Determining the Real Cost of IT Purchases

Businesses often inquire about the ROI (return on investment) before they make technology purchases or changes.

They want to know if their investment will provide a measurable, quantifiable return on the money they spend. In some cases, IT purchases will give you just that, but not all of them. When evaluating IT investments, businesses should take into consideration its long-term performance value.

Most business owners and managers know that technology does provide a valuable return for its cost. Try communicating with your clients and vendors without email, or keeping your books with only pen and paper. The right technology definitely has value, and applied with a smart strategy, can certainly give any business a strategic advantage. Faster delivery of goods and services to clients, increased employee productivity and reduced production costs are just a few examples.

Almost every business needs a few core IT applications to operate, but completing a new IT project or doing an upgrade does have a price tag.

Related: Find out how much you can expect to pay for managed IT services cost in Southern California

So how do you know if it is worth the money?

The right way to look at the real price of any IT project or upgrade is to look at the TCO (total cost of ownership) and not just the amount of money it’s going to cost.

For example, when you buy a car, the price of the car is only a fraction of the cost of owning it. You also have to consider the cost of insurance, gas, maintenance, for example, to get an accurate look at the cost of ownership. Therefore, the total cost of owning a car is far more than just the sticker price, and a less expensive car up-front can end up costing your more in the long run if frequent repairs are needed.

The same concept applies to IT.

When you’re comparing options, you need to consider the total cost of a particular IT decision, not just the price tag.

For example, if you haven’t upgraded your network, it may actually cost you more when you add up the cost of maintenance, support and poor performance, than spending several thousand dollars on new equipment.

These days, many businesses are looking at “going to the cloud” because they want to save money. In many cases, cloud computing will do just that, but the ROI will often come in the form of cheaper devices, less maintenance and little or no upgrade costs over a three-year period.

The savings will not likely come in the form of your month-to-month service and support fees.

So before you make a decision on your next IT project, make sure you take the total cost of your decision into consideration, and make sure you’re talking to a true expert who understands the difference between the price of something and the total cost.

Learn How to Evaluate Your IT Spending

Check out our executive webinar, "The True Cost of Your Technology: How to Evaluate Your IT Spending" to learn what you need to make better informed decisions about IT spending.