Cost Saving Mistake #1 - Switching ISP's on your own.
Posted 11/03/07
That’s right I used the words “cost saving” and
“money pit” in the same sentence. That’s because there are at
least 5 things that I see clients do all the time with their
office Information Technology (IT) that seams to be a
frugal move but in the end it’s just a waste of their money.
# 1 Switching your office Internet Service Provider (ISP) to
save $20 a month.
So that sounds like such an easy call to make right? After all
that’s a savings of $240 a year. But let me run this real life
story past you before you go jumping to conclusions.
You see unfortunately in this real life story the decision to
switch ISP’s was made by the Office Manager without consulting
with the firms IT company. In this case the Office Manager used
a Nationwide
Computer Service Company who specialized in small to medium
size office computer support. And although the Office Manager is
well respected by the firms owners, and has always been one to
keep a tight hold on the company purse, this move is about to
bust the bank.
Proceeding happily along the path of saving the firm $240 a year
the Office Manager cancels the current contract with ISP number
one and signs all the necessary paperwork to move over to ISP
number two.
Being a well organized Office Manager all the arrangements are
made to have the new ISP contact the IT company who takes care
of the firms network so they can coordinate their activities and
ensure the move goes smoothly.
A few days before the move the ISP makes contact with IT company
and tells them the plan. During this initial contact the IT
company asks the ISP about their plans to replace several
expensive and critical Cisco boxes that were supplied at no
charge by the previous ISP. The new ISP replies they have no
plans for any such replacement as by the terms of their contract
those boxes are to be supplied by the customer.
A sales rep from the IT company then immediately contacts the
Office Manager and informs them that they are about to lose
$5,000 in necessary hardware that was being supplied at no
charge by the former ISP. Knowing at this point the contracts
have been signed and the deal has gone past the point of no
return the Office Manger requests a quote to buy their own Cisco
hardware.
Next the IT company explains to the Office Manger the concept of
a static IP
and how it is being used in the firm’s current network setup.
Relieved that this issues does not require any additional
hardware purchases, the Office Manger authorizes what ever time
necessary to move the firm’s
Microsoft Small Business Servers and other systems over to
the new static IP addresses provided by the new ISP.
To wrap up this mess the day of the switch over comes and goes
and no major problems have occurred. The IT company doing the
network support and the new ISP work together very well and the
new Cisco hardware purchased by the customer works flawlessly as
expected.
But now, safe from the prying eyes of the Office Mangers
supervisors, it’s time to analyze the true cost savings of this
move. For the sake of a realistic time frame lets use a 3 year
contract to crunch the numbers against:
ISP cost savings over the term of the 3 year contract ($240 per
year x 3 years) = $ 720
Cost of 8 man hours of labor to install the new Cisco hardware
and switch IP addresses on several dozen devices = $752
Total savings (-$5,032). That works out to an additional $139
per month for the next three years in order to save $20 a month
on the ISP.
Hard to imagine this common IT cost saving move would ever have
been authorized by the Office Manger had the true costs been
known and evaluated up front. But just in case you have been the Office Manger
in a similar situation, don’t feel too bad because it happens all
the time. But if you have ever been in that spot next time be
sure to contact your IT company or staff in advance and discuss
the feasibility of the project before you commit to something
that looks like an easy call. Consulting with a good IT company
will help you understand the pros and cons of your plans so you
can move forward only on those that will truly make a worthwhile
cost savings for your firm..
That’s right I used the words “cost saving” and
“money pit” in the same sentence. That’s because there are at
least 5 things that I see clients do all the time with their
office Information Technology (IT) that seams to be a
frugal move but in the end it’s just a waste of their money.
