IT wears out and needs replacing. This is no secret. However, it does seem to come as a surprise to some businesses. We call this ‘Spend Shock’.
Imagine this scenario:
“Good morning, Your IT Department, how can I help”
“Hello, my PC is running really slowly”
“OK, no problem – let me just run some basic checks………”
“There are a few things I can do as temporary fixes, however the machine is quite old and needs replacing”
“What! We only bought it about 18 months ago!”
“Actually we sold it to you – 5 years ago. We send you a hardware report 4 times a year which details all of the equipment you have and when it’ll need replacing – this machine has been highlighted in the last 4 reports”
“I’m going to have to look at the budgets – I don’t think we have anything in for IT equipment – do what you can for now and I’ll get back to you…..”
The temporary fixes might improve user experience for a week, maybe even a month but that computer is going to need replacing.
There is a better way……
It’s pretty easy to avoid ‘Spend Shock’. Preparing an IT Budget.
Firstly, you’ll need to know when you bought your equipment. Secondly you’ll need to understand the lifespan of that equipment.
The average lifespan for your IT equipment is as follows:
Server 5-7 years
Desktop 4-5 years
Laptop 3-4 years
These are guidelines. A top spec laptop or desktop may last longer, a lower spec one less. There are also various upgrades you can do over the life of a machine to squeeze some more time out of it.
Swapping a hard disk drive (HDD) for a Solid-State Drive (SSD) can speed up an old machine, as can adding additional RAM. However, you’re generally spending money to kick a problem down the road for 12 months or so.
Once you know this basic information you can plan what you’ll need and when. You can pop this in a spreadsheet or into your budgeting software. Now you know exactly when your spend is coming up and can replace equipment before it starts to cause issues in your business.
Preparing an IT Budget really is that simple.
Spreading the Cost
Once you’ve got a handle on what you’re going to be spending and when you can look at how to spread your cost and work within your cash flow.
We have worked with clients on budgets where they save toward equipment, budgeting a percentage of future IT costs each month and putting that amount away. The
Alterntaively you can use leasing agreements or Hardware-as-a-Service (HaaS) to spread your costs.
IT is a depreciating asset, with a short lifespan. There is no advantage to owning it outright. HaaS means you have a fixed monthly cost for your equipment. At the end of the term your equipment is replaced with new and you continue to pay a similar fee. It’s very similar to leasing a car with a maintenance package.