The Top Five Mistakes Business Leaders Make When Cutting IT Costs

Let's face it. Most executives don't think of reviewing or creating budgets as a favorite pastime. So, when business leaders cut IT costs to save a quick buck, or underspend on IT as part of a budgeting strategy to keep overall costs low, they often don’t realize how much this approach hurts their business. 

Underinvesting in IT increases risk, costs you more in the long run, and measurably impacts revenue, productivity, and customer service. More specifically, you can experience: 

• Fluctuating and unpredictable downtime costs

• Higher cybersecurity incident recovery costs

• A decline in productivity and business innovation

• Higher long-term spend from break-fix costs, compliance fines, and unplanned hardware replacements 

We’ve seen many situations where an organization has gotten into trouble from indiscriminate cutting. Here are the top 5 common IT cost cutting mistakes. 

1. Running outdated or underperforming hardware.

Many organizations often use aging hardware long after its ideal lifespan—whether it’s past the end-of-life date or simply old, slow, and struggling to keep up. It may seem like no big deal to use an old server for just a little while longer or install Windows 11 on a six-year-old computer. But doing so creates real business risks.

With older devices, performance declines. Employees will experience sluggish systems, frequent crashes, and delays opening applications that chip away at productivity and morale. Beyond these issues, you also introduce security risks. End-of-life equipment no longer receives security patches or vendor support, making it more vulnerable to cyberattacks.

Hardware used for a business should not be treated like an old car that you can drive past 300,000 miles. In addition to the risks above, when that hardware stops working you will be faced with unexpected (unbudgeted) replacement costs.

Do this instead:

• Keep an accurate hardware inventory report with expected replacement timelines.
• Budget using a 3-5 year lifecycle for each hardware asset—adjusting by device role and current technologies available.
• When end-of-life approaches, evaluate whether the device can support a major operating system upgrade (such as moving from Windows 10 to Windows 11).
  • If the hardware can meet the new requirements, upgrade the operating system to extend the life of the device.
  • If the hardware cannot meet the new requirements, replace the hardware with a newer on-premises model or consider transitioning the workload to the cloud to avoid future capital expenses.

2. Maintaining equipment that doesn’t fit your needs.

Buying equipment and then never thinking about it again can backfire if you don’t periodically evaluate your assets. For example:

• We’ve found that organizations often have servers they don’t need or are not using effectively. There are added costs associated with a server, such as the cost of the physical space to house it, the cost to support it, and the electrical costs to power it. If you reduce the number of servers you have, these costs go down.
• Many options exist when it comes to laptops and desktops, and with these options comes a wide range of prices. Employees may need different systems with different specs depending on their job responsibilities. Organizations often take a one-size-fits-all approach—resulting in both overspending and underspending.

Do this instead:

• Inventory your existing IT assets to determine if they are fully utilized or overkill for your needs.
• Consolidate assets and/or migrate them to the cloud.
• Map employee roles to device standards (such as devices needed for basic office work, power users, field work, etc.).
• Standardize SKUs with clear specs and prices to prevent ad hoc purchases.
  
  

3. Thinking of IT as just cost.

A common mindset that lingers from the early days of IT is when business leaders see information technology as only a cost center. There are a few common reasons for this mindset: 

• IT seems to produce intangible and/or delayed returns.

• Business leaders have been burned by costly, overdue, and/or disruptive IT projects.

• IT stakeholders often talk tech instead of strategy to business leaders.

• IT maintenance and overhead costs are more financially tangible than ROI.

• IT costs grow faster than many other budgetary line items. 

However, modern IT is no longer just “overhead.” Strategic technology investments can directly increase revenue, reduce operational friction, and create competitive advantage for businesses. 

Examples include: 

• Decreased downtime leading to more billable hours, increased sales, and better customer service.

• Modern infrastructure making employees work faster and more productively.

• Automation and modern platforms improving the customer experience.

• Strong cybersecurity best practices protecting your revenue and reputation.

• Compliance certifications becoming a competitive advantage.

• Data insights helping you make smarter, faster decisions.

• Cloud adoption reducing capital expenses and enabling agility. 

Do this instead: If you want to reverse your mindset about seeing IT as only a cost center, it helps to create a strategic IT roadmap that outlines priority projects, expected business outcomes, revenue-impacting opportunities, and critical gaps. From here, you can estimate costs, justify your investments, and build a timeline that works for your budget. 

4. Hiring a Jack or Jill of all trades.

It may seem cost-effective to hire a (cheap) junior IT employee who does everything—from IT support at an employee’s desk to managing your servers. However, this tactic can backfire as your employee becomes overwhelmed, struggles to keep up with baseline IT best practices, and lacks important knowledge.

Do this instead: IT is a specialized field and no one person can do it all. Instead of a hire-only strategy, many organizations are better suited for outsourcing their IT to save money and improve performance. Instead of your organization trying to squeeze the work of four IT employees out of one overworked person, you can outsource IT to a managed services provider that gives you access to experts for much less than the cost of a salaried employee.

🔎 Related Post: Trying to figure out how much IT support contracts cost? Check out this managed IT services cost guide.

5. Neglecting cybersecurity.

Cybersecurity isn’t tangible. We get it. As a result, it feels like something you can put off for another time. But cyberattacks are happening more often, growing more sophisticated, and devastating businesses that get hit. In a Microsoft‑partnered independent study, the average cost of an SMB cyberattack was $254,445, with costs reaching as high as $7 million for some companies.

Also, consider downtime from a cyberattack. According to Coveware data, SMBs hit by ransomware experience an average of 21 days of downtime. Can your organization afford to be inoperable or highly degraded for three weeks?

It’s crucial to have a strong cybersecurity defense in place to protect your organization. The financial, legal, and reputational consequences of a cyberattack far outweigh any incremental gains trying to save money by not spending on cybersecurity.

Do this instead: Perform a cybersecurity assessment, identify your most critical gaps, and begin to address foundational cybersecurity measures. At a minimum, you absolutely must invest in:

• Endpoint detection and response (EDR)
• Multifactor authentication (MFA)
• Patch management
• Security awareness training
• Data backup

🔎 Related Post: Multi-factor Authentication: Why Passwords Aren't Enough

How Do I Balance Costs and Prioritize Needs?

So, how do you balance the IT needs of your organization when faced with the reality of needing to cut costs? What areas of IT can you cut without impacting your organization and employees? Organizations often make mistakes when trying to cut costs because they lack strong IT guidance and only focus on the bottom line.

With a well-thought-out, planned, and executed IT budget, your executive team will save time and money. Additionally, when an unexpected failure does occur, it's a more comfortable conversation because it's actually an exception.

As a leader in your organization, resist the urge to pull out your red pen and slash the IT budget. While it may be tempting to postpone projects like hardware updates or cybersecurity upgrades, it’s not that simple. Start with a more structured and deliberate approach.

Common Questions About Cutting IT Costs

How often should SMBs refresh end‑user devices (such as desktop computers and laptops)?

Most organizations plan on a 3–5 year cycle based on employee roles and workloads. High‑demand and power users often refresh devices sooner.

What’s the fastest way to cut IT costs without adding risk?

Eliminate redundant and/or underused IT assets, shift on-premises infrastructure to the cloud where applicable, and use a managed services provider.

How do I prove IT ROI to finance?

Tie every IT investment to a business goal. Quantify your ROI by aligning with metrics related to operational efficiency, risk reduction, and strategic impact.

When does outsourcing to a managed services provider beat hiring a full-time IT employee?

It’s ideal to shift toward an MSP when you need multi‑disciplinary coverage that exceeds one full-time employee’s capacity and skills.

What are the must‑have cybersecurity controls for SMBs?

EDR, MFA, patch management, security awareness training, and data backups.

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If your organization is struggling with growing IT costs and no solid plan, it’s time to consider a strategic IT partner. We can help your organization find the best IT solutions for your budget while building an IT roadmap that helps your business grow. Contact us today to begin mapping out your IT budget.

TL;DR

Cutting IT spend without a plan often increases total cost and risk. The five big pitfalls are delaying end‑of‑life hardware replacements, maintaining equipment you don’t need, treating IT as a pure cost center, relying on a single “jack‑of‑all‑trades” as your IT resource, and neglecting cybersecurity. A lifecycle plan, right‑sizing assets, a business‑outcome‑driven IT roadmap, a managed services provider, and foundational security (EDR, MFA, patching, training, backups) keep costs predictable, uptime higher, and cyber risk lower. Use a structured budgeting approach to prioritize near‑term fixes and long‑term investments, and then track outcomes against your roadmap.