Can you even imagine a world without technology? It’s hard to picture when we often exchange the phone in our hands only to pick up our laptop. Technology helps us to communicate with others and the objects around us. Our phones let us check our security system, lock up our house, gain access to our office, and check email.
When we look around today, Information Technology (IT) has permeated every aspect of our lives and our businesses. It helps us solve problems, create opportunities, and establish automation to create efficiency. However, we have become so reliant on it that we understate its benefits.
As a result, we often view IT as a commodity, not a value. When evaluating budgets, organizations often question the cost of IT and the return on investment that it provides. In this post, we’ll discuss the primary factors contributing to IT costs and ways you can optimize your technology spend.
As you might expect, many factors contribute to overall IT costs. Though they may vary across industries and organizations, the following four contributors significantly impact businesses and receive a lot of attention.
Contributors to IT Costs
1. Rising Costs of Hardware & IT Services
You can’t help but notice the rising cost of almost everything in recent years. Unsurprisingly, IT hardware and labor costs have also been pushed upwards between supply chain issues, inflation, and labor shortages.
Increasing costs have led many businesses to scrutinize their IT budgets, among others, to ensure a return on investment for their spending. However, it’s essential to consider the cost of not spending adequately on IT.
2. Importance of Cybersecurity
Any IT work, whether launching a website or building a global network, exposes your business to the risk of cybercrime. You’ve undoubtedly read articles about the cost of cybercrime and its impact.
According to Statista, the average cost of a data breach in the United States in 2023 is expected to be $9.48 million US dollars. And the estimated cost of cybercrime is projected to increase significantly.
Protecting all systems and networks from unwanted digital attacks is essential, and cybersecurity must be a top priority for all businesses. Not only does cybersecurity help to protect your organization from financial attacks, but it also blocks disruptions to your business.
3. Leveraging Emerging Technologies
Changes in technology and emerging technologies also impact overall IT costs. While we can plan for some technological advances, we can’t plan for everything. Software designed for current needs eventually becomes outdated, often requiring costly updates.
New technologies may create opportunities and improve efficiency, but they come with a cost. Artificial intelligence (AI), machine learning, cloud and edge computing, and other advanced technologies offer tremendous value at a significant cost.
According to McKinsey, corporate investments in 2022 in advanced technologies were more than $1 trillion, demonstrating faith in their potential value. AI alone is projected to add as much as $4.4 trillion in value in the coming years.
4. Hiring Qualified People with Specialized Expertise
Hiring the right people with the right experience is vital when staffing your IT projects. Not only do they need to understand current technology, but they also need to keep abreast of industry trends.
If you don’t have the right expertise, you may deal with business disruptions and costly security breaches. Without an ability to understand current business needs with an eye to future technological advances, you risk not only not solving today’s problems or meeting the current opportunity but also the ability to transform your future.
What You Can Do to Optimize Your IT Spend
According to KPMG’s 2023 US Technology Survey Report, 65% of respondents said they must do more with less budget in 2023. If you’re fighting the same budget battles, you’re not alone.
Before you make changes, start with an internal assessment of your IT services.
This assessment should include hardware costs to internal and external staffing resources and processes. Anything within your IT budget and that IT touches should be evaluated to determine the value and return on investment.
This assessment will provide the foundation for change, which may validate the need for budget cuts, staffing adjustments, outsourcing, and more. Once you understand the costs and their ROI, you can then evaluate and compare your opportunities.
Are you looking for a team of technology strategy experts to help you optimize your IT spend? Our team here at Blue Tree would love to talk to you and explore how we can help by not only pinpointing the source of your technology challenges but designing, implementing, and supporting cost-effective solutions to help your business grow.