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Why Your Business Is Overspending on IT, and How to Fix It

Why Your Business Is Overspending on IT, and How to Fix It

Why Your Business Is Overspending on IT, and How to Fix It

The IT department of your business is crucial for its operations, providing the technology resources and support all your other departments need to make your organization successful. Because of this, many organizational leaders see IT as an untouchable sunk cost.

Here’s the problem: many businesses are habitually overspending on IT, exhausting their budgets and fully tapping their labor force unnecessarily. True, you don’t want to make compromises when it comes to resource availability or security, but most of the time, overspending comes from a handful of procedural and philosophical issues that can be somewhat easily remedied.

These are some of the most common reasons why businesses overspend on IT.

No Clear Plan

Many organizations have no clear, overarching plan for their technology infrastructure or how it’s going to grow in the future. Instead, they cobble together a sequence of reactionary decisions, only investing in new people and new technologies when pushed to do so – and creating a disorganized infrastructural mess in the process.

Smart businesses plan ahead, with a clear vision for how they want to create the technology infrastructure for their business and enough foresight to make that infrastructure easily scalable. If you’ve already suffered from a lack of planning, consider tearing down and rebuilding from scratch.

Exclusively Internal Resources

There’s nothing wrong with wanting an in-house IT team; internal resources are incredibly valuable, since they tend to be highly accessible and easier to coordinate with. However, many business leaders underestimate the value of working with third party vendors and external resources.

In reality, outsourcing various IT functions is typically more effective and more cost-efficient than relying exclusively on internal resources. Working with consultants, leveraging third party IT services, and generally outsourcing to the best professionals you can find will usually save you money and headaches in the long run.

Lack of Analytics and Documentation

How is your network organized? How is it performing?

Without adequate documentation and analytics in place, you have no real way of answering these questions. And if you don’t even know if your network is performing optimally, how could you begin addressing the problem?

Network analytics, ongoing monitoring, and occasional audits via network mapping can all help you better understand how your IT resources are connected to each other – and proactively diagnose potential issues. This is a small investment that can save you a lot of money in the long run.

Hardware and Software Bloat

The term “software bloat” typically refers to successive versions of a software platform becoming slower over time, but it can also refer to excessive numbers of programs encroaching on a given technological system.

Over time, many IT departments gradually accumulate hardware and software without really thinking about how it adds organizational value. Over the course of several years, your organization could be left with a bloated mass of hardware and software that isn’t truly necessary, but is costing you lots of money on an ongoing basis.

Unnecessary Complexity

Sometimes, network complexity gets out of hand. If your resources are chaotically coordinated, or if you don’t have a streamlined system in place, it can cost you in terms of productivity, performance, accessibility, security, and more. The best IT departments rely on straightforward, minimalistic, and scalable systems that make the lives of the IT professionals who work there much easier.

Poor Vendor Management

Sometimes, overspending is a direct consequence of poor vendor management.

For example:

  •       Lack of due diligence. Due diligence is vital before choosing to work with a new vendor. If you choose the wrong products and services for your organization, you could end up paying too much money for things you don’t really need. You could also end up working with an unreliable vendor, or one with major security vulnerabilities that cost your organization dearly.
  •       Unfavorable agreements. Even good vendors sometimes have unfavorable agreements in place. You could easily spend too much money on necessary products and services, or end up with resource shortages that force you to seek out additional agreements with other vendors.
  •       Excessive commitments. Even worse, some organizations get trapped into agreements with excessive commitments. They may be contractually obligated to work with a certain vendor for many years, despite the arrangement being prohibitively expensive.

Reliance on Manual Actions

These days, many IT departments end up overspending simply because they’re not leveraging the full power of artificial intelligence (AI) or automation. Automation can practically eliminate some manual actions that would otherwise be necessary from your IT team, saving you time, saving you money, and reducing the possibility of human error.

Is your business spending too much money on IT? It’s entirely possible. But the only way to know for sure is to conduct an assessment, potentially with an IT consultant at your side, so you can diagnose your spending issues and work to resolve them.

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