The hidden costs of IT

In all my years in IT, I have found there are many constants. One of these seems to be the lack of understanding of business owners, managers and senior executives in relation to the real cost of IT in their respective businesses.

Small business owners are by far the worst when it comes to estimating and budgeting for IT and it’s my view that much of this comes from a lack of understanding of both what’s being implemented and why. The lack of understanding leads to unrealistic expectations of costs. Let’s look at a very simple case in point.

I recently carried out some work for a client who purchased some IT equipment. Without naming names and giving anything away I’ll change the details to protect the innocent while still making my point. Our client (let’s call him Jim) recently purchased a new backup device. Jim did this without seeking any advice as to it’s suitability for his environment, compatibility with his current infrastructure or any of the ongoing costs (like media).

After spending $2500.00 on the device, Jim became frustrated when he couldn’t get it work. Jim thinks of himself as a bit of IT hand and to be fair, knows his way around a PC fairly well and has a reasonable understanding of servers and networking concepts. After 2 days, Jim was ready to throw his shiny new toy out the window. He could not get the server to recognise the device, let alone backup any data. Jim reluctantly picked up the phone and gave me a call.

After a small amount of research and downloading the right drivers, rebooting the server and some additional configuration, we had the device up and running. Now for the bad news…

Jim thought he was buying a Mercedes Benz but what he ended up with was a speed limited 20 year old VW. It turns out that this device works great when connected via a suitable interface (which Jim’s server didn’t have) and the server is running the latest version of Microsoft Server (which Jim’s wasn’t). In Jim’s environment, the device’s speed was severely impeded by having to operate over USB2.0 and the backups were slower than his existing solution. To add insult to injury, the media cost nearly 4 times that of his existing media and he didn’t have a second unit offsite that he could use to restore the media in the event of a major disaster.

Poor Jim! He was pretty annoyed with himself. Instead of just cutting his losses, Jim insisted on forging ahead. A new interface card for the server, an OS upgrade and 10 new tapes. Now we’re cooking. The total cost, including Jim’s time (he bills out at $2100 a day and it took him 2 days) was:

$2500.00 – backup unit
$4200.00 – in lost time
$  200.00 – investigation into device issues
$  220.00 – interface card
$1600.00 – OS upgrade (software + IT consulting)
$  600.00 – new media
$  800.00 – more IT consulting to sort out issues with other server software as a result of the OS upgrade


Total of $10,120.00 (and that doesn’t include the spare unit for DR)

Now the really sad thing is that all this started because Jim was convinced he had a problem that didn’t actually exist. Having read one bad review of a technology he was using (that had never failed him) and being told in the same article that another technology was far superior (without any context), Jim was convinced he needed to act. He was told it was plug and play, he didn’t have to be an IT whiz to install and configure it and everything would be just dandy. Jim could have cut his losses and sold the device to minimise his mistake but he chose not to admit he’d made a bad decision and that is where things spiralled out of control.

The moral behind all this is simple. IT is a complex beast if you don’t fully understand your environment. Every day we’re being told that it’s getting simpler but what we’re not told is that isn’t the whole truth. Consumer grade IT is getting more powerful and simpler to install but business grade equipment and services still require significant investment in IT knowledge to successfully deploy them in a business environment.

Business owners should recognise that IT is complex and that decisions about technology need to be understood so that the decision is an informed one. We would never suggest that a business owner hand over the decision to someone in IT – that’s like giving the keys to your new Ferrari to your mechanic’s teenage son. Instead we advocate for business owners and managers to get themselves informed by having someone who understands the technology and their environment explain the full costs and implications of any IT procurement. This will inevitably cost you a few dollars (assuming you don’t get free consulting or are already paying for Managed Services) but in the end, it could save you thousands.

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