used with permission from HP Technology at Work
Most people have likely heard of “buyer’s remorse”. It’s the regret one feels after purchasing an item due to a variety of factors and is frequently associated with the purchase of an expensive item. The buyer might feel remorse due to guilt from extravagance, that they were over-influenced by the seller, or just made a bad choice. It is a feeling that most everyone can relate to. Whether it is the purchase of a home, car, or even lunch at a restaurant, we all want to ensure that we made a wise decision that will prove to be a good investment in the future.
While consumers often deal with buyer’s remorse, an overlooked part of any purchase is the long-term effects that a purchase has on the buyer. Many purchases require ongoing maintenance costs, updates, and costs for additional services as part of the purchase. For organizations, many purchases are made on a whim to satisfy an arising business need, financed by a one-time cash influx, or bought with the intention that it will never need to be replaced. This mindset can lead to something worse than buyer’s remorse and is a symptom of not having a long-term technology strategy.
While in college, my parents bought me a small chest freezer as a birthday gift. It worked great at the time and was an incredibly useful gift. When my wife and I purchased our current home, it came with a large chest freezer in the basement that was probably 40 years older than my other freezer. We chose to use the larger, older freezer as it could store more than the other freezer and seemed to operate just as well; we were happy to give my sister the smaller freezer when hers died. It was an easy decision to make and a wise one on our part (so far). New advancements are not made constantly in freezing capabilities, so while likely not as efficient, a 40 year old model is as capable, dependent, and reliable as a newer model. Unfortunately, the same does not apply when investing in technology for your organization.
I work with customers all the time that take a “have money, will buy” technology approach. Sometimes this strategy is perfectly fine for certain businesses. However, it is far better to approach the money invested in technology as an ongoing, planned expense. Here are some things to keep in mind when devising the technology strategy for your organization:
Your current purchases impact your future purchases
Good technology ties to your business practices and operations to improve efficiency and make your organization more productive. It is a no-brainer for business owners to update technology that they know is making their business more profitable. Some technology can bring about a more intangible benefit to organizations, making the decision to reinvest a more difficult one. While the business decision is often easy to make, making a decision for the greater good of your organization that doesn’t directly effect your bottom line is much harder to make. I find that the biggest area that this concept is neglected is in education.
Many schools approach technology with the “have money, will buy” mindset. The next time they come across $25,000 in funding, they’ll purchase a mobile lab or iPad cart. This is not a bad thing in some cases, but most schools do not make any plans to replenish their new purchase in 3-6 years. They don’t plan for breakage, setup costs, power consumption and other ancillary costs involved. They don’t plan for a future purchase that they will need to make to keep pace with their current purchase. I have seen more one-to-one initiatives than I would like that have no plan to replace 6 year old hardware and the planning upfront lacked an equipment replacement timeline. This mindset often comes with an unfair and unrealistic expectation of school technical staff to support the environment as efficiently as when the equipment was brand new.
I often get the question of: “Why do I need a new server when my current one is only 3 years old”? In this situation, the customer buys a server with the intention of file sharing and using it as a print server. Since that time, they have added resource intensive applications and a large SQL database. The server that they purchased is not obsolete…for the purpose they originally intended. But it is entirely lacking for the new services they require.
Additionally, the concept of Moore’s Law applies to technology. Moore’s Law is the idea that the number of transistors on integrated circuits doubles every 2 years and was the prediction of Gordon Moore back in 1965. The concept has been eerily accurate over the past 40 years and basically states that the capacity of technology doubles every two years. The moniker of “Law” is somewhat misleading as it is simply an observation made by Mr. Moore, but it has been remarkably accurate. While it is unknown whether the principle of Moore’s Law will hold forever, technology will continue to advance in capacity and capability over time. In loose terms, a computer bought today is 200% more powerful than one purchased four years ago. Before you jump in with both feet, examine the future implications of your technology decisions.
What’s the Total Cost of Ownership?
When you buy a car, you don’t pay the sticker price at the dealer or simply make payments, expecting to never have any additional costs related to the vehicle. Technology is no different: there are additional costs to maintain and support your purchase. In a 2008 report by Gartner, it was estimated that a desktop PC costing $1,200 will cost a company anywhere between $3,413 and $5,867 over a four year period. While six years is a long period for this information to remain valid today, it points out the incremental costs involved with purchasing technology. The crux of this being brought up is not scare you into not buying a PC, but to take into account and plan for future costs.
Total Cost of Ownership can be looked at in a variety of ways. Direct costs of ownership are required for technology to work and involve support, maintenance, repairs. Ancillary costs of ownership are costs incurred for supporting technology such as security and backups. External costs of ownership involve items like power consumption costs. Lack of addressing how to approach these costs can at the very worst, cause your technology to be unusable, and in the very best scenario, increase support costs.
Align your organization needs to technology investments
Many organizations do not realize that technology is both primary and ancillary in function. Technology can support an organization as a whole (network infrastructure) or an individual (iPad). It can be budgeted by department or under the umbrella of “technology.” It can become confusing what choices to make not only when budgeting, but also how to invest in technology that will serve your organization as you move into the future.
The market is flooded today with devices with lower price tags. Tablets, Chromebooks, and Smart Phones are new product categories that didn’t even exist 7-8 years ago. The capabilities and price of client devices are wide ranging. Some lower cost items have minimized maintenance costs at the sake of privacy. Others have minimized cost at the sake of functionality. Still others reduce upfront costs at the sake of maintenance costs. New devices are either good or bad depending on your need and how you intend to move forward, but should be looked at for the role they fulfill in your organization.
Setting your long-term technology strategy can seem imposing initially, but having direction and a game plan as your organization grows and has new needs is invaluable. If you have questions about how to address these issues and want to set a long-term strategy for your organization, [CONTACT US].
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