The discussion of IT maintenance costs is a big one in the business world. The team at VC3/VC3 consults with organizations on IT department performance throughout the U.S. and Canada. When they do, IT maintenance costs almost always come up.
Our team is very familiar with the frustration of investing large sums of money into IT and the woes of not getting the expected results. To combat this feeling of loss, we help CFOs understand the different types of IT costs. We help them categorize the costs accordingly and figure out what their IT maintenance costs should be.
While there is no surefire way to pinpoint the exact dollar amount for your IT maintenance, here are a few ways to estimate the costs and keep your budget on track.
- Break Down IT Costs into Categories
- Keep Growth in Mind When Forecasting IT Costs
- How to Structure Your IT Costs
- Are You Investing in the Right IT for Your Business?
Break Down IT Costs into Categories
IT usually gets lumped into one broad category. Because of this, when CFOs crunch the numbers, there’s almost always confusion about how they could have spent SO much on IT. If you find yourself in this position, you’ll need to dig deeper into your numbers and create some categories.
Your spreadsheet could include categories such as hardware, software licenses, Internet, warranties, upgrades, etc. This list should get specific to your company. Work with your IT department or managed IT services provider to break down the correct cost categories for you.
Categorizing IT support costs can be very valuable to understanding where your money is going.
- Projects – Any upgrades or additional hardware/software
- Help Desk / End-User Support – This includes the cost of the vendor AND the cost of an employee spending time dealing with IT issues instead of working
- IT Maintenance – This area is left out of most forecasts. And yet it’s your greatest asset in preventing additional costs. This is network administration, patch management, backups, disaster recovery, etc. All the regular maintenance tasks that must be done to keep everything running smoothly
Breaking down costs by category is the only way to truly forecast expenditure. Perhaps last year was when a lot of workstations needed to be replaced, or it was the year that your company upgraded by purchasing tablet devices for all C-levels.
If costs are lumped together, your IT services fees might look outrageous. But, in reality, it was a project that increased costs for the year.
The goals of projects should be to advance the organization’s operations and standardize and improve your system environment so there are fewer failures. With the right maintenance routine, the lifespan of your technology can be extended, and the cost of IT maintenance will go toward productivity.
By removing all issues, people can work instead of being on the phone with IT.
Looking at last year’s numbers can give you a jumping-off point for creating an estimate. In some cases, you’ll know you can spend more; in others, you’ll need to dial back.
Keep Growth in Mind When Forecasting IT Costs
Sometimes things cost more, and it’s a good thing.
How much did your company grow last year? What are your company’s plans for growth in the coming year? More users equal more data. More data equals additional storage, which costs more.
If executives are concerned with rising IT costs, looking at recent growth and planned growth could help factor in and explain future costs and current price surges.
How to Structure Your IT Costs
Now that your list and cost breakdown has been formulated, creating a list of needs vs. wants is the next step. This list can be as lean or as large as you want it to be – just because it made the list doesn’t mean it’ll make the final cut.
Your managed IT services provider is a great resource to help you figure out your company’s needs. Ask them to do an assessment of your current system – what kind of upgrades do they suggest, what things are urgent, and which still have some time?
They should help you find a happy medium between your needs and budget.
Are You Investing in the Right IT for Your Business?
A good investment when it comes to your IT can sometimes be hindsight. In our consumer-based culture, wanting the latest and greatest technology can hinder growth. Your technology should serve its purpose while also being cost-effective. The total cost of ownership includes yearly maintenance of the product. There is a balance between maintaining productivity and keeping the cost manageable.
IT costs can be very confusing to figure out, much less compare. Breaking down your cost into categories and digging into the root of the expense can go a long way in helping you understand how your IT investment can give you a competitive advantage. Set up a meeting with your IT team today, communicate your fears, and check that everything is in line with industry standards.