Unveiling Hidden IT Costs for SMBs

Information Technology (IT) has become the backbone for most small to medium-sized businesses (SMBs) in today’s digital age. Managing IT in-house is certainly appealing since you get to control everything, but there’s a catch — the obscured financial drains it introduces often go unnoticed. 

For SMBs trying to stay on budget, it’s important to know about these hidden costs upfront to keep the business growing and making money. 

Managing IT In-House vs. Outsourcing

In some cases, outsourcing IT services can be a smarter move financially. Providers typically spread costs across multiple clients, saving you from big upfront expenses. Instead, you pay a monthly fee for maintained equipment and personalized software, making your ongoing expenses more manageable.

This option also allows you to avoid paying salaries and benefits for a full internal IT team. If you choose to manage your IT in-house, here is a peek at some of the expenses you can expect to face.

Infrastructure Costs

There are many internal infrastructure expenses when it comes to in-house IT. For instance, setting up an IT infrastructure, which includes servers, routers, PCs, security tools, and productivity software, can cost tens of thousands upfront.

After the initial setup, there are plenty of ongoing maintenance expenses as well in order to keep the infrastructure up-to-date through future upgrades and the software licenses necessary to run them.

Constant Endpoint Monitoring

Monitoring employee endpoints for security threats and managing bandwidth usage are essential tasks in today’s digital workplace. However, doing this in-house requires investing in monitoring tools, allocating staff resources for constant monitoring, and addressing any issues that arise promptly, all of which contribute to hidden costs. Plus, the high demand for skilled IT professionals often requires spending more on salaries and benefits to keep talent from moving to competitors or larger enterprises.

Team Training Materials to Educate Your Employees

Investing in ongoing cybersecurity training for your employees is crucial for protecting your business from cyber threats. However, creating and maintaining training materials, conducting training sessions, and keeping up with the latest cybersecurity trends can be expensive and time-consuming when done internally.

Cooling Costs for Server Room

Running a server room generates significant heat, requiring constant cooling to prevent overheating and equipment damage. These cooling expenses, including electricity for air conditioning systems and specialized cooling equipment, can add up quickly and become a significant portion of your IT budget.

Downtime and Productivity Loss

When systems crash, it’s not just a hassle — it can be a financial black hole. Immediately, you will see a loss in revenue, but the ripple effects on employee productivity and morale can be equally damaging. Each minute wasted due to IT failures or inefficiencies takes away from the business’s bottom line and can ruin the competitive edge in a fast-paced market.

Security Risks and Data Breaches

With cyber threats looming large everywhere, securing your own IT infrastructure is a big deal. Even small businesses get hit by cyberattacks and data breaches, and when it happens, you’re looking at fines, lawyers’ bills, and a damaged reputation that’s hard to fix. Plus, you have to spend money improving your security and regularly auditing your tech. It can feel like a never-ending cycle of spending.

Opportunity Costs

Putting too much effort into managing your IT in-house can take away time and resources from what matters for your business. When you’re constantly battling IT concerns, it can stifle innovation and hamper growth. The decision to keep your IT functions internally can prevent you from exploring new market opportunities or investing in research and development that could pave the way for future success.

Scalability Challenges

If you’re an SMB aiming to grow, scaling in-house IT infrastructure can be a challenge. Expanding hardware, software, and personnel to match business growth requires careful planning as well as a financial investment. Sometimes,  the way things are set up internally makes it hard to grow quickly, which can hold back the company from keeping up with what customers want.

Missing Out on Hardware Deals From MSPs

Managed Service Providers (MSPs) often partner with hardware vendors, allowing them to pass on exclusive deals and discounts to their clients. By managing IT internally, SMBs may miss out on these cost-saving opportunities, ultimately paying more for hardware purchases and upgrades.

Managing Inbound Tickets + Proactive Projects

Handling inbound IT support tickets and managing proactive IT projects, such as system upgrades and cybersecurity enhancements, requires a dedicated team of IT professionals. The manpower needed to address these tasks internally can strain resources and lead to increased operational costs.

For SMBs, outsourcing certain IT tasks to MSPs can be more cost-effective than maintaining a full internal IT team. Outsourcing allows businesses to access specialized expertise on an as-needed basis, avoiding the overhead costs associated with hiring, training, and retaining in-house IT staff.

Total Cost of Ownership Analysis

Knowing the Total Cost of Ownership (TCO) is critical for small businesses when they’re deciding where to put their money in IT. TCO isn’t just about how much you spend at the beginning — it covers all the costs, both direct and indirect, that come with your IT stuff over time. When SMBs do a thorough TCO analysis, they can see the big picture of how their IT choices affect their money in the long run. This helps them plan better and make smarter decisions about their IT strategies.

Running your IT in-house might seem like a great option, but there are hidden costs that can significantly impact the financial health and operational efficiency of your business. Figuring out what these costs are is key to mitigating their impact. 

Lots of businesses find that getting outside help with their IT, like outsourcing services, can be a smart move. It can help keep costs more predictable, give access to the latest tech and experts, and let you adjust things easily as your business grows.

As a small business, you need to take a close look at your IT setup and think about whether the hidden costs are worth it compared to other options like outsourcing. 

Getting advice from IT pros can help you find ways to save money and make things run smoother, ensuring that the IT backbone of your business supports rather than hinders growth. Now is the time to explore tailored IT solutions that can adapt to your business’s evolving needs, securing a competitive edge in the digital marketplace.

If you want to learn more about how Nextro can help your organisation reduce its IT costs, get in touch with our team now.