Just like in The Brady Bunch where it was always, “Marcia, Marcia, Marcia!” hard costs seem to get all the press. Hard costs can easily be associated with a break/fix model, while soft costs can impact your business severely, but are rather difficult to calculate. Soft costs include things like the cost of downtime, loss of employee productivity, and people and labor costs. Soft costs are all too often overlooked by many organizations and most people, even CFO’s, cannot answer the question, “What is your soft dollar cost?”

 

Servers going down comprise both hard and soft costs.  Consider what I’ll call the soft cost bind companies can find themselves in when servers crash: hundreds of employees are no longer working productively and thousands of customers,  end users and executives alike are all  complaining.  Lost revenue resulting from the crash is a soft cost. Yes, that’s one way of putting it. 
 
Most companies look at salary, benefits and taxes associated with employees as total cost. They forget to consider that, in addition to salary, they need to pay for recruiting, skills assessments and screening expenses, as well as items related to the employee’s safety and productivity (maintenance, safety equipment, office equipment, business cards, smart phones, laptops, etc.) which all add to the cost. Don’t forget to add in training, vacation, sick time, personal time and possibly tuition reimbursement and you start to see what it actually costs not only to hire a person, but to maintain that person. Many HR Directors say business owners should to expect an employee to cost an additional 25% to 30% in soft costs on top of base salary each year.
 
Several other "soft dollar" issues can also have a major effect on an organizations cost of hire. For example, how much is lost each day while a position remains vacant? And what is the cost for training and development of a new hire to bring them up to speed?  What about the cost of a bad hire, which is estimated to cost between two and seven times the employee’s annual salary?  No one ever wants to discuss that, of course…

 

At Catapult Systems we can help you understand the concept of cost savings via managed services.  Every day we help our prospective clients grapple with the numbers for our managed services proactive support versus the common break/fix model to which many are currently accustomed.  Engage us and we’ll help you figure out the most cost effective way to transition into our SAFE Managed Services for SharePoint, SQL, Lync, Exchange and Systems Center.