Every small- or medium-sized business (SMB) can increase its net profit by minimizing its capital and operational expenses. This is why SMB owners are always looking for ways to save money and cut costs. While doing so is necessary to prevent overspending and ensure a healthy bottom line, it’s also important to avoid making cost cutting mistakes that could compromise the quality of products or services.
The IT department is often one of the first places SMB owners look at when trying to reduce expenses. However, if you make wrong IT budgeting decisions, your business can suffer down the road. Here are the five common mistakes to avoid when cutting costs in the IT department.
1. Skimping on hardware and software purchases
It might seem like a good idea to save money by buying cheaper equipment or off-the-shelf (OTS) software, but this can actually lead to more problems.
For instance, cheap hardware is often less durable and more likely to break down than top-grade hardware. Hardware replacement and its related downtime expenses can cost your business even more money in the long run than if you paid for more expensive equipment upfront. Meanwhile, OTS software cannot be fully customized according to your business specifications, so you may have to purchase several OTS software just to address all your needs. This can cause the costs to pile up.
Even if you have to make budget cuts in your IT department, it’s best to choose quality hardware and software that will last for years to come.
2. Not investing in IT maintenance
Just like any other type of machinery, your IT systems need regular maintenance and updates to function properly. Failing to keep your systems up to date can lead to security vulnerabilities, compatibility issues, and a host of other problems. By investing in proper maintenance, you can avoid these issues and keep your business running smoothly.
3. Not factoring in future growth costs
As your business expands and reaches new milestones, your IT needs become more complex. If you don't properly plan and budget for potential business growth, you may have to make major changes to your infrastructure on the fly. This can be a costly and time-consuming process, so it's important to think ahead.
4. Ignoring customer feedback
Your customers are the ones who use your products and services, so their opinion is invaluable. If you ignore what they have to say, you risk making or not making changes in your IT infrastructure that could alienate or frustrate your customers. For instance, if your customers value data privacy, then it’s critical to implement solutions that safeguard their data. Your budget should always consider all stakeholders, and that includes your customers.
5. Making indiscriminate cuts across the board
While slashing budgets across departments might seem like a good way to save money, this can often lead to more problems than it solves. When you make indiscriminate cuts to your budget, you risk causing major disruptions to business operations. For example, because of a budget cut, you may not have enough resources to implement a comprehensive backup plan. This can lead to data loss that will devastate your business.
It's important to be strategic about where you cut costs so that you don't jeopardize the company. Understand your IT needs before you make changes; otherwise, you might not have the financial capacity to fix an issue when something unexpected happens, such as when something breaks or isn't compatible with the rest of your systems.
These are just five of the common mistakes to avoid when making IT cost cutting decisions. If you want to learn how to save on IT costs without sacrificing quality or how to make the most of your IT investments, get in touch with our business IT experts at Cutting Edge Network Technologies. Drop us a line today.