Tell me, is your IT department wasting your company’s money? That’s a tricky question to answer. Nobody wants to waste money, yet despite best efforts to the contrary, many IT departments unwittingly waste money every day.
How so? While I couldn’t possibly cover every way in one blog post, I’ve put together a list of some of the most common ways that IT departments waste money. If you’re looking for ways your company can save money, start by investigating these 5 areas:
1. Unused licenses
Studies estimate that $5.1 billion dollars are wasted every year in unused software licenses. How does this happen? Here’s a common scenario: A company purchases new software on a per-seat licensing structure. Over the next few years, some employees leave the company, others switch job roles, and others just stop using the software. Unless they’ve kept a close eye on user licenses, they’re most likely paying unnecessary user fees.
Going one step further, here’s another way to save money on user fees: Cut back on seldom-used licenses. For instance, some employees may only use one screen in your ERP software, yet you’re stuck paying full license fees for those users. One way around this problem: Build web apps that integrate with your system and mimic that screen’s capabilities. This lets you eliminate seldom-used licenses, while maintaining the same capabilities. For example, here’s a company that took this approach and saved hundreds of thousands of dollars.
How much money do spreadsheets waste? This article from a couple of years back puts the cost of spreadsheet errors at $11.5 billion dollars. Do you think that sounds high? You might think otherwise after checking out this site of real-life spreadsheet horror stories.
How can something as simple as a spreadsheet waste so much money? To be fair, it’s not the spreadsheet’s fault. Spreadsheets are regularly misused. They were never designed to be multi-department or even multi-person tools, yet many companies treat them as such.
Spreadsheet misuse creates a couple of problems. First, it leads to wasted time. If your employees spend time extracting and manipulating data in Excel for reporting, they’re wasting time…which (assuming they’re being paid) also wastes money. Secondly, it leads to data errors. Pulling data out of your systems and manipulating it in Excel opens the door for all sorts of errors. Word of warning: If your company bases decisions on spreadsheet data…be careful. Studies estimate that as little as 20% and, in some cases, as much as 80% of spreadsheets contain significant errors.
3. Reinventing the wheel
Despite the growth in development software and platforms, some developers still insist on developing business applications from scratch. Why? Maybe they feel more comfortable coding everything by hand, maybe they’ve had a bad experience with a tool in the past, or maybe they believe one of these common development tool myths.
How much money does this practice waste? Depending on the project, good development software will improve developer productivity by 50% – 80%. Factor that into your developer’s yearly salary, and it’s easy to see how much money your company could save. Here’s a good example: This IT department completed a 1,000-hour project in just 300 hours when they decided to use a development platform.
4. Failed projects
Depending on which survey you read, anywhere from 25% – 70% of IT projects fail. How much money do these failures waste? Two experts recently calculated the global impact of IT project failures as being $3 trillion dollars annually.
Why do these projects fail? I doubt you could narrow any project failure down to just one (or even two) reasons. Many, many problems lead to project failure, but here are two of the most common:
- Unclear business objectives – If the business unit and the IT department aren’t clear on the business objective from the onset, the project will likely fail.
- Failure to involve end users – If an IT department completes an entire project without involving the actual users, the project will likely fail.
According to this site, 15% of an organization’s revenue is spent creating, managing, and distributing paper documents. That takes into account factors like purchasing paper, printing costs, storing documents, and more.
That’s just the beginning: Overusing paper is a real time-waster as well. For instance, many companies still rely on paper-based forms. These forms are completed by hand and then manually entered into the company’s system…which essentially creates twice the work. How can you avoid this problem? Replace your paper-based forms with web-based forms. This automates the process, saves time, and reduces data entry errors.
Is your IT department guilty of any of these common money wasters? If so, you have a great opportunity save your company some money (and make yourself look good in the process). Identify the ways in which your company is wasting money, and offer a solution to fix the problem. Eliminating just one of the problems above will create significant savings for your company…and make you look like a hero.
Do you need help eliminating spreadsheet misuse, cutting down on paper consumption, or improving development speed? We’d love to help! Our development platform, m-Power, can help you create web reports (to eliminate spreadsheet misuse), build web forms (to cut down on paper consumption), and dramatically improve development speed. To check out m-Power for yourself, just sign up for a free trial.
2 thoughts on “5 most common IT money-wasters”
Good post, I always like them. Easy to understand, I like it!
we are always guilty this is why I like IT 😀
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