Deciding to replace or upgrade computer equipment
Technology has become an important staple in the modern business environment. Businesses today rely upon automated technologies for both routine tasks and strategic planning. Due to the rapid progression of technology development and innovation, one of the biggest decision-making expenses organizations are often faced with today is deciding what to do when computer technology becomes outdated.
One of the initial questions managerial decision makers often consider is whether it is more cost efficient and functionally effective to replace or upgrade existing computer equipment. A primary reason why organizations put such emphasis and financial investment into technology is because it helps sustain a competitive advantage in what may be a heavily aggressive market.
Align with the business model
Determining whether to replace or upgrade computer equipment typically depends on several factors, including how the technology is used. Any equipment utilized should fit the existing business model and support its objectives, or if not, business strategies should be carefully analyzed before an investment in computer technology is made.
The reason for this is twofold, as the latest and greatest up-to-date technology will not be worth the investment if it does not support the business model, and consequently, older computer equipment may not help meet organizational objectives or strategic planning the company has slated for the future.
Decision makers are wise to pay heed to the ways their organizations use existing technology and how it aligns with business strategy to help determine what changes, if any, need to be made. If the current technology fits with strategies and for the most part does both its functional job and helps the business gain a competitive advantage, it may warrant an upgrade. However, if the existing technology is not meeting goals or benefiting the company in ways that it could from a strategic perspective, an overhaul and investment in new technology may be the better option.
Is existing technology efficient and functionally effective?
Peter Alexander, Entrepreneur.com, provides several points to consider when making the decision of whether to upgrade or purchase new equipment. Issues Alexander suggests to consider are staff productivity, types of applications being used — for instance, the more powerful the application, the stronger the equipment will need to be — and the number of users on the network.
Alexander says, "To help you decide, get an estimate on total repair costs from your trusted IT advisor. Ask what the warranty on the repair is, then compare this estimate to the cost of buying an equivalent, brand-new replacement. In some cases, the cost of buying or leasing new equipment is the same, or even less than, repairing. Plus, as mentioned earlier, the replacement may have new features and abilities the older model lacks."
Ultimately, as equipment becomes dated, technologies do need to be modernized or else the business may have difficulty keeping up with competition, especially if the computers are too sluggish to maintain strong levels of productivity. Ultimately, slower productivity will impact the bottom line if it takes longer to do the work necessary in order to turn a profit.
Strategic advantage
Technology is a significant expense; however, rather than focus on the expenditure, managerial decision makers can look at an upgrade or replacement as a strategic investment and opportunity. When considering what kind of hardware and software to invest in, or upgrade existing equipment, as mentioned earlier, strategic planning must be considered. Vision should not be limited to the now, but also incorporate longer-term business plans and potential expansion/growth; it is critical that scalability and compatibility be considered when it comes to technology expenditures.
Analysis should be conducted in order to determine how technology will best help gain and maintain a competitive advantage. Modernizing or replacing equipment can be an expensive lesson if the technology does not support business objectives. Any investment in technology ideally should carefully weigh several factors, including development and cost, reliability and accuracy, organizational change, privacy and security; additionally both short-term and long-term capabilities must be considered, as it is not feasible to invest in technologies that do not support organizational mission.
In summary, strategic planning technology is useless unless it supports the company's objectives and goals. Technology should be considered as an excellent chance to increase competitive advantage. If the current equipment is not helping the business be the best it can be, this means it is time to consider options. Managers should carefully evaluate and plan technology purchases, as it is not a decision to be made lightly; smart decisions will equate to profitable ones.
Technology is going to remain a part of the future, and businesses that can effectively learn how to plan for this expense can operate efficiently and use it to configure ways to maintain that coveted competitive advantage.
