With myriad systems available to help you run your business, and so many of your competitors thriving and dying at the same time, taking the risk out of how you make those big decisions should rely on real data instead of speculation or assumptions. But how do you work out the ROI of your IT outsourcing, London or otherwise?
We’re going to offer a straightforward calculation to get you started—the first and possibly most basic of many that an IT provider should help you with. Hopefully, when you add your own business data to the variables, it will show you the true value of having an outside operation provide real value, over your current ‘guesstimated’ savings by managing those matters in-house.
In this topic:
- Throwing numbers around to see what sticks
- The tip of the IT Iceberg
- Your ROI guide to to IT outsourcing
Throwing numbers around to see what sticks
I stumbled across this magic number the other day when looking into outsourcing IT ROI.
No—it’s not the date Brexit started its never-ending process—it’s the number of hours your staff will work over the course of a year if you give them 4 weeks holiday.
With it, a whole range of calculations become available that should help you paint a more accurate picture of your businesses efficiency and operation.
Number of production staff x hourly charge rate x 1920 = Optimum yearly revenue
If you compare the final figure to your actual revenue from the previous year, you’ll see how far you fall short of what should be your perfect target income. And you will fall a long way short of that figure. I guarantee it.
Where does that shortfall go?
The biggest offender is the time that your staff aren’t working. So, why aren’t they working? Well, it’d be inhumane to expect them to work the full 8 hours a day without a break or a pause for breath, but here’s a consideration that you can take control of.
If your staff loses 15 minutes a day each because their computer freezes, their email is down, there’s a system or network crash, or any other basic IT stumble, that adds up to 3,600 minutes a year. How long does it take to switch off a computer and reboot it? 4 or 5 minutes? If they go for a coffee when their email server isn’t responding, how long there? 10 minutes? How often do they struggle connecting to a network or Wi-Fi printer?
That 15 minutes a day is looking fairly realistic now, isn’t it?
In total, that’s 60 hours a year for each of your staff.
You’re paying your workforce a week and a half’s wages to wait for systems to reconnect.
If you’ve got 25 workers on £30k salaries—that’s almost £22k a year in lost revenue.
If you outsource your IT to minimise that downtime, that £22k figure is only the start.
What about the time a worker spends trying to fix a problem him or herself? What about a system shutdown or a hack where the business has to close for a day? Shutting down our imaginary small business for a single day will cost them £2.8k.
The monthly fee of a typical London IT outsourcing specialist doesn’t look quite so imposing now, does it?
Here are a few other items from a vast and increasing selection that will increase the time spent by your staff ‘not doing their job’:
- Network downtime
- Configuring hardware
- Hardware crashes
- Malware attacks
- Software conflicts
- Internet dropouts
- Phone system crashes
- Power outages
- Cyber attacks
And these are only the tip of the iceberg. Imagine how much more concerning it would be if you had the full list of possible day-to-day technical failings that your business could experience in any given day?
Here’s another unsettling food for thought figure.
For a business with £5million of yearly revenue, the combined rate for that business over the course of a year is £2,604/hr. If they lost a week and a half of their chargeable hours, that’s £156k of lost revenue. That’s not a figure to be taken lightly.
Our country’s capital is a thriving hub of business operation. Taking care of your IT systems properly is a big undertaking, and making a choice to outsource in London offers real advantages, savings and profit. Take the time to produce the relative figures to your business, and you’ll start to see just how much.
The tip of the IT iceberg
We haven’t even touched on increasing workflow, boosting productivity, automating procedures, enhancing communication and the myriad other advantages and savings that a more proficient use of IT can bring to your operation.
Those numbers are only the starting point covering basic downtime. Just one of the items we take for granted as part of the workday process. But it shouldn’t be. For you to run at your best, your systems need to too. Are you taking care of those systems as you should? Or are they letting you down and impacting revenue on a daily basis?
Talk to one of our consultants. We provide the kind of structured plans in IT outsourcing, London businesses need.
Your ROI guide to IT outsourcing
When you’ve started number crunching, and you’re beginning to see the benefits available—physically and financially—here’s a quick guide to making sure you get the best when taking the plunge.
1. Understand your outsourcing requirements in detail
This will come from an intense evaluation of your existing business processes in every department.
2. Conduct a cost-benefit analysis
Search out the hidden costs and considered qualitative benefits. Your IT provider will have experienced pitfalls you may not be aware of when working with other businesses. They’re in a position to offer different solutions in streamlining your system, and the time and savings they should add to your figures.
3. Define the data that you will use to measure your success
This is the tool you need to know that your outsourcing is offering genuine value, and also so your provider knows precisely what they’re aiming to achieve.
4. Schedule regular ROI audits
- Are you meeting current compliance regulations?
- Has outsourcing lowered your operating costs as hoped?
- Have you improved your business strategy above and beyond previous operations?
- Has reconfiguring your processes transformed your operation?
- Are you automating existing tasks to allow your staff to work in more valuable areas?
- Can you see a clear picture of forwarding motion? If not, why not? Analyse your data. It’s essential that you understand where things work and where they don’t. And why.
- Are you introducing innovations and creative solutions as part of your product and process?
Asking the right questions and considering the gains from your initial requirements, as well as calculating real data provided from regular audits, will keep everyone on track.
If everything goes as it should, your provider can boast of the benefits they’ve brought, and you can pat yourself on the back, seeing how much revenue your smart thinking has brought to the business.
For your IT outsourcing in London, doesn’t it pay to employ an expert? Your personal ROI figures should tell you that it does.