Maintaining a Manageable IT Budget Regardless of Firm Size
By Anthony Mongeluzo, PCS –
November 7, 2018
Allow me to share a secret among IT companies. While we treat everyone equally, I can sometimes tell that smaller firms worry that they can’t avail themselves of the complete range of IT solutions, including the cloud, because they have a modest budget.
Here’s the reality. Small firms (let’s define them as a practice with 10 or fewer people) might be unable to afford all the bells and whistles of a larger firm, but modest steps can help you close the gap. Where is that leveraging? It’s all about the cloud.
The Small Firm
A determining factor of your investment in IT might hinge on growth plans. If you have nine people and realistically don’t see growth beyond one or two people in the next few years, then migrating to the cloud has plenty of pluses. You bypass server hardware charges, have no upfront capital expense, and incur no added infrastructure costs or upgrade charges. Migrating is relatively inexpensive, costs are predictable (cloud fee increases tend to be modest), downtime is generally minimal, and you won’t have to think about it constantly.
The Larger Firm
Your firm isn’t quite small (by our definition), and your size ranges from 25 to 50 people. At this size, consider building your own infrastructure with a company server or backup system. Our internal studies show that the payback on this investment is about 32 months. If you project out for five to seven years, you’ve paid your costs in two years and eight months, and the remaining cost virtually disappears.
When I explain this, most accountants ask: “What’s the catch, Anthony? There’s always a catch.” This approach takes some extra upfront planning. For example, you must ensure that you have a solid and safe power source and that the physical configuration of your office permits this approach. But with proper maintenance, you can significantly reduce costs.
Ask a consultant to help with your decision. I recommend an overall assessment (for small firms, too). Some accountants say that as the owner of a large IT firm, it’s in my interest to suggest an assessment or audit. They are correct. But it is also in their best interest. Most overview plans are either free or quite modest. If I see an accountant balk, I ask these relevant questions: “Don’t clients come to you for a half-hour or hour consultation when they have to make a significant decision regarding finances? Don’t you charge them your hourly rate or a set fee, and don’t you consider their seeking out your expertise a wise move?” I point out that the same strategic approach applies to accountants who must make decisions like migrating to the cloud or building their own network.
If you have a full-time person devoted to IT, it might be time to weigh the cost of a salary and benefits versus an outside vendor. This is particularly true if you don’t have confidence in your IT person. But if you decide to choose an outside vendor, it’s vital that you ask the following questions:
- Tell me about your reputation?
- Are you familiar with accounting practices?
- How can I know that every time we have an issue, I don’t get a new hire on the phone? \
- What is your response time when I’m having an IT crisis?
The endgame in technology assessment is not any more complicated than it is for analyzing the financials of a business. It starts with deciding to conduct an assessment, acting on the decision and then deciding on a trusted adviser who can provide your firm with options. In all of this, I return to a mantra that I share with all my accounting clients. You have among the most valuable assets of clients’ businesses: their financial records. Whatever path you choose, ensure that the safety of your digital information, and thus theirs, is paramount in all your deliberations.