Toward IT Utopia…Pay Now or Pay Later

What tools does your business require: a hammer, a cell phone, a utility van? How long do you expect these tools to last: two years, five years, ten years? What drives your purchase decisions for these items: quality, reliability, functionality, performance?

I have a finish hammer that was my grandfather’s, I’ve never had a cell phone for more than two years , and I expect my utility van, in which I haul around my 327 children, to last at least long enough for most of them to move out!

What’s my point? Good question. My point is that for some odd reason most small businesses relate to their skid loader, 10-key or office chair entirely differently than their technology tools. They fail to consider the useful life of their IT equipment, fail to consider quality and value when making purchasing decisions, and fail to evaluate the impact of functionality and performance on the tools usefulness.

I’ve read that Oracle replaces their computers every six months, as their internal studies reveal that the increased performance of new computers leads to increased productivity for staff, which in conjunction with lower maintenance and support costs leads to immediate positive ROI. A bit extreme? Perhaps. I mean, what does Larry Ellison know?

Maybe your staff’s productivity isn’t so directly tied to the use of your technology tools. Maybe you can remain competitive while doing business on that Windows 98 eMachine you got free in 2001 with a three-year AOL contract. Maybe you can justify spending $3,000 over the next year in maintenance costs on the server you could replace for $2,500 (complete with 3-year warranty), increasing the performance of your business critical systems for all seven of your staff. Maybe not.

Practical Steps:

  1. Make IT purchasing decisions based on value, reliability and performance, not just upfront cost.
  2. Estimate useful life of equipment for the purposes of depreciation and budgeting for replacement, and account for these when determining the costs of goods/services that you sell.
  3. Consider purchasing hardware warranty covering the entire useful life of the equipment.

Next, we’ll discuss software!

This entry was posted in Information Technology. Bookmark the permalink.

Comments are closed.