It may seem like an odd concept – thinking about turning your IT department, which is an expense, into a profit center. Is this actually possible? Is this some kind of trick?
The answer to both of these questions, oddly enough, is yes!
It is entirely possible to turn your IT expense into profit – and it’s also a trick. Why a trick? Because it’s a matter of perspective. Of course, your IT department is always going to cost you money – that’s obvious – it’s more a matter of how much money.
Let’s look at a simple example of what we mean by turning your IT into a profit center:
So here is a generic company with an IT department upon which they rely heavily to run the business. These are the broad components of their IT section:
• A functional but outdated ERP software system.
• Several standalone applications.
• In-house Microsoft based server system.
• Various pieces of equipment including servers, routers, switches, terminals, etc.
• 1 full time system administrator.
• 4 help desk and hardware specialists.
• 1 IT manager.
Total annual budget: $400,000
Here’s where it gets good…
So this fictitious company hires an IT support specialist agency – like Glorium Technologies – to come in, perform an analysis on their entire IT structure from personnel to infrastructure. This agency provides a cost benefit analysis and a plan to streamline the IT processes.
You’d be amazed how often this can be done successfully – it’s one of the things we do here.
So, the agency informs the company that they can revamp the IT department in the following ways, with the following components:
• A complete Cloud-based ERP system.
• Fully integrate the standalone software into the new ERP.
• Provide remote IT support and help desk personnel.
• Provide an IT manager who can be placed on-site but works primarily off-site.
• No more in-house servers.
Total annual cost: $240,000 – 40% less!
Why is the IT budget reduced so much? Well, this example company has eliminated the need for its help desk and system admins, a full-time on-site manager and most of the hardware that would need servicing, replacement and so on.
By utilizing a cloud-based system, the company has reduced its operating expenses and much of the IT support personnel are spread over several clients – thus reducing the burden of supporting them all from one company.
In most cases, a business with in-house IT wastes a good deal of revenue supporting people they don’t need all the time, but they can’t lose them completely.
So, what do they do with that extra $160K?
This is the profit. Remember, not spending money is the same as profit. Even better, that extra money that’s not spent on IT can be pumped back into marketing and thereby used to increase the customer base and create more gross revenue.
The sky is the limit! Not only has our example company reduced overhead, they’ve increased their ability to expand and all the while they’ve gotten a more effective and more flexible IT department to support the business.
Just an example – yet you can clearly see how an IT profit analysis can benefit any organization. There’s no guarantee that it’ll work for you, but why not check into it?