4 Practical tips for lowering small-business IT costs

4 Practical tips for lowering small-business IT costs

You can keep technology expenses low without outside contractors or additional full-time staff. In fact, our team primarily sells managed IT services to organizations with more than 30 employees because that’s the point where outsourcing tech support becomes unavoidable.

Every small- to medium-sized business (SMB) is different, so 30 employees isn’t a hard-and-fast number, but there are some unifying trends among technology budgets.

How much should my business spend on IT?

A Deloitte Insights report from 2018 found that the average SMB’s IT budget was 3.64% of the company’s revenue. But manufacturing firms and nonprofits reported much lower numbers:

Average IT budget as percentage of revenue

If you’re spending less than that and things are going smoothly, you’re doing great. If you’re battling IT obstacles or spending too much, here are some practical tips for reducing costs:

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Before you can honestly consider outsourcing IT management, you need to be 100% confident that it will solve problems and unclog bottlenecks. Our free eBook 5 Big Ways IT Outsourcing Can Boost Your Company's Productivity should get you to that point.

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Section 179 tax deductions

The IRS tax code lets you deduct the full value of business-related purchases in a single year. This dramatically reduces your year-end tax bill compared to depreciating equipment bit by bit over several years. You can apply the deduction to laptops, desktops, peripheral equipment, and even software.

All you have to do is save the purchase orders, invoices, and receipts for documentation when filing IRS Form 4562. Come April, you could write off up to 37% of your IT purchases.

Just keep in mind that in 2018, the Connecticut legislature enacted laws that disallowed the full IRS deduction. Consult with a local expert about balancing your state and federal tax claims.

Software-as-a-Service (SaaS)

Even though there are few opportunities left to purchase software for a one-time fee, it’s rarely a better decision than subscription-based software. Take Microsoft Office as an example: the one-time purchase is $250 versus the cloud-based subscription for $8.25 per month.

Microsoft Office cloud based subscription

The one-time option doesn’t become cheaper until after more than two and a half years. By the time you’ve reached that point, Microsoft has released enough features and upgrades for the cloud version it barely resembles the one-time purchase version.

SaaS options require less money up front. They also ensure you have the most recent and advanced versions of the app. Until you cross that 30-employee threshold and can manage enterprise software locally, you should always pick the SaaS option.

Bring your own device (BYOD)

BYOD used to refer to company policies that let employees use their own mobile phones for work. Almost everyone uses their own phone for work today, so the term is now more commonly associated with employees who use their own laptops for work.

Five or six years ago, the inefficiencies of installing company software and configuring security settings across dozens of different hardware specifications and operating systems would have prevented any opportunities for cost savings. But now it’s a piece of cake.

Hosted desktops, sometimes called Desktop-as-a-Service (DaaS), allow employees to log in to an app on their personal laptop that connects them to a “virtual desktop.” DaaS streams content from a computer somewhere else to any computer with an internet connection.

The apps, processing speeds, and security settings an employee experiences are tied to the distant virtual desktop rather than the hardware at your staffer’s fingertips. This means you can either buy fewer, or cheaper, computers without lowering productivity.

Automation

How often do you feel like technology is creating more work than it’s eliminating? Take data entry, for example. Doing it right might lead to exciting insights and business intelligence, but that usually requires hundreds of hours of monotonous work. In a fraction of that time, anyone can master some basic automation skills to reduce time wasted on managing technology.

Tools like Zapier, IFTTT, and Siri Shortcuts are built for users of all skill levels. You could set up an automation protocol whereby customer form submissions are automatically copied into an Excel spreadsheet with other submissions. Or you could delay purchasing customer service software with DIY automatic responses.

Just pick a task that requires the least amount of critical thinking and takes the most amount of time. If the task can be summarized as, “Any time X happens, do Y,” you can automate it.

If you’re approaching that 30-employee limit or your business has above-average IT needs, it may be time to start thinking about outsourcing your tech support. That’s a weighty decision, so we recommend learning a little bit about how it works first. Our free eBook — 5 Big Ways IT Outsourcing Can Boost Your Company's Productivity — is an excellent place to start research, so download your copy today!

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