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What are Shadow IT (Information Technology) Costs for Your Business?

The place to start any business decision is to weigh the cost. At first glance there are several ways to budget for Information Technology (IT). If you truly want to control, forecast, and manage your costs, you have to consider all of your costs that comprise your technology budget. There are obvious items such as servers and desktops, applications, and internet service. As you examine further there are some hidden or variable costs that lurk in the shadows from time to time. How often do you get a surprise labor invoice from your technology services provider? How often does a software license renewal occur? Have you ever had a workstation crash that was not that old? It either has to be replaced or you will wish you replaced it after paying a large repair invoice. What about a rogue invoice for new anti-virus software that you simply have to have? You simply do not want to risk getting a ransomware virus. When you add up all of these shadow costs you realize you are spending more on technology than originally forecasted. However even with shadow costs and unforeseen expenses you can manage and forecast your technology budget. There is a better strategy.

First you must consider your IT support services agreement. Do you have a managed service provider that charges a set fee per month. Do you have an hourly contract where you pay for support on an as needed basis, perhaps by the hour? What else goes into IT costs? What about software, workstations, dual monitors, smart phones, remote access, and anti-virus software?

Consideration should be given to printers and scanners, server level collaboration and file storage. What about on site and off site backups? What about maintenance and periodic software updates? Perhaps you have monitoring fees, backups and other services. After examining all the costs and variables you also have to consider who is managing all of these items anyway? Are you paying someone on your staff to manage and assess all of these different items? Alas …. Another hidden technology cost that you may not have fully considered. Many small companies will have someone on their staff who manages the technology details. This person usually is “voluntold” or apprehensively raises their hand to take this assignment.

This person usually has some type of technology background. However it is usually out of date or very elementary and they are tasked with making technology decisions for today. Also they usually have other job responsibilities that are either dismissed or held back due to technology issues that have to be addressed now. The question becomes should this person be distracted by making technology decisions on the fly? Do they have the time and research ability to always make the best business decision for your business? Does this individual use their technology responsibilities as an excuse for poor performance in other job responsibilities? In this area alone many businesses realize that there is a lost opportunity cost by having a paid internal position just managing technology issues. The loss mounts up if they make poor technology decisions on the fly just to get through that day’s IT crisis.

After careful consideration, you can analyze the actual expenses for your technology budget. When including all of the shadow costs and surprises that occur you will get an accurate idea of how much your technology actually costs. Armed with that information you are now ready to see what kind of system and support that your money could buy. As a matter of fact, you could have unlimited around the clock support, all new hardware, updated software and an IT department at your service for close or less than what you spend today on your decaying system.

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