Though pandemic restrictions have started to ease, allowing businesses to start a “return to normal,” the future state of the economy remains somewhat uncertain. Companies and their internal teams must be careful to make the most of every dollar to avoid stretching their limited resources too thin.
This is especially true for IT teams, who often have complicated budgets with various recurring costs to monitor. Below, the members of Forbes Technology Council share 14 ways tech leaders often waste their allotted funds and why these investments aren’t ideal for a budget-conscious team.
1. Skipping Data Analysis In Decision-Making
IT teams often make decisions based on “hunches” rather than through robust data analysis. Using business intelligence tools, IT leaders can gather actionable insights to make educated decisions, minimizing the loss of budget funds. As a result, money can be used more efficiently, leading to a higher level of productivity in the long run. – Ashwini Choudhary, Recogni
2. Not Considering ROI
Whether it is a strategic change or hiring, I think the main reason for wasted budget dollars is the quality of the analysis that’s done. Whenever you plan to invest, the first thing to keep in mind is how to measure its ROI. Will this money bring value? How do you prioritize your initiatives? Evaluate all the ideas you have. I think the worst thing one can do is to put out fires instead of thinking strategically. – Nadya Knysh, a1qa
3. Creating Unused Functionality
Some of the largest waste for IT organizations is spending labor dollars and time creating or implementing unused functionality. Leaders often fixate on project budget and deadlines and neglect measuring whether a product or feature is adopted by users and delivering the expected value. Product management is more important for eliminating waste over the long term than project management. – Christopher Lazzaro, Associated Electric Cooperative Inc.
4. Poorly Managing Personnel
The No. 1 source of waste in IT is the inefficient use of personnel. You need to invest time to hire the right person, train them properly, develop their skills and teach them ways to use their time efficiently. This is the only way to get an effective return on investment. – Elaine Montilla, The Graduate Center, CUNY
5. Building On Top Of Legacy Systems
Too many IT teams waste time and money trying to build on top of legacy systems. While starting from scratch can be resource-intensive, sometimes it is the better path. Ask yourself which option future-proofs your organization and requires less friction in the long run. You’ll be surprised by how many resources you save when you don’t have to constantly maintain old IT systems. – Marc Fischer, Dogtown Media LLC
6. Underinvesting In Security
Underinvesting in security elevates your risk profile, not only potentially wasting future budget funds but also overexposing a business’ reputation. We live and work today in a cloud-first, distributed-app, work-from-anywhere tech environment, and as such, investing in traditional boundary security instead of an integrated, cloud-managed and multi-cloud-ready approach results in the misuse of funds. – Carlos Pignataro, Cisco Systems, Inc.
7. Not Monitoring Cloud Spend
One money-waster is a lack of governance over cloud infrastructure. Engineering teams can accumulate massive costs if the infrastructure isn’t designed properly and monitored effectively. Additionally, engaging in little to no evaluation before purchasing subscription-based tools contributes significantly to costs over time. These tools slip through the cracks because of minuscule monthly charges, which add up. – Harshil Shah, DXFactor
8. Allowing Everyone Access To New Software
One of the most annoying things we sometimes do is buy a new piece of software (candy for IT!), then all of the sudden give everyone access to it. In these days of software as a service, most tools are bought by the seat, and if you give everyone on the team a seat, the bill just grows and grows. A better alternative is to ensure that everyone only has access to the tools they really need. – Mercedes Soria, Knightscope
9. Racking Up Data-Protection Costs
Traditional data-protection solutions require extensive maintenance and upgrades. For every $1 spent to build on-premises data center infrastructure, another $2 is spent managing, maintaining and securing it. That’s why companies are shifting to SaaS-based, cloud-native backup solutions to eliminate upfront capital expenditures, ongoing network costs and big, hidden cloud fees. – Manoj Nair, Metallic
10. Working In Silos
At the top of the list of reasons budget funds are wasted is IT teams working in silos and not cross-referencing the tools used by other teams. There are often significant economies of scale, both fiscal and in terms of skills transfer, where a degree of consultation and standardization can be adopted. – Al Kingsley, NetSupport Limited
11. Paying For Redundant Products And Services
Many IT teams waste budget dollars on redundant services and products, and they don’t do competitive shopping. Companies tend to have many services and products that overlap, and it is easier to just keep paying for each service or product than to consolidate and reduce costs. Many of these products and services are never shopped—companies just use their standard, everyday vendor with no consideration of prices. – Michael Hoyt, Life Cycle Engineering, Inc.
12. Taking A One-Size-Fits-All Cloud Approach
Going to the cloud in a one-size-fits-all approach usually leads to out-of-control costs. As we look ahead, forward-looking companies are choosing to cloud differently, being smarter about where to land each application, being safer about managing cloud security and business continuity, and looking for ways to simplify the management of their multi-cloud environment. – Michael Fulton, Expedient
13. Decentralizing IT Management
Companies often waste budget funds through decentralized IT management and software duplication. When anyone in any department can execute a contract with a third-party vendor without management oversight, the organization loses every time. People from various departments will often purchase similar software, causing the organization to overspend and lose out on any volume or bundle discounts. – Bob Fabien Zinga, Directly, Inc./U.S. Navy Reserve
14. Not Outsourcing IT
Often the IT team is the bad investment! Unless the function is core to the business and can leverage economies of scale, it is legacy. The IT function can often be performed much better, more quickly and more cost-effectively by an external third party that has economies of scale, redundancy, expertise and the appropriate incentives. Investing in a legacy function is a fool’s errand. – William Diggin, Accenture