The many ways companies waste money on technology

The many ways companies waste money on technology



Most corporate tech waste starts with the hope/belief that tech will make a problem go away without prudent oversight.

Examples include:

  • Assuming the cloud will solve all problems and doesn’t need to be carefully managed. Often the problems arise because of poor planning. Many companies simply move all of their software online as a whole—so it can operate in the cloud instead of on the company’s servers—without modifying it. The problem is that if software isn’t modified, it may run all the time and draw on cloud resources needlessly, running up big usage costs. Most applications are written so that you “launch the application and let it run”. That model isn’t necessary in the cloud because resources can be allocated dynamically when the application needs them. Organizations that lack plans to track and monitor cloud costs overspend by an average of 40%. Many companies don’t realize they are storing their data online in a way that costs a lot more money (and) move software to the cloud that they’d be better off running on their own servers. Often companies move software to the cloud that they’d be better off running on their own servers. For instance, it can be cheaper to run software with heavy processing-power requirements (such as video-rendering tools) outside of the cloud.
  • Misunderstanding customer sentiment. Take the case of Harry Rosen, a 17-store luxury menswear chain based in Toronto. In 2018, it did a customer survey, asking if buyers would use PayPal if the company offered it on the site and a significant number said yes. So, the company hired a systems integrator to add PayPal into its e-commerce platform, at a cost of $80,000. But then only a small portion of the company’s online payments came through PayPal (just 10% by late 2018). The trouble seemed to be that PayPal wasn’t a one-step process. Customers had to click “buy,” fill out their payment information on the PayPal platform, and then go back to the Harry Rosen site to complete the transaction. In retrospect, says Ian Rosen, Harry Rosen’s executive vice president, digital and strategy, the company should have asked customers about broader question: What kind of payment experience best suits your needs? The company might have realized that customers wanted a simpler payment experience overall, not necessarily PayPal itself.
  • Sticking with old technology because it’s cheaper and ‘will do for now. In some cases, companies waste money because they can’t keep up with every new trend so they end up sticking with old technology when it isn’t cost-effective anymore.
  • Believing that in-house IT departments can do a better job building a custom solution rather than buying from a vendor. In businesses that have strong technology capabilities, teams that oversee the company’s technology may push to develop new tools or services in-house instead of buying them. You end up doing a lot of work that, to be honest, is already available either cheaply or for free in the open source community.
  • Internal failures to communicate honestly or effectively. When tech problems waste company money, lack of communication, and a hesitancy to communicate failure, may be why.