Most business managers and owners are familiar with the concept of opportunity cost, but they may not be applying the idea to their decisions regarding IT support.
What is opportunity cost?
Simply put, opportunity cost is the foundational economic concept that whenever a decision is made, certain trade-offs will occur. Something must be given up as a consequence of the decision made. Whatever is given up is referred to as the opportunity cost of that particular decision.
For example, someone who takes money from a bank account in order to purchase a new car is giving up more than the money itself; they are also sacrificing the opportunities that the sum might have opened up. The opportunity cost of the car might be additional funds that the money in question could have generated were it invested in an interest-bearing account.
How opportunity cost in involved in IT consulting
Opportunity costs should be carefully weighed whenever a small or medium-sized business encounters tech difficulties or it is planning to implement a new form of technology. Many times, SMBs try to handle these issues on their own rather than outlay funds to pay for IT consulting. This can be a strategic error since non-experts are likely to spend a great deal of time dealing with the technology involved.
This time could have been spent on profit-generating activities such as pursuing new clients. The opportunity cost, in terms on dollars, of doing the work yourself could well exceed the amount you would have to pay to hire an IT consulting firm to take care of it for you.