Despite the rapid rise of cloud technologies in recent years, many businesses still opt to keep their IT in-house. There remains a common misconception that the on-premises approach is easier to control and budget for, but this is rarely the case outside of large enterprises, which have dedicated IT departments and clearly documented technology strategies. While in-house IT is the traditional approach, there’s never been any shortage of hidden costs.
#1. Continuous investment
Building an IT infrastructure from scratch easily runs into tens of thousands of dollars, even for a small business. Some of the direct costs include networking infrastructure, server hardware, workstations and software licenses, not to mention the expertise required to get everything up and running. While these expenses might be relatively straightforward to budget for, it’s the unexpected costs that can really eat away at a company’s bottom line.
Given the dynamic nature of enterprise technology, an internal IT department requires ongoing spending in the form of maintenance, upgrades, repairs, and remediation for unexpected things like data breaches or system failures. To keep ahead of the curve, business leaders are under constant pressure to innovate, and that requires continuous investment, as well as the ability to clearly prioritize tasks to make the best possible use of limited resources.
#2. Human resources
Enterprise IT is an incredibly competitive field that holds some of the highest-paid job titles. According to PayScale, for example, a Chief Information Officer (CIO) in the US demands an average salary of over $162,000 per year. That’s far beyond what many small businesses can afford, and it’s not even the whole story. Other payroll factors include pension contribution, taxes, bonuses, and more.
In-house IT also comes with unexpected HR expenses. For example, if something goes wrong and it’s beyond the abilities of your in-house team to resolve, you may need to call in a technician who will charge you by the hour. This break/fix approach to IT support presents unexpected costs that are simply impossible for small businesses to budget for. By contrast, proactive support commands a monthly fee that’s always predictable.
#3. Unsupported hours
Few companies can afford to maintain an in-house IT department that works around the clock. As such, problems may only be dealt with during working hours, which means more downtime. If employees come in to work one morning only to find that they can’t do their jobs because systems are down, productivity and morale will suffer. At the same time, customer satisfaction can plummet when instant gratification is expected.
Businesses with in-house IT departments may have no choice but to pay staff overtime to fix urgent issues, but this approach also presents the risk of burnout and reduced morale. Making matters even more complicated is the fact that, from a security and compliance perspective, your technology infrastructure needs 24/7/365 care anyway. After all, hackers don’t exactly adhere to a 9-till-5 routine, so neither can your IT.
#4. Software licensing
A lot of organizations run outdated operating systems and other software simply because they can’t afford to upgrade. Unfortunately, this presents an enormous risk, since outdated and unsupported software is inherently more vulnerable to exploits. We’ve all heard about the major ransomware and other malware attacks in recent years — many of them target such vulnerabilities.
Software licensing can be a veritable minefield to navigate, particularly if you want to run programs and operating systems in an in-house data center. A lot of desktop software cannot run in a virtualized, server-side environment without additional licensing costs. Fortunately, things are changing now that enterprise IT favors the software-as-a-service (SaaS) model, but software licensing for in-house infrastructures remains complex and costly.
#5. Cybersecurity failings
Given the multitude of digital threats facing today’s businesses, cybersecurity should be a top priority for any organization. In fact, security and compliance must be built in from the outset, rather than tacked on later. Maintaining an in-house IT infrastructure requires ample security expertise, compliance auditing, and ongoing staff training, and none of these come cheap.
Unfortunately, the cost of a data breach is much higher. Aside from the more immediate costs of remediation efforts, there are also factors like brand damage and possible litigation to think about. In fact, these indirect costs of suffering a data breach are sometimes enough to make businesses go into insolvency. As such, no business can afford to let cybersecurity take a backseat in a world where the threats are constantly evolving.