How much does your IT really cost?

When I visit a prospective client for the first time, I always ask them how much they pay for IT. Their answer is usually the hard cost, the dollar figure that is on the check to their IT vendor each month.

When I ask them what their IT costs them each month/year, I usually get a puzzled look, like, “I just told you what it costs me.”

And therein lies the problem. Most people only consider the hard cost and very few people consider soft costs related to IT, but that is usually where you spend most of your money!

Hard Costs – Hard costs comprise the money you pay to your IT vendor plus the cost to replace hardware when it dies or hits EOL. Sometimes this is reactive work that must be done to get everything back to the state it was in before the disaster/crash/downtime etc. occured. When a server crashes and needs to be fixed, this is a hard cost. When a computer gets a virus and needs to be disinfected, this is a hard cost. When a disk drive runs out of space and has to be replaced, this is a hard cost. Hard costs are easy to calculate. Look at what you have spent to make repairs once you realize that something isn’t working right and you have your hard cost.

Soft Costs – Soft costs are a little bit trickier. Soft costs are those costs that impact your business, often severely, yet most people aren’t quite sure how to calculate them. When a your server gets hacked and they steal credit card numbers and you get sued (or lose the good will of your clients), that is a soft cost. When your server crashes and you have 50 employees not working, the payroll spent and lost revenue to the business is a soft cost. When your computers run slowly and waste even a few minutes a day of employee productivity, the lost sales are a soft cost. When your employees surf inapproriate websites and either aren’t productive, or get you sued, that is a soft cost. When you lose a 9 months of accounting data because a backup could not be restored, this most certainly is a soft cost.

Because I am so intent on reducing my business’ soft costs, we have created great value as a partner to reduce our client’s soft costs.

Here’s the great thing about most of the soft costs, while yes, they are sometimes difficult to calculate, we have created calculators!

Calculators