Budgets are tight all over, and with so much new and emerging technology available to new business owners, it’s difficult to know when it’s wise to spend the money and when to just sit tight. Jim Browning, research vice president for Gartner, outlined four guidelines for managing IT expenses when he spoke at the Midsize Enterprise Summit. It’s good advice for those who want to start a business, too. Here are some rules of thumb to help evaluate when investing in technology makes sense for your business:
Align Your Technology With Your Business Goals
Browning says to start by evaluating how each of your technology investments serves your business goals, a principle he calls “doing less with less.” A technology budget for a typical office will include items such as Internet service, computers, tablets, smartphones, scanners, copiers, printers, and shredders. Depending on your line of business, you may need additional specialized equipment. For instance, a company with heavy graphic design, video production or teleconferencing needs might invest in a monitor with 4K capability to get double the resolution available. Make a list of your existing equipment as well as equipment you’re considering purchasing and identify what role each serves in advancing your business goals.
When evaluating how your technology serves your business goals, you should keep your financial goals in mind. How much does each piece of technology contribute toward generating a return on investment (ROI) in comparison to its expense? When evaluating this, consider your total cost of investment (TCO), not just the direct cost of purchase. Direct costs of purchasing equipment only contribute about 20 percent toward total TCO, Gartner estimates. The other 80 percent consists of expenses for labor, tech support, and maintenance. When these other costs are factored in, a $1,000 PC might actually end up costing $15,000 over a three-year period.
Remember to factor in TCO when calculating your ROI. This means it’s important to consider factors such as the quality of a vendor’s customer service and tech support when purchasing equipment. Map out each purchase decision and its rationale to make sure you’re getting a good return on your equipment investments.
One other factor to consider when calculating ROI is tax deductions. One advantage of buying equipment over leasing it is that you can deduct the full purchase price your first year.
Standardize Your Technology
Standardizing your technology is another key to lowering your costs when investing in technology, says Browning. This includes both simplifying your technological environment and reducing the number of vendors you work with. For instance, if you have a BYOD policy and your employees are using a wide range of different devices and operating systems, this increases the range of potential technology integrations, version updates and security risks you need to manage, thereby increasing your administrative time and costs.
Establish a BYOD policy that limits your employees to specific mobile device platforms and operating system versions. Similarly, standardizing your other hardware and software selections will lower your total cost of ownership by improving manageability.
Segment Your Users
A third key to keeping your technology purchases on budget is segmenting your users. At most companies, different types of employees will have different technology needs. However, allowing everyone to have an individual technology profile will needlessly multiply your equipment and support costs.
The solution is to define a set number of technology profiles within your company restricting which equipment and applications different types of users should have access to. To keep your company’s number of technology profiles manageable, most organizations should have no more than three to five different technology profiles, Browning says.
Go With Good Enough When Possible
Browning’s fourth guideline for keeping technology equipment investments under budget is going with “good enough” when possible. You don’t necessarily need the latest cutting-edge technology for every piece of equipment to stay competitive. Key pieces of equipment related to your company’s core strengths should certainly be kept up-to-date. For instance, if you’re an accounting firm, you need to keep current with the latest accounting software updates.
However, this doesn’t mean you need to buy a new PC and operating system every time you upgrade your software. In fact, 70 percent of technology purchases don’t need anything beyond “good enough” to serve their function, Browning says. Keep your costs down by buying refurbished equipment, which is often as good as new equipment but much less expensive.
Now that your technology tools are in place, it’s time to protect your personal assets! Call us today to form an LLC, incorporate a business, file a DBA and more! Don’t forget – we also offer free business consultations!
Roy Rasmussen, co-author of “Publishing for Publicity,” is a freelance copywriter who helps small businesses get more customers and make more sales. His specialty is helping experts reach their target market with a focused sales message. His most recent projects include books on cloud computing, small business management, sales, and business coaching.