Why Skimping on Technology Can Be Costly?

Skimping on IT

Skimping on IT can be dangerous for your organization


As businesses face adverse business environment, they are likely to skimp on technology, among other steps to manage the business. Skimping comes in different forms such as cancelling or postponing acquisitions; product features; technology and human resources. While skimping may seem to return benefits — more specifically, cost savings — in the short term, it is likely to stymie the growth in the long term. Contrary to the belief that technology investments or acquisitions generally raise costs, they can not only improve how business is done but also reduce costs. For example, compare the costs of acquiring a virtual meeting technology and the travel costs incurred in meeting customers or leads. Empirical data corroborates the cost and productivity benefits offered by technology.

Why do businesses skimp?

  • Challenging business conditions

Adverse business climate in the form of factors such as demand slump, slowing sales and government policies strongly discourage technology investments.

  • Cost cutting

When businesses focus on cost cutting by shedding locations, people and other resources, it is difficult to even think of new technology acquisition or investments because it is against the current policy.

  • Cost versus benefit analysis outcome

Many businesses, as a policy, are more inclined to favor the benefits of cost reduction more than that of technology investments. In such businesses, technology investments are usually enforced by circumstances or law. The cost reduction benefits are almost immediately visible and tangible but that of technology investments not as much. So, CEOs, CFOs or COOs, who are accountable to shareholders, are more inclined to cut costs than invest in technology.

Technologies usually impacted by skimping

CEOs, CFOs or COOs want to show results quickly and what better than cost reduction? The higher the reduction the better. Based on this goal, the following technology investments are usually impacted.

  • Company acquisitions

Company acquisitions are among the costliest of investments. They are either shelved or postponed.

  • Technologies with long-term vision

Technologies such as HR analytics software applications take a while before giving returns on investment (RoI). Such investments do not find much favor.

  • Multiple software licenses

Businesses usually want to make do with minimum licenses.

Incentives for not skimping

CEOs, CFOs or COOs are rarely not driven by short-term goals and this is a strong factor behind skimping. However, if they are willing to go a bit beyond short-term gains, data reveals that technology investments not only improve productivity but also save costs. For example, in the marketing teams, eAdvisors enjoy comparative advantages over traditional advisors because the former adopt technology in their jobs. When eAdvisors are on the move to meet clients and leads, they can show high-quality and engaging presentations on tablets or laptops as opposed to traditional marketing and persuasion techniques used by traditional advisors.


If businesses must skimp which they will in certain circumstances, they need to distinguish between critical and non-critical technology investments.

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