Hidden Costs in Information Technology

26.04.19 01:10 PM Comment(s) By Peter

How does a False Economy develop in Information Technology?

Having worked in the Information Technology industry for nearly twenty years in areas of senior management in Enterprise and as a consultant I have seen this in action many times to the detriment of the businesses that carries it out.


So what is a False Economy?


One definition is:

  • an apparent financial saving that in fact leads to greater expenditure.
  • example "do not skimp on batteries, it is a false economy"


How is this evident in my experience?


It can come in many forms such as the business getting an untrained and unskilled staff member to:


Carry out medium to complex technical tasks.
Advising business on their I.T. strategy.
Advising business on what types of equipment to purchase.


These are just a few examples and there are many more variations. When I see this occurring I am always amazed and try to understand the logic. At the root of it could
be a wide range of reasons such as the business does not want to pay for a skilled IT person or the business thinking they are saving money, maybe the business has had a bad IT support experience and has lost trust in service providers.


If one steps back and views these decisions holistically it can be seen that in fact the business will be losing money by:


Incorrect solutions or applications being purchased.
Extra costs involved getting an experienced company to correct the systems that have been implemented.
The systems failing or inefficient due incorrect implementations.
Lost productivity and staff frustrations.


The above are just some possible ways business can be affected.


Some real world examples:


A lawyer business wants to implement a service utilising Office 365 but they want to do this themselves.

When you look at the hours spent on setting this up and testing when they have no or minimal IT experience the hours spent by the business will be greater. Then looking at what the business is charging out per hour to their clients and comparing that to what an IT company would charge it can be seen this is a “False Economy”

Then consider the work backlog generated by the staff not doing what they are employed to do.


A business employee is tasked with working on the I.T. strategy for management but this person has no or minimal IT experience. The business ends up with contracts signed for solutions that actually do not fit in with the business holistically. The end result can be multiple systems implemented to get to the desired target. “Band aid” solutions are then implemented to fix up what should have been implemented correctly in the first place.


Whatever business you are in would you get someone who is not skilled in your area of expertise to implement or guide other people or clients on what to do?

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