Contributed Column

All About IT

by Eric Hart, NPI

Budgeting to avoid falling behind the technology curve

Vermont companies depend heavily on technology to perform functions throughout the workplace. Every department feels the impact when systems aren’t working properly. Slow computers, software versions that lack functionality, and devices that unexpectedly stop working make it challenging to keep pace with customer demand. It makes good business sense to plan ahead for replacing older hardware and software before their limitations impact workflow.

It’s tempting to “leave well enough alone” when IT pains are only intermittent, but this is risky. Deferring an upgrade may avoid a capital expenditure, but the loss of valuable production time coupled with other consequences — delayed payments, diminished reputation, or the inability to keep talented staff — can add up to unacceptable losses.

The 2019 “State of IT” report by Spiceworks, a professional network for the information technology industry, says that the need to upgrade outdated IT infrastructure will drive this year’s budget increases. It reports that small companies (up to 100 people) have upped their 2019 technology allocations by 11 percent.

Here are some potential areas of concern in key technology areas:

Software

  • Look for applications that are unsupported by the vendor. Vendors usually support the current and one or two previous major versions of their software.
  • Verify that newly added software to support growth or the continuance of key functions is compatible with older software. The system may require additional upgrades: for example, a new operating system.
  • Check to make sure older devices such as servers and desktops will still work after new software is added.
  • Security
  • Be aware of changes in regulatory requirements.
  • Consider adding additional protections following a breach.
  • Hardware
  • Know the ages of your devices; most computer hardware has a serviceable life expectancy between three and seven years.
  • Take action if a server or other device fails on a regular basis.
  • Consider a next-generation device that has added features. For example, firewall technology regularly includes new security features.

All technology has a shelf life.

If you haven’t done an inventory in more than a year, the first step is to assess the state of your IT environment. This information will make it easier to plan and budget for replacement and project costs.

After determining which pieces of physical equipment are approaching the end of life, establish the current age and health of the software systems. Identify which are operating well and which need to be updated or replaced. Then you will be ready to create a plan, starting with the most critical replacements first.

This is not a one-and-done event. Schedule a revisit of the plan and budget at least once or twice a year.

Keep these things in mind as you create the budget:

  • • Moving to the cloud may avoid the cost of a new server, but don’t overlook the cost of migration. In the long term you will benefit from a “lease it rather than buy it” philosophy. This approach reduces the need to fund capital reserves for technology purchases.
  • • Don’t forget about license and warranty renewals, including firewall security subscriptions and server warranties.
  • • Allow for contingencies that may arise. Ten percent is a common allotment.
  • • Look into new technologies. Adopting them will maximize your company’s full potential by meeting your customers’ needs in new and innovative ways.

Moving from reactive to proactive technology management may be painful and expensive to do in a single year. You might need to prioritize the investments over several years until you have erased the technology debt.

An IT plan and budget will lead to improved business performance resulting in better execution of the overall company mission. •

Eric Hart is CEO of NPI Technology Management located in South Burlington, www.npi.net.

Index of Contributed Columns

For information on submitting a contributed column see here.