Budgeting for Technology

 

 

A major failing of small businesses is their lack of planning each financial year.

 

Even those that do set budgets each year, forget or ignore budgeting for Information Technology, instead adopting a reactive "band-aid" policy which ends up costing far more in downtime and repairs.

 

This report is designed to help small businesses budget for their IT needs.

 

 

 

There is a tendency to treat business computers like televisions or similar technology. That is:

You spend money to buy them, then should get 1-3 years of trouble-free use before they die and need to be replaced.

 

Whilst this is not too far away from the truth as far as the HARDWARE is concerned, it is entirely wrong in terms of the software on your computers.

 

Software like Microsoft Windows or Office is a complex mix of the result of tens of thousands of programing hours, done by hundreds of different programmers. Then other company's complex software applications are developed and run over the top of that.  The whole lot runs on a collection of hardware which might have as many as 50 different component manufacturers. All this creates a computing environment which SHOULD work really well, but in reality, contains quite a lot of bugs which impact the performance and stability of your computers.

 

The solutions to these bugs are released frequently in the form of Patches and Service Packs.

A patch is a repair to a piece of software that fixes a recognised flaw in the operation or security of a program or operating system. A Service Pack is a large number of Patches, rolled up in to one installation.

 

Some flaws affect very few people. Some flaws discovered are MAJOR problems for business owners. The famous DCOM RPC flaw found in 2003 was the method used by the BLASTER worm to spread incredibily quickly, and it brought a huge number of businesses to a standstill. Antivirus software did NOT keep it out!

 

 

If you treat your computers like TVs, your business WILL suffer. Your computers need regular servicing, especially the software.  The good news is that the patches and Service Packs are released free by the software manufacturers, but we do recommend that you have them installed by a professional.

 

Sometimes the problems are not fixed by patches, but by adjustments to the configuration of the software.  There are vast online databases of the symptoms and 'workarounds' for these issues, and they can often only be properly repaired by a skilled engineer.

 

 

So you now know that you need to expect costs beyond the upfront purchase of your IT equipment.

 

 

For larger businesses, it is common for a full time techician to be assigned for every 50-70 desktop computers in use by company staff.  This is sometimes increased depending upon the exact operations of the company, and the number and type of servers they run. A network administrator will earn a minimum of $45,000 pa and can be up to $70,000 per year, plus oncosts and overheads of perhaps another $10,000. This full time staff member does nothing more than MAINTAINING the network, and upgrading where required.

 

You can therefore safely assume that you will need to spend a fraction of that cost each year on maintenance, depending upon the number of computers in your business.  See below for the approximate yearly costs for keeping your computers running smoothly.
(Prices are for QLD. Other states can expect to spend 10-20% more).

 

 

    50                        2                $36,000

    30                        2                $24,000

    15                        1                $12,000

    10                        1                $  9,000

     5                         0                $  3,000

 

 

 

 

 

On top of this are hardware costs. Hardware are the physical "bits" of your computers.

You can expect to get somewhere between 1 and 5 years of productive use out of each of your computers.  IT Leaders is a great fan of continuing to use hardware that is working well, rather than simply discarding it after 3 years as the big corporates do.

 

HOWEVER, think of the "Lost Productivity" table below when budgeting and spending money on computer equipment.

If a computer is running slowly and wasting the time of your staff, replacing the computer could well be the CHEAPEST action you could possibly take. 

 

Quite often a business can reduce costs by upgrading its most heavily worked computers regularly, and then reusing the older computers in a less taxing role.

 

How do you know if your computers are runing poorly? Ask your staff!  Get them to log the time they spend waiting each day, and do the maths yourself!

 

 

 

The alternative is to not plan, and then get surprised when your computers need expensive repairs/rebuilds.

 

The alternative is to experience frustration and much greater financial loss when your staff can't work because their systems are down.

 

The alternative is to have discontent staff who are prevented from doing their jobs efficiently by computers that hamper their performance.

 

If 5 staff are losing just 15 minutes per day in productivity because their systems run slowly, look what it COSTS per year:

 

5 staff  x  0.25hrs per day x  $40 per hour 

 

If you are charging those staff out at $250+ per hour (as is the case with professional firms), then expect to be wasting $60,000+ per year in lost productivity.

 

Suddenly a bit of maintenance doesn't look so expensive!

 

Please review our Support Plans for a simple, structured, and effective way to address this issue, or contact IT Leaders now.