Technology can be a valuable tool for your business, but it can also be expensive and time-consuming to manage. As an IT leader, you need to make sure that you’ve got the right tools in place to do your job. In this post, we’ll explore what makes technology so costly and how you can determine if it’s worth spending money on new products—or if you should invest elsewhere instead.
New technologies are expensive.
You may think that new technologies are the best way to solve your company’s problems. However, new technologies are often more expensive than maintaining existing systems. New technologies can require:
- New infrastructure (servers and data centers for example)
- New training and support
- New processes
Technology is always changing.
In the world of technology, nothing stays still for long. New technologies are constantly being developed and made available to anyone who can afford them. They’re also often expensive—new technology can be a major cost center for your business, and you might not know how it will affect your bottom line until it’s too late.
In addition to the costs associated with purchasing new technologies, there are other factors that make them difficult to manage:
- The uncertainty of what will happen once you start using new technology in your business
- How disruptive they may be when they’re introduced into an existing environment (for example, if your company currently uses mainframes)
Budgeting for technology can be a challenge.
Budgeting for technology can be a challenge. It’s a process that begins with strategic planning and ends with managing the allocated budget. Strategic plans must be revisited annually, if not more often, to accommodate changes in your organization’s environment. And budgets need to be updated constantly as well, because they are always changing based on new technologies and services you decide to adopt or retire during the course of a year.
To make this easier on yourself—and more effective at getting the results you want—it’s important to have some best practices in mind when it comes time to create your tech spend plan:
Budgeting is a continuous process—not something you do once per year only ever again. This means that if there are changes within your department or organization that affect how much money should be spent on IT services or equipment this year compared with last year (e.g., hiring an additional team member), these changes should be reflected in next year’s budgeting process so that resources can continue being allocated wisely throughout its duration rather than just at one point during it.
Budgeting requires flexibility: With so many factors affecting how much money gets allocated toward various departments within an organization over time (everything from general inflationary trends affecting costs through inflationary pressures due specifically towards labor costs caused by minimum wage laws), having flexibility within any set amount will help ensure that no one section gets overlooked while others get overly burdened.
Budgeting requires collaboration between owners who have different perspectives regarding where money goes best (“Well I know what’s been going wrong here lately!”).
IT as a cost center.
An IT department is a cost center. This means it isn’t responsible for directly generating revenue, but rather for costs associated with planning, implementing, and supporting technology needs.
According to TechTarget, “In the case where the CIO is reporting to finance, the best way to get approval for technology investments is to create a business case that outlines a straightforward financial justification for the investment. For example, CIOs should make the case that a $100,000 spend will save $400,000 rather than focus on more strategic goals such as improved customer service or reducing errors.”
IT has to deliver and manage services that keep the business operational.
Bring-your-own device programs can be vulnerable.
Bring-your-own device programs, or BYODs, are a good thing for employees. They allow workers to use the devices they prefer and can spell significant cost savings. But BYODs are also more vulnerable to security breaches than company-owned equipment because they do not have an enterprise security profile built into them.
If you’re considering a BYOD program, get ready for some additional costs in both time and money when it comes to testing your employees’ devices before they connect them to your network. You’ll also need to invest in software that will monitor apps installed on their devices and ensure that they don’t contain any malware or other harmful components (such as unauthorized access).
The best way to avoid these potential problems is by establishing clear guidelines that govern employee use of personal devices at work—and making sure those rules are followed by everyone who uses one for work purposes.
IT leaders spend time balancing cost and value of technology to the business.
As an IT leader, you are responsible for the cost of technology. You need to be able to justify the cost of technology and balance it with the value it brings to the business. As a result, your job is often about managing costs.
You must be able to make decisions that balance how much money should go toward maintaining existing systems versus investing in new technologies. That requires balancing your budget against what’s going on in your industry and understanding how much change is needed within your organization at large.
The bottom line is that technology spending is a balancing act. When done well, IT investment can lead to greater productivity, better engagement with customers and investors, and even higher profits. Done poorly, though, it can be a drain on resources or even a risk to business success. Where does your company fall on this spectrum? Does it need more budget for technology investment? Or do you already have enough control over costs but would like more control over your budgets overall?