5 tips for SMBs to eliminate hidden IT costs
With today's evolving IT environment, there are many things small and midsize businesses (SMBs) can no longer ignore in terms of their IT investments and plans. Trends such as bring-your-own-device (BYOD) and basic IT hygiene such as data backup and document management may not appear as immediate priorities but, if ignored, can have long-term financial impact.
Bastiaan Toeset, director of partner-led sales in Asia-Pacific, Japan and Greater China at Cisco Systems, said companies that ignore security threats, for example, could experience network downtime or even see their entire IT infrastructure brought down. Such losses involving data, revenue or productivity--and often it is a combination of these--can be "catastrophic" for smaller businesses.
Additionally Toeset noted, SMBs now also have to cope with the BYOD trend as younger generation workers bring their own devices and use them to do work within the corporate IT environment.
"The highly distributed nature of these Internet-connected devices and diversity of these devices, in terms of the hardware or operating systems, drive up management and maintenance costs and can impact productivity and increase security risks if not properly integrated," he stated.
With these challenges in mind, the Cisco executive, together with other industry players and one SMB, highlighted some top IT hidden cost areas and offered tips on how small businesses can avoid unnecessary financial outlay.
Take long-term view
Lim Kok Hin, vice president and COO at Canon Singapore, said SMBs often underestimate the hidden costs of new technology offerings and the resulting consequences. The root problem here is the lack of understanding about business activities, employees' tech usage patterns, and implications of the new IT product.
Lim said: "More often than not, these costs arise when SMBs purchase solutions that do not accurately align to their business needs and requirements, and invest in systems that they do not need or take full advantage of."
Without accurate, long-term assessment of business and IT needs, these smaller companies end up spending more for deploying and maintaining short-term IT products that need to be upgraded, or in some cases completely overhauled, as the market evolves, he warned.
To avoid these unbudgeted costs, SMBs should first identify where new systems will connect to within their existing setup and which platforms they can collaborate with. Lim said: "In a fast evolving market, SMBs need to plan for long-term needs in order to sustain their agility and competitive edge as they grow."
Scalability is key
On a related note, companies should also plan to scale up their IT spend as their businesses grow.
Eric Goh, managing director of Singapore at EMC, citing the example of storage, said scalability is essential as requirements in this area can be rather unpredictable.
For SMBs, in particular, capacity expansion is a typical upgrade they encounter. Goh added it is important to implement products that will support and keep pace with the business growth while providing cost efficiency.
Creating a virtualized environment, for example, can help smaller businesses boost their ability and agility in responding to the needs of the business environment as well as improve server utilization, thereby, increasing their operational efficiency, he stated.
Use tech wisely
Lim also called on SMBs to use tech to leverage their key advantages of agility and adaptability, thus, lowering IT expenditure.
One startup agreed. Shivanu Shukla, co-founder of Teamie, a social collaboration service provider specializing in the education sector, pointed out that most of its IT systems are cloud-based. These include services such as Google Apps, Amazon Web Services to host its customer relationship management (CRM) system and EC2 server to power its Web applications.
"Cloud services are typically very transparent with their pricing," he explained. "The hidden costs are more a function of how well the company plans its IT resources versus its needs. For example, if you planned to reserve two large EC2 instances, but realize you need three or four instances, then your IT budget will begin to balloon."
Shukla said cloud computing gives Teamie the flexibility to grow its business and scale its IT resources accordingly. Noting that defining an IT budget for an on-premise infrastructure is different compared with one based on cloud services, he said the company chose to attribute a percentage of its revenue as its IT budget rather than fixing on an absolute amount.
Futureproof IT investments
Toeset added that SMBs should choose IT infrastructure options that address both the challenges of today and tomorrow.
Taking IPv6 as an example, the Cisco director pointed out it is important to architect an IPv6-ready network infrastructure to meet the new application and operating system requirements over the next few years. This would prevent wasting money on short-term IT measures.
Develop good IT support ecosystem
Small and midsize businesses also tend to rely on only one employee or a small team of IT staff to manage the tech aspects of the company, Lim noted. One IT manager may be all it can afford to support the implementation and maintenance of desktop, server, network and other core business applications.
Since multiple roles or functions are served by the same staff, SMBs should identify and focus on their core business and engage reputable and responsible vendors to assist in the management of IT systems, he suggested.
Toeset agreed services such as software-as-a-service (SaaS) and other cloud-based managed services do provide the ongoing management, protection and maintenance of network infrastructure and the diverse array of endpoints, operating systems and mobile devices that increasingly populate the workplace today.
Thus, Lim said, by outsourcing tracking, management and maintenance of IT systems, SMBs can more efficiently prioritize their efforts and translate it into sales revenues. This would also enable them to spend on tech that addresses critical business needs and reduce unnecessary expenditure, he said.