How Much Do You Really Spend?

By Bob Violino Print this article Print

You know your company's annual technology budget for software, hardware and labor. But have you tried to add up the hidden costs?

How much does information technology cost a company? You have to look at both the direct budgeted costs and the indirect—or "hidden"—expenses. The direct costs are fairly straightforward and measurable: desktop and server hardware and software; salaries and benefits for staffers; external support and maintenance for hardware and software; software development (internal and outsourced); and voice and data communications equipment.

Indirect or unbudgeted costs are a different story. It's not easy to accurately measure things such as the amount of time non-technical employees take to resolve technology-related issues. Hidden costs can include time waiting for help-desk support or scripting applications such as spreadsheets.

That's on top of other "downtime" activities such as planned upgrades, systems conversions and maintenance; and unplanned events such as outages, software failures and data recovery. All of these "hidden" costs can lead to lost work time and lower productivity.

"This is where the hidden cost of I.T. is; it's generally when you look at the impact on [workers who use technology] that you really start to measure the total costs," says Paul Renaud, founder and head of The Lanigan Group, a technology consulting firm in Ottawa, Canada, that helps companies improve the value of their information-technology operations.

Understanding the causes of the hidden costs is the first step to making improvements, Renaud says. Organizations can start to see sharp reductions in indirect or unbudgeted costs once they improve support for employees who use technology.

This article was originally published on 2005-08-04
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