Many businesses turn to cost-cutting measures to help boost profitability and keep their businesses healthy, especially when the specter of recession looms over the country. While trimming expenses, it’s important for small and midsized businesses to understand exactly how to cut IT costs, and the danger of cutting too deeply into technology support.

Here are some of the common risks associated with reducing IT budgets and ways to do it properly.

Risk 1: Cybersecurity Cost Cutting Leads to Increased Risk

Research shows that only about half of companies have an adequate security budget. Without the right level of cybersecurity spending, your security measures suffer, you’ll fail to address advanced threats, and your ability to respond quickly to attack decreases.

The consequences of insufficient security budgets can range from data breaches to regulatory non-compliance and severe reputational damage.

Degraded Cybersecurity Awareness
Cybersecurity awareness training is an important part your overall security strategy. Unfortunately, this area is often viewed as expendable during cost-cutting exercises. Neglecting cybersecurity awareness training increases the risk of human error, a common entry point for cybercriminals. Educating employees on best practices, identifying phishing attempts, and adhering to proper security protocols significantly enhances an organization’s defense against cyber threats.

Fail to Meet the Evolving Threat Landscape
Hackers continually adapt and refine their techniques, necessitating proactive measures to counter their evolving threats. Cost cutting in IT can impede the deployment of cutting-edge security technologies and restrict the ability to keep pace with emerging threats. Staying ahead of cybercriminals requires investment in threat intelligence platforms, regular security audits, and a proactive security posture to detect and respond to threats before they harm your organization.

Risk 2: The Wrong Compromises Harm Business Stability

One of the easiest—and most dangerous places—to cut IT costs is your disaster and recovery solution.

While most businesses that we work with have some backup and disaster recovery (BDR) solution in place, those solutions need maintenance and testing to stay relevant.

When done right, your BDR systems should as safeguard, helping promote business continuity, minimizing downtime in the face of data loss, system failures, or natural disasters. Without regular testing, these systems may fail when needed most, resulting in prolonged downtime, critical data loss, and potential reputational and financial damage.

Proper Network Technology Updates
But that’s not the only way that you can hurt the stability of your business. If you’re not vigilant about patching and updating your systems, however, you can find yourself in a similarly vulnerable situation.

According to security firm Avast, nearly 55% of the software installed on PCs across the globe is out of date. A separate report from just last year found that unpatched vulnerabilities are the most consistent ransomware attack vector, while unpatched Microsoft, Zoho, Fortinet, and Citrix software continues to be a source of pain.

Replacing end-of-life hardware and the application can contribute to performance degradation and an inability to adapt to evolving business needs. Utilizing unsupported hardware and software increases the risk of security breaches and compromises the organization’s ability to leverage the latest security enhancements.

Risk 3: The Hidden Cost of Second-Rate Technology

Reliable technology costs money, there’s no way to escape that fact. When you cut costs unduly, you ultimately force compromises in the quality of the tools that you’re going to use. In today’s always-on, hyper-connected business environment, those compromises can cost you serious money.

Working with Your IT Service Provider
If you’re working with a managed service provider (MSP), you’ll know that they invest a huge amount of time and resources to acquire expertise in specific technologies. Asking them to cut costs means that you’re forcing their IT team to work with technology or tools outside their core competence.

Expecting their staff to handle new technology without adequate training or support can lead to suboptimal job performance and reduce efficiency. What does that mean for you? Increased error rates, slower support times, and compromised security. Clearly, this is not an area where you’ll want to make compromises without careful consideration.

The Right Way to Cut IT Costs Effectively

Organizations should focus on optimizing IT expenditures by identifying areas where efficiency can be improved, while maintaining the necessary resources to mitigate risk. Research from advisory firm Gartner 39% of CFOs will zero in on cost cutting if inflation remains high in in the second half.

Here are some tips to reduce your costs the right way:

Implement Cost Management Strategy
Review your IT roadmap and strategy, and your network infrastructure. Is “shadow IT,” technology that exists outside your known technology budget, costing your money that you’re not accounting for? Is the upkeep on a legacy server or system driving your operating expenditures high, where a strategic cloud migration could eliminate those costs entirely? Trimming fat from existing systems is a delicate art, which may benefit from the help of a virtual chief information officer (vCIO).

Consider Current and Future Needs
Before cutting too deeply into your IT budgeting, first take stock of your current IT infrastructure and think about future needs. Are you planning an expansion that will require additional cybersecurity measures, data storage, and scale-up of your IT infrastructure. Understanding your existing technology landscape and projecting future growth will help you allocate appropriate funds to meet both immediate and long-term IT needs.

Strategically Outsource
For companies of the right size, there are benefits to having an in-house IT staff. Fast access to expertise, capturing institutional knowledge, and maximum flexibility are all good reasons. However, those benefits come at a high cost.

Handing over certain functions to a managed IT service provider can be a powerful tool, when it’s done right.

MSPs provide an entire team of technologists working with familiar technologies for a single, flat fee. That means they can efficiently take over all (or some) of your network management tasks without burdening your company with employee turnover or the onerous costs of hiring IT staff for every role.

An IT Management Partner with Deep Ohio Roots

Small and midsized businesses in Columbus and Cincinnati can struggle to make strong IT decisions, especially when it comes to long-term budgeting. The Astute Technology Management team has helped businesses in healthcare, commercial construction, and professional services get the most of their money for two decades. We’re here to help!

Contact us at any time at 614 389 4102 or [email protected].