From the November 2007 issue of Boomer Market Advisor • Subscribe!

November 1, 2007

Keeping pace with office technology

The technology industry is remarkably adept at continually churning out new hardware and software, leaving you faced with important questions. Does your firm need the latest microprocessors, operating systems or productivity applications? How often should you refresh your employees' computers, and how much should you budget?

A PC isn't a permanent solution -- Remember that a computer has a limited lifespan, and that just because it still works doesn't mean it hasn't outlived its usefulness. Our company's rule is that computers have, at most, a four-year lifespan. We divide those four years into two phases. Initially, the new systems go to our "power users." A few years later, they are redeployed to employees with less intensive needs. By redistributing systems, we can ensure that our most demanding users have the performance capacity they need to operate efficiently.

Buy at the sweet spot -- When buying a new desktop or server, the goal should be to find the balance between longevity and cost. While low-end systems may have more appealing price tags, the true value of these PCs may be disappointing due to their shorter functional life spans. Conversely, there is always a premium placed on the latest and greatest technology. For example, the fastest desktop processors available from Intel typically cost hundreds of dollars more than those just one step down on the performance ladder, even if the difference in speed -- and overall life of the machine -- is nearly imperceptible.

Budget well, spend wisely -- The cost of a system isn't limited to the hardware alone. After including the cost of productivity applications, antivirus software, business-level technical support, warranties and disaster recovery services, a $1,500 computer may cost closer to $2,500. Your firm should budget to replace 25 percent of its hardware each year. Failing to do so will create a future liability for your firm and make for dramatic spikes in technical expenditures.

Aim for flexible standardization -- Fortune 500 companies typically lease large lots of computers, deploying hundreds of identically-configured machines at once. While this streamlines an IT department's support and training practices, the costs often outweigh the benefits for smaller firms. It does makes sense to standardize on a single system vendor, as doing so means you can go to one source for tech support, more readily share replacement parts, and potentially tap into vendor-provided financing options like leasing and lines of credit. However, because most firms won't replace all of their systems at once, configurations will inevitably vary. Some employees may need additional storage capacity, dual monitors, or even multiple computers. Keep things consistent where possible, but don't fret about variations.

Investigate hosted options -- While ridding your firm of desktop PCs isn't realistic, there is an increasing number of hosted solutions -- also referred to as "software as a service" or "outsourced applications" -- that may lessen your dependence on boxed software and in-office servers. Google has introduced a number of online applications that compete with Microsoft's Office suite. Rather than running as a program on the PC itself, Google's offering is accessed through the PC's Web browser and delivers team collaboration and work-from-anywhere capabilities. While applications like these are in their infancy and may not yet be suitable for power users, they have the potential to lower software costs, simplify administration and -- because they run on Google's servers rather than the user's desktop -- extend the lifespan of PCs.

There are similar hosted solutions for a wide variety of business purposes, such as e-mail storage, payroll processing, CRM, and portfolio management. The biggest benefit to outsourcing software to these hosted solutions is that they reduce costs associated with buying and maintaining servers -- by far the most expensive components in an IT infrastructure.

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