provide all your business IT needs. Contact us today and get a free IT consultation.