Cost of IT in Australia

The total cost of IT can be broken down into these primary categories:

Known Costs

Equipment: This includes hardware like computers, servers, networks, and peripheral devices.

Software and Services: This encompasses applications, cloud-based solutions, and software-as-a-service (SaaS) offerings.

Personnel: This category covers the cost of IT staff, including salaries, benefits, hiring, and training

Unknown Costs

Disruptions: This includes costs related to downtime, security breaches, and other IT-related interruptions.

Opportunity Cost. This is the value of the following best alternative forgone when a choice is made. It’s essentially the benefit you miss when choosing one option over another.

While you can easily plan for the tangible assets of your IT infrastructure, like hardware and software, and even estimate personnel costs, the real challenge lies in predicting the unpredictable. Interruptions, from system crashes to security breaches, can disrupt operations and drive-up costs unexpectedly. That’s why it’s crucial to consider the initial investment and the potential hidden costs that can arise from unforeseen IT disruptions.

IIT interruptions can cost your business in two ways: lost time and missed opportunities. When employees are bogged down with IT problems or helping others, they’re not focusing on their primary tasks. A recent study by Robert Half Technology found that U.S. office workers waste an average of 22 minutes each day dealing with IT issues. That adds up to over 88 hours per year per employee, a significant drain on productivity.

Interruptions Cost

The average Australian salary in 2024 is $70,000 or $36 per hour.

22 minutes/day x 5 days/week x 48 weeks/year = 5,280 minutes or 88 hours/year

If our average hourly rate per employee is $36 per hour, then

Cost of lost time =  88 hours/year x $36/hour = $3,300/year per employee

If we have 15 employees, the lost time can cost us $49,500 annually. OK, now we are getting somewhere. We have a dollar value that we can associate with interruptions.

Opportunity Cost

The opportunity cost of IT disruptions extends far beyond the immediate financial impact. It includes lost productivity, delayed projects, decreased customer satisfaction, and hindered innovation. By investing in robust IT support and infrastructure, businesses can minimize these disruptions and focus on achieving their strategic goals.

So, while the disruption cost per employee is 88 hours and $3,300 per employee per year. The opportunity cost is what could those disrupted staff do with those 88 hours of lost time. Most companies want to get 2-3 times the salary per employee overall. So if we take 2 x the salary as a calculation baseline. So, each employee will generate $72 in income per hour.

The opportunity cost is $72 in lost income per hour.

Opportunity Cost  = 88 hours/year x $72/hour = $6,336/year per employee

Now let’s say 30% of your staff are from HR and other non-income generating areas

This brings down the Opportunity Cost to $4435.2