# Understanding The Cost Of An Ineffective IT System For Your Business

Not Many businesses have any choice but to adopt and embrace IT technology. Today all activities are handled by IT and IT-enabled devices, be it online or offline. The IT systems are sturdy but there are many limitations. Maybe as much as the unpredictability of human beings. What can fail will fail at some time or the other.

## No One Is Prepared:

People have been guilty of dropping their laptops or splashing their drinks on them. Laptops are stolen more often than we can imagine. These failures always occur when they are least expected. Literally, no one is prepared for such failures. Machines age like people and also their operating systems become archaic with time. It is quite evident that nearly everyone is guilty of a ‘lack of long-term vision’.

The cost of creating redundancy for hardware and software is prohibitive for companies and that’s why they shy away from it.

## Employee Man Hour Loss:

When the inevitable happens due to any stupid or serious reason. Typically, the operation and finance guys start calculating the man-hour lost and compute a cost. The employee whose computer has collapsed is singled out and his wages are calculated into per day and further into per hour. Later the total time to replace his computer is calculated.

The total figure is considered as the total loss due to the interruption. But then this is just the wages and replacement cost lost for the company.

What needs to be calculated is the ‘opportunity loss cost’. One employee who is out of the circuit is not just causing wage loss but all the business that he was to manage and generate is also lost. How about creating a formula to calculate that loss? What if we take a weighted average of the employees’ contribution to the total revenue of the business? We must consider the total business handled by the employee and then calculate.

If the employee is out of the loop for a day therefore besides his wages the company is also losing one day worth of business and that makes the turnover go down. That amount is directly proportional to the total revenue of the business and the importance of that employee in the equation. If the employee brought in revenue of X amount or was instrumental in getting that number. Then we must take that revenue’s percentage in terms of total revenue.

So, if an employee (directly or indirectly) brought in \$25,000 and the business monthly turnover is \$100,000 the employee was contributing 25%. Let’s assume a computer can be replaced in two days. A two-day loss to business would mean 25,000 divided by 25 days (working days). His daily contribution to the top line of the business would be \$2000. The computed wages of this person for two days would be about \$1000. The company would be losing 3% to the top line. If the business was operating on a 30% margin (profit of \$30,000) then the impact on the bottom line would be a whopping 10%.

## Face Loss:

All businesses are customer facing and interaction with customers is critical for any business. An outage or crashing of hardware means that customers are going to be unattended or lost trying to reach the company. When this happens it can’t be simply computed in real money terms. What is happening here is that the company is upsetting a customer.

The customer has no knowledge of any outage or computer hardware accident. All the customer is realising is that the company is irresponsible in response and unprofessional in their demeanour. The loss caused by this is intangible because the customer may be sharing this experience and causing damage that is not detectable ever.

## More Intangible Loss

Every computer deployed in the business process is a formidable machine that is a modern-day loom in a textile factory. The device is constantly collecting data about the clients, correspondence, and negotiations. Besides that, nosiness logistics are also stored. Any loss of a device could mean permanent loss of that data.

It was akin to losing a complete filing cabinet to the fire in the era before computers. This is also an intangible loss as the data could have helped deduce new strategies and directions to the advantage of the business.

## There Is A Solution:

A smart business team will always plan for eventualities. They have backup plans for their key positions. In the IT era, a company must be prepared with redundancy for their IT system. There is trusted managed IT support in Melbourne which can provide you some peace of mind. IT services in Melbourne can begin with an audit of the IT system that has been designed.  The system is spread across hardware and software.

The hardware audit will show how many computers are at what stage of vulnerability. Machines like humans age and eventually wither away. They need to be replaced before they cause a mishap. A thorough audit by IT support from Melbourne can clearly show the stages of deterioration. The severe cases can be earmarked for replacement.

The cost of taking a chance and not replacing can cost your business far more dearly than the cost of the hardware.

## Prevention Is Better Than Cure:

A good IT service in Melbourne can create an efficient system for cloud computing. All correspondence through email and data generated through the business process can be backed into cloud IT.  Cloud backup services are not very expensive especially if you consider the safety that is coming into play.

The data backups create a legacy trail showing the performance of the business and the employees. Data in the cloud can be accessed by authorised personnel and serves as a monitoring tool.

This adds efficiency and proactive course correction to the trajectory of the business. Forewarned is forearmed. Astute businesses should be prudent about the strength of their IT system. The cliché adage of health is wealth is more suitable to the health of the IT system and IT machinery.