4 Common mistakes – While understanding IT Department Cost


As we start stage 3 of reopening businesses in Ontario, most business leaders are striving for higher production levels without compromising health and safety. Increasing revenue levels and controlling operational cost is more critical than ever for any business leader.


Coronavirus continues to dominate every conversation as we all struggle to deal with the magnitude of the pandemic. However, amidst such chaos and discussions also lies an unparalleled opportunity to usher in transformational changes to the various sectors spread across.

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As technology investment in business kept operations alive when everything else was shut down, most business leaders considering technology to be very critical item for their revenue growth strategy, but many hesitate to invest because of economic uncertainty. Here are few facts to understand technology/IT operational cost:

  • Technology cost is small cost compare to other business expenses, but it impacts the most two critical items in business – payroll and revenue
  • IT Operational cost is unavoidable but business soft cost or impact on payroll/revenue can be measure and minimized.
  • Hard cost is easy to calculate but soft cost is complex, bit difficult to calculate
  • What you can measure, calculate, easy to control – soft cost is hard to control
  • IT Soft cost is many times higher than hard cost; controlling soft cost makes business operations lean and provide competitive advantage.

All business leaders will agree that payroll cost is biggest expense in any business, but most business leaders don’t consider this item while considering IT department cost.


Here’s top 4 mistakes when understanding IT Department Cost:

  • IT Staff Time: If you have IT Department or IT Staff, their salary, overtime, training, bonus all should be part of IT Cost. IT Department payroll cost needs to consider while understanding complete IT department cost not just hardware and software cost.
  • Non-IT Staff Time: Staff in other departments than IT, how much time they are spending coordinating with IT department, waiting for IT tasks, On-boarding/Off-boarding Time. An estimate time spent on IT support calls, tickets and average close time should be translated financial impact should also needs to be consider as part of IT cost.
  • Leadership Time: How much time is invested in IT meetings, decision making process, communication and research time? Business leaders time usually equals to most critical financial impact. Approximate time required for business leader to manage IT Department and soft cost should be part of IT Department cost
  • Mistakes and Wrong decision: Finally, time spent or wasted in wrong decisions. Mistakes, wrong decisions or lack of decision all waste time in IT Department. All mistakes in business have high financial impact. An estimate of past mistakes or wrong decisions and financial impact on business revenue and/or payroll should also be considered as part of IT Operational commitment.
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