Sheila Burkett

November 12, 2008

Everyday, we are faced with buying decisions. When it comes to making a technology purchase, the complexity of the hardware and software can make you question the decision or stall in making a decision. Below is an approach to making that buying decision and being comfortable with the decision you have made.  

 

In the IS world, we talk about understanding the scope and requirements for your technology needs. The reality is that anytime you decide you need to make a purchase, you should first understand why you need to make the purchase. As you go through this process, the first thing I highly recommend you do is to write down your needs. This should include how you are going to use the purchase, how it is going to improve your situation and what critical functions must it perform.

 

One example is purchasing a new computer. Most of the time, people decide that they need a new computer because they want one. They will go out and purchase whatever the latest computer they find that is in a price range they can tolerate. Once they bring it home, they discover it doesn’t have enough memory to run the software they use on a daily basis or better yet, the software they have will no longer run on the computer they just purchased. They are then faced with the dilemma of buying new software, which increases the overall cost of the initial purchase. 

 

The same is true with purchasing new software. You really must sit down and think through why you need the software. How will you use it in your business or personal life? What changes will need to be made when the software is put to use? What else you might need after purchasing the software? Many times people upgrade software because it is no longer being supported by the company who created the software. If you never called the company for support, the software still meets your needs and you don’t need additional functionality, it is perfectly ok to not upgrade the software. You would be amazed at what help is available for older versions of software that are no longer supported by the software vendors who created them. This will require a risk assessment to be done, as larger companies auditors will look at unsupported software as an internal control risk.

 

Before purchasing anything, you should assess what you have, how it is currently being used and what capabilities are not being fully utilized.   This analysis will allow you to better understand your real needs and what changes might need to be made in the organization when new hardware or software are implemented. 

Depending on your needs, the answer might be to stay competitive. Your customers might expect you to have the latest technology sitting on your desk or in order to provide the best customer service, you need the latest technology. There is nothing wrong with that answer. The important thing is to think through the why and ensure that it makes sense. In difficult economic times, it is important to prioritize our needs and wants. Going through this process will help you ensure you are making the right choices. 

 

Taking the time to understand your options before making a purchase allows you to weigh your criteria against price and availability. I would encourage you to create a grid (using a spreadsheet or piece of paper). Down the left-hand side, list your needs and criteria. Across the top, list providers of the product or service. At each cell, indicate if the provider meets that need. You may want to color code it (red, yellow, green), use yes/no indicators or come up another way to measure how well the product meets the need. This will allow you to prioritize your needs, identify like providers and eliminate those who don’t meet your needs. Remember, one of your criteria could be the provider’s customer service record or that they are a preferred vendor. The question for you will be what weight that will have verse cost and functionality.

 

Everyone has a budget, even if it isn’t written down. As a business, you should understand what you are able and willing to spend. Factor in if this will be a capitalized and how long is the depreciation period for that capital expenditure. Most accountants depreciate hardware (including desktops) over a five year period. The reality is that if you purchase a piece of equipment that is being depreciated over five years, then you need to make a purchase that will last five years. 

 

Once you have gone through this process, you will have to make decisions. By writing out your needs, understanding how it will be used, and knowing the options available, you will be able to make an educated choice. There will be no right answer. There isn’t one direction you should go with regards to purchasing hardware and software. As long as you make an educated decision, you will be able to move forward comfortably understanding the tradeoffs and why you made them. If you do your homework, you should select a product that meets your needs and helps you achieve your goals.

 

One of the services we offer at Tuxedo Park Management is helping you through this analysis and purchase decision.  Call us today to find how we can help you be more successful in making technology decisions.