With big budgets, IT departments make an obvious cost saving target. At the same time companies cannot miss the opportunities coming from new technologies. Carmen Ene, CEO of 3 Step IT, says CIOs and CFOs everywhere are left scratching their heads trying to work out how IT can deliver more while costing less.
In the past, a business’s IT department would typically consist of desktop computers, a handful of servers, telephone systems and software licenses and support - meaning that keeping budgets under control was much simpler. However, as a company’s technology stack becomes ever larger and more complex, cloud technologies, mobile devices and ERP systems have been added. With every new addition to an IT department’s remit, the task of maintaining a cost-effective budget becomes significantly more complex.
Consuming roughly a third of a typical IT budget, devices take up a sizeable chunk of these growing costs. It’s no surprise then, when those assets have been purchased, that companies typically hold off on replacing them for as long as they can in an attempt to save money where possible.
However, there is no such thing as a free lunch, and of course nothing is quite as simple as it seems. Just because a business does not buy replacement devices more regularly does not mean that it will simply save that amount of money.
The trouble with sweating devices
In order to counter the pressures put on an organisation’s IT department, one strategy that many CTOs have taken is to buy a business’s IT assets in one single purchase, or a handful of transactions. On the one hand, this simplifies the way the department manages its budget by only making purchases when needed. However, it also means that employees are often left with slow or outdated devices due to the pressure of sweating assets and using technology until the very end of its life.
This comes with a number of costs to a business. Firstly, from a financial viewpoint, the cost of an IT department providing support to the end user as a result of software failures, cyber-security problems and occasional device collapse. Secondly, there is a separate category of hidden costs: the opportunity cost that comes with not exploiting new advances. While we may not notice the change as it happens, PCs get faster, their graphics resolution improves, battery life improves, and device-to-device connections work better and more efficiently. As a result of missing out on this, those using outdated devices are forced to work slower and less efficiently, while those using newer devices see the speed and efficiency of their work improve.
While the practice of sweating devices may have made sense a few years ago, business technologies are now advancing at such a rapid rate that technology more than three years old can now be considered ‘outdated’. With technology becoming obsolete at a faster rate than ever before, it is surprising that so many companies overlook the importance of keeping their IT equipment up to date.
The Effect On Employees
Having to use outdated technology can have a knock-on effect throughout an organisation, and can begin to impact employee productivity and satisfaction. This is where the unforeseen cost of aging technology comes into play.
Research suggests that 53% of workers feel they would be more productive if their company gave them better technology to use. In addition, unproductive staff currently cost UK businesses £22 billion each year with an average of £4,467 per employee every year.
Complete Overhaul
Contrary to widespread assumptions that purchasing equipment outright simplifies budgets, it can in fact distort priorities and make it more difficult to invest in newer technologies - particularly when aging technology begins to malfunction and requires maintenance.
The costs associated with purchasing and maintaining a modern platform are no longer practical or sustainable and working current technologies until their eventual death doesn’t make business sense. Instead, organisations should look to a more flexible approach to equipping businesses with the agile tools needed to perform at their peak and drive future growth. Working with a flexible asset management system, coupled with a financing solution, can be the answer.