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The Truth about surprise IT service costs

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Let me pose a question, how would you react if this scenario happened to you? You are at a supermarket in the vitamin section. You are looking over the different supplements and such trying to find a good multivitamin. In the process with all of the various options and claims you realize that maybe you do not have all of the understanding you need to make an informed decision. So to help yourself, you reach out and tag the clerk working there to ask for help. He turns to you, listens with a distant thoughtful gaze and nods a few times. He lets you know that he has been working in the vitamin isle longer than most clerks and really knows what you need. You share your needs and finish by asking, which vitamins do you think are best for me? What do you recommend?

He nervously looks around, checking to see if anyone else is watching. Then with a sheepish grin tells you that vitamins are not necessary, that in fact they are a waste. Oh, you reply, so are you recommending changing my diet so I get the nutrients naturally? Again after checking both ways, leans in and tells you, no. The whole minimum daily allowance vitamin thing is a scam. In fact, as proof he offers, I’ve only had 25% of the vitamin C and D they say I am supposed to have for the last few years, and look at me, I’m still alive and well.

What would you think of his advice? Would you decide that minimum dosage of certain nutrients were all fallacy? How long do you think that the clerk can avoid proper amounts before it becomes a problem? What are the long-term effects of shorting yourself on these nutrients?

Everything has a price and we all want to get more for less but how do we know that we are not getting the bad end of the transaction?

I see companies shorting themselves every day in several aspects of their businesses, but especially with regards to technology.   Many think they are beating the game, a few realize it will eventually catch up, and even fewer actually take the time and effort to learn what is required to be healthy.

Why? Let me share what I have gleaned from the past 30 or so years.

Why should you care?

You pay for it in one way or another. Think of technology as a tool and if the tool is not efficient, it slows the whole operation down. In the late Dr. Covey taught us in seven habits, time spent sharpening the saw is critical to long-term success. Abe Lincoln said, if you give me 6 hours to cut down a tree, I’ll spend the first four sharpening the axe.

I see so many companies spending time with work-a-rounds, frustrated employees, and distractions all because of a poor state of technology. You are going to pay for technology in one or some combination of these three ways: you pay to do it correctly up front good decisions and proper IT support, by crisis and recovery on the back end or inefficient staff and lower operational performance.   A quick question to ask yourself -If you see that the majority of your technology efforts are for repair and recovery it is a strong indication that you are in the pay for crisis state.

Reasons you should care:

  • You are going to pay the piper, why not have a better experience
  • Eliminate surprises
  • Reduce volatility
  • Improve strategic focus

Why should you care now?

Simply, compound interest. Improving your investments sooner rather than later is always the right thing to do. Improving operations by a small 3% over several years delivers staggering results. The longer you wait, the ultimate price you pay increases.

  • The problem is not going away
  • The cloud will not save you
  • Improvement now gives you a compound return

 

Here are the some most common excuses heard:

That much effort for technology is not really necessary – we do not really need to take care of them, the cost is the same, if not less to just run them into the ground.

Often we see companies that feel that as long as the lights turn on, their systems are fine. Many leaders do not have to deal with the reality that their employees face. An owner can ask someone else to deal with it, or they are often the ones who get the newer more capable systems. The common folk have to deal with the IT systems with problems, and do not raise the problem to the boss out of fear.

We have done it this way forever

We all have patterns. It is how we survive with so much pulling for our attention. The problem is that patterns that worked when a company was 10 or so people or 5 years ago does not work for larger or current needs. But, since there are so many other issues, we will use a pattern until it no longer serves us. Success is in understanding the term “until it no longer serves”. When something completely fails, generally there has been a degraded state for a period of time. We need to catch those slowdowns and negative business impacts before they become failures.

So and so told me that…

We all have areas in our lives where we need someone to point us in the right direction; for instance, financial help, an attorney, investments and technology. Now these advisors can range from virtual to in person, magazines, websites, siblings, and neighbors and most likely somebody’s kid – she is a wiz you know. But where do you get the knowledge you need to make an informed decision?

If we had a legal issue, we would ask the prospective attorney if they had experience with our case. Have them explain and show us that they not only have passed the bar, but have success dealing with very similar cases. But for some reason, when it comes to computer systems and IT support we tend to think it is all the same. If you can fix a PC or get a smartphone to load your email then any technical tasks is within scope. Why?

I don’t understand it so I do the minimum I can [because I do not want to make a major mistake]

Often we freeze because we do not know what to do. Now if the world were to freeze as well, then this technique might work, but the world is progressing. What our clients, vendors, and employees expect and often demand is racing

I am going to have a crisis anyway [I might as well save until then]

I see some people give up, and this is a common excuse. This is not just going with the flow, this is exposing your business. Avoiding a crisis saves money, effort, pain, etc… Yes, you cannot avoid everything but do you have health insurance, try and eat right, etc? It takes effort, but you need to protect the important things.

I have tried before and achieved poor results [I am not going to play that game again]

Unfortunately almost every business has this story. You believed that a certain solution would solve everything for you, but after signing on the dotted line, it really did not happen. Has every employee worked out for you? Has every client? Vendor? No, but over time you have learned and improved the odds of a successful outcome. Why would IT support and technology consulting be any different?

 

What can you do about it?

First, there is a cost of ownership for everything you bring into your company. You can be knowledgeable about the real IT services costs or you can attempt to get away cheap. It reminds me of purchasing my first car, a used powder blue beetle. After a few hundred dollar down payment the monthly payment was $110.00. That was all I needed. I looked at what I was earning at the time and I had that amount on a monthly basis fairly consistently so nothing to it, right? Wow the opportunities that would be opened up by having that car.

Only one problem, I was young and did not have the proper credit to sign myself. I needed a co-signer, I needed my dad to help. I explained what I wanted to do and how it was imperative to my life that I have this car. Somehow he was not convinced the monthly payment was really the whole story. I argued with my dad when he told me that it would cost a whole lot more. I argued that I know I need gas and some oil, he countered with insurance and usage costs, repairs and finally opportunity cost. You get the picture. I argued and luckily for me, he caved, I was into my first car. And turns out, dad was correct, that simple beetle and $110.00 payment was the lowest of my real concerns. (I have since had the same conversation with two of my children, with the same results)

Gartner reports produces detailed costs analysis of how much it costs for technology/IT support per employee for most industries. I see this benchmark as pretty much the standard daily allowance guidelines. If your industry spends 4k a year per employee on technology costs or for every 30 employees, you have 1 technical employee that gives you insight into what those averages are.

Now, many argue that it does not cost that much, but you have to ask yourself these questions before you summarily dismiss this insight. (Have you ever had a client not understand how it costs so much for your services? Have they tried to wing it themselves and have they had to learn the hard way that your expertise in your field is really expertise? Funny how often we discount other professions real knowledge and costs)

Next steps

First you need to really calculate what are you really spending now – do not stop at “well a PC will just cost me $800”. Look at acquisition costs, installation, migration, training, software, patching, anti-virus and malware efforts, updates, repairs, backup, connectivity, etc… How much time it takes to spec out the equipment, review proposals and options, negotiate, order, etc….Time lost from employees waiting for problems to be fixed, waiting on hold for support, distracting coworkers by asking how do I do this or have you seen this problem before? These all take real resources to operate.

Now, are you spending more or less than the industry average? If more, ask why and what are you striving to accomplish? How are you measuring that you are accomplishments that you are paying more for?

If less, why? What are competitors spending on that you are not? What advantages do they have over your business that you are forfeiting? What is the real cost to your business for losing ground?

Look, if you can say, we spend 2k per desktop less than the industry average because we find that… (fill in the blank) the other companies do not know what they are doing, or we are waiting till it is proven or what ever, then at least you have a reason why. If you are just scrimping to scrimp, you are probably just hurting your future.

In recap, whether we are aware or not, there is a cost (hard, soft and opportunity) for all of our IT services and systems. Knowing what our real costs are, and what the industry averages are give us knowledge. Being ignorant of those costs does not make them go away, it takes away from our ability to better manage, predict, understand and make better informed decisions.

You work too hard not to have the full picture of your IT support costs. You deserve to know, it is your company.

 

Until next time,

-Dan

 

 

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