Streamline Your Tech Spending - Page 1

Jun 16, 2004

John Wu

According to the analysts, things are looking up for technology spending.

Most companies say they will either increase or maintain technology spending and prioritize investing in their infrastructure over purchasing the next 'whiz-bang' application.

Yet, even though there are signs that the economy is waking from its recessionary slumber, what has not changed is CIOs still must keep an eye on their technology budget. Don't let pent-up demand detract your focus from making solid decisions around your technology spend.

The following are five key considerations to think about in order to maximize your IT performance within you recovering budget.

Initial Cost v. Total Cost

Yes, Technology 'A' has a lower initial cost than Technology 'B' and it seems to be just what you're looking for. But, wait! That initial cost most likely is not what you will ultimately spend to purchase, integrate and implement the solution. Keep in mind that computer technology is not like real estate, where value appreciates over time.

From the moment you install the application or the technology, its value is on a downward trajectory. Understanding this is a given, so it is critical for you to get as much value out of the solution as you can, from the first day. Don't look to a solution that has all the bells and whistles, when you just need a couple of bells.

Planning for the future? Be realistic about what you will truly use and what may, ultimately, remain shelfware.

Another thing to keep in mind is mechanical replacement cost. Things that appear to be relatively simple pieces may require special equipment or trained personnel to maintain them. These can drive the cost of an otherwise inexpensive item way up. Look for solutions where the parts are easy to replace and where no specialized expertise is required.

Additionally, if general market parts can be used, all the better for your budget. For example, in the server industry, it is more fiscally prudent for a customer to choose a product that, in addition to being reliable and durable, has parts available on the open market.

Adaptation and Scalability

It is important to consider how fast your system adapts to new technology and what the costs are to make those adjustments. Take note of whether a vendor guarantees that they will support new and upcoming technology.

There have been instances with technology buyers who purchase version 1.0, only to discover it is being phased out by the vendor who will no longer provide support for it, thereby forcing the buyers to upgrade, maybe before they are ready, in order to not get stuck 'holding the bag.'

Also, make sure your vendor provides backwards compatibility. That way, you gain the advantage of upgrading to any new products and your investment is protected. Of course, if you do not expect your business or technology to maintain the status quo, you will need to understand how your solution will scale over time and how, if at all, the technology will interface with changing platforms and networking standards.

Big Budget Advertisers

In the consulting world, there is an adage, "You never got fired for hiring [insert widely known company name here]." The idea being that if a name is familiar enough, how could you have known that five months and $5 million later you still have a solution that doesn't work?

This no longer applies in post-recessionary times. As the dotcom era fizzled and even bellwethers of the technology industry faltered, there has been an emergence of viable technology options made available both by traditional and non-traditional sales channels.

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