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Dollars-and-sense Strategy

The Best Way to Contain Costs Is to Spend More Money


A little boy sits down at the table next to his father and says, “hey, Dad, would you like to save some money?” Dad replies, “sure, what do you have in mind?” The little boy replies, “why not buy me a bike? Then I won’t have to wear my shoes out so fast!”

I told that joke to a CFO recently, and he offered me a rather reluctant smile. With all seriousness, I told him there may be more truth to that story than he might want to admit. I asked him to join me as we walked around the office, going from department to department, watching people toiling away at their computers. All he saw was too many people. All I saw was too much old technology.

Greg Pellerin

Greg Pellerin

There was a time, not too long ago, when you could get away with keeping the same hardware and software for five years or longer. It might take a licking, but as long as it was still ticking, there was no use in replacing it. As it aged, new technology and people were brought in to address cutting-edge applications, but because the old systems were deemed too important to the company’s core operation, they (and the people being paid to operate and maintain them) were left alone.  Things don’t work that way anymore, or at least they shouldn’t.

Today, older technologies are nothing but a drain on the operating budget because, from an OpEx perspective, they are fully depreciated. Headcount can’t be reduced because trained people are needed for operation of those old but critical systems.

The best way to break this endless IT cycle is to establish a regularly scheduled information-technology assessment and refresh process. As tough as it may be for your CFO to accept, spending money on new IT resources at regular intervals (as well as assessing the people needed to run them) eliminates the even more expensive and disruptive result of trying to fix everything at once.

It comes down to three basic areas: IT operations, network design, and equipment. Here’s a look at what a comprehensive IT-assessment process should entail to create an effective technology refresh plan.

• IT operations. Start by looking at the people and procedures you have in place to meet current and future business goals. Identify whether your network is fast enough and efficient enough to accomplish those objectives.  Interviews with key business and IT stakeholders are key elements of the process.
• Network design. Are your current network switching, routing, and security designs stable, safe, and secure? Are connectivity and controls in place to meet current needs, let alone future growth?
• Equipment. Conduct a complete cataloguing of organizational hardware (PC, server, and user-device inventory). Assess condition, expandability, life expectancy, and replacement cost. Identify technology gaps and ask if day-to-day operations are limited by your current infrastructure (for example, a printer that can only print 10 pages a minute and what implications 20-page-per-minute capability would have on productivity).

In the end, the goal is to provide a road map for leveraging IT as a competitive advantage. Establish a technology-refresh schedule, then stick to it.

Donald Trump once said that “sometimes the best investments are the ones you don’t make.” But when it comes to the regular assessment of your IT infrastructure, you might want to tell Donald, “you’re fired!”

Greg Pellerin is a 15-year veteran of the telecommunications and IT industries and a co-founder of VertitechIT, one of the fastest-growing business and healthcare IT networking and consulting firms in the country; (413) 268-1605; [email protected]

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