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3 Practical Tips to Lower IT Costs for Small Businesses

You can keep technology spending low without external contractors or additional full-time staff. In fact, our team primarily sells managed IT services to companies with more than 15 employees, because that's when outsourcing technical support is usually inevitable.

Every small to medium-sized business (SMB) is different, so 15 employees is not a rigid and straightforward number, but there are some unifying trends in technology budgets.

How much should my company spend on IT?

A 2018 report by Deloitte Insights found that the average IT budget of an SMB represented 3.64% of the company's revenue. Manufacturing companies and nonprofits, however, reported much lower numbers:

The average IT expenditure of companies according to various industries: On average 3.65% costs of sales for IT in all industries.

If you're spending less than that and things are going well, you are doing fine. If you're struggling with IT barriers or over-spending, here are some handy tips to help you cut costs:

1. Use Software-as-a-Service (SaaS) whenever possible

While there are few ways to get software for a one-time fee, it's rarely a better choice than subscription-based software. Take Microsoft Office as an example: the one-time purchase costs 230 euros compared to the cloud-based subscription for 8.80 euros per month.

The one-time option only becomes cheaper after more than two and a half years. When you get to that point, Microsoft has released enough features and upgrades for the cloud version, which barely resembles the one-time purchase.

SaaS options require less upfront investment. They also ensure that you have the latest and most advanced versions of the application. Nowadays, you should always go for the SaaS option.

2. Employees rely on “Bring your own device” (BYOD)

BYOD used to refer to company policies that allowed employees to use their own cell phones for work. Today almost everyone uses their own phone for work, so the term is more commonly associated with employees who use their own laptop for work.

Five or six years ago, inefficiencies in installing corporate software and configuring security settings across dozens of different hardware specifications and operating systems would have prevented any opportunities for cost savings. But now it's a breeze.

Hosted desktops, sometimes referred to as Desktop-as-a-Service (DaaS), allow employees to log into an application on their personal laptop that connects them to a “virtual desktop”. DaaS streams content from one computer in another location to any computer with an internet connection.

The applications, processing speeds and security settings that an employee receives are linked to the remote virtual desktop and not to the hardware that your employee has at hand. That means you can either buy fewer computers or buy cheaper computers without sacrificing productivity.

3. Take advantage of automation

How often do you feel that technology is doing more work than it eliminates? Take data entry for example. Done right, this can lead to exciting insights and business intelligence, but it usually takes hundreds of hours of repetitive work. In a fraction of that time, anyone can master some basic automation skills to reduce the time wasted managing the technology.

Tools like Zapier, IFTTT and Microsoft Power Automate are designed for users of all skill levels. You could set up an automation protocol where the forms submitted by customers are automatically copied to an Excel spreadsheet with other forms. Or, you could delay buying customer service software with auto-responses that you can customize.

Just pick a task that requires the least critical thinking and takes the most time. If the task can be summed up like this: “Whenever X happens, do Y”, you can mostly automate it.

What's next?

If you are nearing the 15 employee mark or your company has higher than average IT needs, it may be time to consider outsourcing technical support. This is a weighty decision, so we recommend doing a little research on how it works first. Our free e-book - The IT Services Buying Guide - is a good place to start your research, so download your copy today.

Talk to me, I look forward to talking to you.

Founder and owner of the company hagel IT-Services GmbH. Passionate about technology, of course, and always looking for improvements.

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