We come across many clients who try and save themselves money by using ‘free’ or ‘cheap’ IT solutions, that turn out costing the company a lot more than the other options. One of our clients found out the hard way, choosing the wrong places to spend their funds.
Our client installed Open Office, the free alternative of Microsoft Office, onto their Terminal Server because they didn’t want to spend the additional costs on Microsoft licensing. After repeatedly running into issues using the software, we were brought in to help them out.
Is it really the cheap option?
Using Open Office, the company was having to deal with: staff requiring more training, the software taking longer to do simple tasks, and support of the software taking longer from a break-fix perspective.
On average the staff member was spending approximately 15mins a day extra than they normally would need to use the new software.
The hidden costs
Extrapolating it out it works out to, 15mins per day = 75mins per week = 3450mins per working year = 57.5hrs per working year = cost of $1,315.60 per year (based on the hourly rate of $22.88 per hour), and for a company of 15 staff, the ‘cheap’ software actually costs the company around $19,734.00 per year.
As servers get older, they typically require more break-fix type maintenance. When they first go in, they probably require around 12 hour per year of solid maintenance as a bare minimum. At the five year mark, they probably require around 60 hours per year of solid maintenance (including backups, hardware failures, etc).
These are estimates of course, but mapping this out from the first year to the fifth year, the cost to maintain a five year old server would be approximately $7,200 per year.
In addition, power and cooling costs go up.
A new server typically costs 18% of the original cost of the hardware per year in power and cooling. So based on the average cost of a server of $15,000 (for a small company of 15 staff), the cost per year for power and cooling in the first year would be around $2,700.00.
However, by the fifth year of a server’s life, it’s reasonable to assume the server won’t run as efficiently as it first did. Let’s say in it’s fifth year it now costs around 25%, rather than 18%, equating to $3,750.00 per year.
The count so far on our scenario here is approximately $61,288.80 per year for a company of 15 staff with ‘cheap’ software, slow infrastructure and an aging server.
And this is only looking at a small subset of factors.
Needless to say, once we consulted with the client we were able to work out a beneficial solution that saved the company money in staff productivity, as well as software and hardware maintenance.