The Snowball Effect of Implementing “Cheap IT”

In CIO/IT by Daniel NewmanLeave a Comment

I’ll be honest. I don’t like the ring of it when people utter the words “cheap” and “IT” in the same breath. But wait, this post isn’t about my personal preferences, right? Actually, it is! I’m going to talk about why “cheap” and “IT” are not best buddies from a business standpoint, and why it is dangerous for any company to cut corners with IT.

Why businesses underinvest in IT

With shrinking budgets and increasing competition, most companies aggressively single out areas for reducing costs. Often, IT becomes a target because spending less on IT may seem like a logical step for companies looking to trim the fat. Let’s face it, digital assets are much less visible than investments in physical assets or infrastructure.

Some may call this a generational issue, but I think it’s more of a mindset issue. While I do agree that not being a digital native may play a part in being more accepting or aware of what IT investments can bring to the table, I certainly don’t agree that being born at a certain time strips you of your abilities to see things as they are. In this case, a huge wave of digitization is rapidly engulfing the business landscape.

That said, below are some of the reasons that encourage people to underinvest in IT are relatively easy to understand (while still being wrong.):

First, the “We’ve-always-done-it-this-way” attitude. This resistance to change is the biggest enemy of any digital transformation and is the direct result of businesses not being ready to push themselves out of their comfort zone, even at the risk of failure.

Second, digital is still treated by many as a nice-to-have luxury. While companies realize the importance of a strong digital presence, many still believe digital is an unreliable money-drainer, even while they end up spending considerably more on physical assets.

Third, the “it-wont-happen-to-me” attitude. Some companies either dismiss the risks as overstatements or end up taking even greater risks, rather than making IT investments to prevent them.

The perils of cheap IT

Whether it’s using old machines, outdated software, or cutting corners with low-cost cloud and mobile deployments, I believe that cheap IT has an effect that goes far beyond any dollar savings incurred. On a deeper level, it impacts employees, operations, and customers in ways that may be exponentially more expensive than IT investments in the first place.

For example, slow machines or dated software frustrates employees, which eventually reflects in poor performance, low morale, and lower productivity. Let’s not forget just how quickly a poorly designed website can create a bad user experience. This can hurt customer satisfaction and ultimately lead to increased money spent (dare I say wasted) on unnecessary customer service.

In the process of curbing IT expenses, many businesses suffer because they lose sight of the big picture. Plus, they often overlook a crucial factor—innovation. Innovation is not only imperative for modern businesses, but the price of ignoring it is extremely high in today’s competitive environment.

Think of it this way: Business today is a game of survival. When hundreds or even thousands of companies are competing head-to-head, a business can only survive by continuous innovation. The fact of the matter is that you simply can’t innovate without a solid tech foundation.

Employees are bringing trends like BYOD, mobility, and shadow IT into the workplace, often without the knowledge of their employers. This means companies are getting into the digital game whether they know it or not. IT staff and resources can arm companies with proper strategies to handle these issues.

However, without a proper level of IT investment, businesses could be exposed to security threats that are serious enough to cause significant financial and reputational damage — damage that could last a lifetime.

To sum it up, if businesses don’t put their dollars into IT, they are pretty much following the Blues Brothers’ formula for success.

“It’s 106 miles to Chicago, we’ve got a full tank of gas, half a pack of cigarettes, it’s dark and we’re wearing sunglasses.”

Additional resources on this topic:

Cheap IT Will Cost You
Enterprise IT Reality: Cyberthreats and Security Fears
With Regulation Looming, It’s Time for Industry to Raise the Bar for Software Quality

This post was written as part of the Dell Insight Partners program, which provides news and analysis about the evolving world of tech. For more on these topics, visit Dell’s thought leadership site Power More. Dell sponsored this article, but the opinions are my own and don’t necessarily represent Dell’s positions or strategies.

photo credit: Another view of Cantenna II via photopin (license)

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. From Big Data to IoT to Cloud Computing, Newman makes the connections between business, people and tech that are required for companies to benefit most from their technology projects, which leads to his ideas regularly being cited in CIO.Com, CIO Review and hundreds of other sites across the world. A 5x Best Selling Author including his most recent “Building Dragons: Digital Transformation in the Experience Economy,” Daniel is also a Forbes, Entrepreneur and Huffington Post Contributor. MBA and Graduate Adjunct Professor, Daniel Newman is a Chicago Native and his speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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