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Clip Here and Save Big
How to trim your IT budget without making sacrifices.
Published May 2008
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These days, even companies in nontechnical industries are spending ever larger chunks of their budgets on IT. Last year, companies with less than $250 million in annual revenue spent a median of $6,120 per employee on technology, according to Computer Economics, an IT research firm in Irvine, California. This year, many businesses are looking to cut IT spending. Though there are countless ways to scrimp here and there, experts say the most effective way to pinch pennies without sacrificing technology is to outsource as much IT as possible. Handing off management of tech systems to so-called hosted or managed service providers not only cuts costs but also eliminates common IT headaches. If you want to save big bucks on IT, consider farming out the following functions to someone else.
Stop Tinkering With E-mail
E-mail trouble is the most common reason employees flag down the IT team. An in-house e-mail system requires a robust server. And floods of spam and system crashes can consume hours of technicians' time. Estimates put the monthly cost of maintaining an internal mail server -- including license fees, bandwidth, upgrades, and the staff to run it -- at as much as $50 per employee. That's why many businesses are switching to hosted options from companies such as BlueTie, FuseMail, Everyone.net, and Mailtrust, which can cost as little as $1 to $15 a month per user. Many offer hosted Microsoft Exchange servers so you don't have to get used to a new program, or they offer Web-based programs that look similar to Microsoft Outlook. Most provide around-the-clock customer support.
That's why Air Tractor opted for a hosted e-mail service. The Olney, Texas -- based company, which manufactures and sells crop-dusting planes, needed e-mail for its 50 or so office employees but wanted to avoid the cost of managing it in-house. "We didn't even want to think about hiring an expensive IT guy to keep up with it," says Jim Anz, who manages Air Tractor's data processing. Anz chose Noteworthy, a Web-based e-mail program from Mailtrust with shared calendars and group contact lists. He liked the price -- less than $2 per user per month -- and that he didn't need to pay another company to keep the e-mail free of spam and viruses. Anz was also won over by Mailtrust's guarantee of an immediate response if something went wrong.
AMOUNT SAVED: About $20,000 a year
Use Software on the Web
Whether you call it software on demand or software as a service, the idea is the same: You use software on the Web instead of installing it on your hard drives, and you pay as you go. Salesforce.com and NetSuite led the way with hosted customer relationship management services, but now all sorts of software makers are offering hosted versions of their programs. Even Microsoft (NASDAQ:MSFT), the king of packaged software, has recently taken baby steps toward offering hosted versions of its software, including Office Live Workspace, which allows users to share and view Microsoft Office documents online. (Of course, to edit documents, users must have Office installed on their computers.) Using hosted software saves companies both a hefty up-front license fee and the cost of having techies install and troubleshoot programs. Plus, companies can easily cut back or increase the number of users as needed.
Matt Rissell likes that idea. His company, TSheets.com, which is based in Meridian, Idaho, sells hosted software that helps companies manage time sheets. And Rissell uses hosted applications to meet some of his own company's needs. He figures one such application, Yugma, saves him more than $150 a month. It's an online collaboration tool that includes whiteboards, chat, and file sharing. Instead of Microsoft SharePoint, Rissell's programmers use Yugma -- which costs Rissell $20 a month for 20 users -- to collaborate on their coding projects. He also uses it to host Web-based seminars for his customers around the world. "It's the kind of tool every big business owner has, only it's priced so that a small-business owner can afford it," says Rissell. And he's not locked into a long-term contract, because he pays on a month-by-month basis.
AMOUNT SAVED: About $1,800 a year
Switch to a Virtual Phone System
Another hefty expense and technician time-suck is the company phone system. Instead of plunking down several thousand dollars for an internal phone system -- also known as a private branch exchange, or PBX -- some small and midsize companies are opting for so-called virtual PBX services.
These phone providers, such as GotVMail, RingCentral, Packet8, Virtual-PBX, and many others, offer hosted phone systems that don't require installing or maintaining equipment. For a monthly fee of about $2 to $15 per extension, companies get an internal phone system with a main number, voice mail, and free internal calling. Incoming calls to an extension can be routed to a landline, VoIP phone, or cell phone. Because the equipment is managed off-site by the virtual PBX service, companies avoid paying a staff technician. However, many of the services are geared toward companies with fewer than 100 employees.
Some virtual PBX providers, such as Junction Networks and CallTower, also offer hosted VoIP plans that can lower long-distance bills without the cost of installing and managing an internal VoIP system.
