IT Expense Management – Consider Your Options Carefully
CFO’s, Financial Managers and generally anyone with P&L experience are always looking to understand their true costs to operate a business unit. IT expenses by design and can be very difficult to understand, plan and budget for when you consider the volatility of technology and the complex group of service requirements that make this department successful to your company operations.
Expenditures on the surface are very black and white but what does it really mean, what’s necessary vs. what’s not? Why are we managing this when it’s not our expertise?
What are my real options to reduce expenses, and increase profitability in this area or for the business as a whole without negatively impacting my business operations or clients in the process?
Consider the following typical annual expenditures running your business in any IT Department vs. outsourcing those same services or hard costs on an annual basis:
| In House | Costs | Outsourcing |
| Server Hardware | $100,000 | $0.00 |
| Router/CSU/DSU | $12,500 | $0.00 |
| UPS Backup | $20,000 | $0.00 |
| Software Licensing | $25,000 | $0.00 |
| Hardware Servicing Fees | $7,000 | $0.00 |
| Staffing | $200,000 | $0.00 |
| DS-3 Internet Connectivity | $35,000 | $0.00 |
| Initial configuration/setup | $10,000 | $1,000 |
| Hosting Fees | $0.00 | $60,000 |
| Hardware and software support | $0.00 | $42,000 |
| Generator backup | $15,000 | $0.00 |
| Total expenses for Year One | $424,500 | $112,000 |
In Closing, as a Financial Manager myself it’s easy to see how compelling these numbers appear, certainly compelling enough to investigate the options further.
