How To Determine The TRUE Cost Of Any IT Upgrade, Transition Or Addition
I’m often asked about the ROI (return on investment) for technology. Truth is, I don’t believe you “invest” in technology. Investments are things that provide a measurable, quantifiable return for your money.
Of course it can easily be argued that technology does provide a return for your money. If you don’t think so, try communicating with your clients and market without email or tracking inventory with pen and paper. And the right technology applied with a smart strategy can certainly give any business owner a strategic advantage in faster delivery of goods and services to customers, greater productivity, lowered production costs and the like. In fact, there aren’t too many businesses that can operate without a few core IT applications. But the reality is that your bank account is going to be a bit lighter after you install that new upgrade or technology, so how do you know if that IT upgrade or project is worth the money?
The right way to look at the true price of any IT project or upgrade is to look at TCO or “total cost of ownership” and not just the PRICE of the project or upgrade. For example, if you buy a car, the price of the car is only one cost of owning it. You also have to consider insurance, gas and routine maintenance like new tyres and oil changes to get an accurate look at what you’ll pay. Therefore, the total COST of owning a car is far more than just the price tag – and a cheaper car up front can end up costing more in the long-haul if frequent repairs are needed.
In IT, the same principle applies. You have to look at the TOTAL cost of a particular IT decision, not just the price tag, when comparing options. For example, the real cost of not upgrading a network may actually be higher than spending several thousand dollars on new equipment and upgrades when you accurately assess the total cost of maintenance, service fees and poor performance. These days, many business owners are looking at “going to the cloud” because they want to save money. And in many cases, it will do just that, but the cost savings will often come in the form of cheaper devices, less maintenance and low (or no) upgrade costs over a 3 year period – not in a month to month service fee. So before you say “No” or “Yes” to that next IT project, make sure you are taking into consideration the TOTAL cost of your decision, and make sure you are talking to a true pro who understands the difference between the price of something and the total cost.