So, you use Information Technology to cut down costs and increase productivity. Of course, in theory costs are expected to get cut but in reality, service providers see the little that gets paid and are unsatisfied. They would rather charge more for this important technology that makes working cheap and makes big profits.
Most costs are dependent on acquisition of equipment, maintainance of equipment and labour costs in terms of salaries for the isp's employees. Of these, their are costs that directly apply to the service itself and other which apply indirectly.
In terms of labour, you look at engineers as direct labour costs and administrative positions come under indirect labour eg, accountants, secretaries, drivers, managers. The costs of indirect labour and direct labour apply separately.
Other than labour, there are also material costs, some of which apply directly and some indirectly. For example, cost of maintaining a transmitter is a direct maintainance cost and cost of maintaining a vehicle is an indirect maintainance cost. The cost of buying a fuse to fix a transformer is a direct cost for a company like escom, and cost of buying a fuse to fix a car is an indirect cost.
So then when you separate these costs, you are able to make priorities with the budget you have. Under strenuous circumstances you might consider to priorities the direct costs as they are the ones that get you more moneys.
The indirect costs though less priorities but greatly affect the loss and profit. If neglected, its a loss you have trace where it comes from if recognized you can save a lot of costs and put yourself on the profitable side.
So, then in an Information Technology company, the Engineers, are more critical than the rest of the employees, the production equipment more critical than operational equipment. Setting priorities in this way, creates a better base for your IT start up.
I might have to put in the maths later as we proceed.
Kondwani C. Hara is C.E.O. and Chief Consultant at Oispr IT.