Scheidydude's Blog

So you want to make the move to the Cloud.  You’ve looked at your numbers.  You know what you spend, in salary and time, maintaining and updating your technology infrastructure.  Now read that last sentence again.  This is the most important step.  Many small businesses do not truly know what it costs them to maintain their infrastructure.  Nor do they often budget for future growth or obsolescence.  So take your time and get this step done right. 

So, what is your IT costing you?  How do you estimate cost and value beyond the numbers already on your balance sheet?

Estimating the cost and value of your information technology is not an entirely new process.  The same investments (sounds better than costs) in education and continuing education that apply to office staff, associates, trainees and even mid to C level officers also applies to your IT staff.  In some ways it even applies at an accelerated pace.

Technology often changes at an exponential rate (though that doesn’t mean we need to be on that cutting edge).  For small businesses, IT equipment is mostly purchased and capitalized on the books over a period of several years.  This practice doesn’t quite fit anymore.  Most consumer products and even low-end enterprise level laptops and desktops shouldn’t be on the books for more than 3 years.  Advancements in technology can quickly move these investments into obsolescence. While the cost of a laptop or desktop is not minute, the cost of a server and its associated operating system and applications are large in comparison.  And yet that server and software can easily be obsolete in 3 to 5 years.  To carry the cost of that technology on the books beyond that time is to carry a loss with no offsetting asset.  And just as that server, operating system or application may need to be updated, so do the skills your IT staff has in order to support those updates.  And, while companies were capitalizing the cost of the equipment longer than the life of the assets, they also were not budgeting for training staff on the updates that they did not see coming.

So on your books you already have your hard assets (server, operating systems and applications) and soft assets (employee salaries – and let’s face it, your staff, while an expense, are assets to the company – you wouldn’t want to have to train new employees to the unique way you do business).  But if you look further down the road, say within the next 3 years (most likely sooner if your considering moving to the Cloud), then you will also have the expense of upgrading or replacing your existing servers and applications as well as the expense of training your staff (both IT and end users).

Now we have your hard assets, soft assets, and future expenditures (hardware upgrades, OS upgrades, applications upgrades, and staff training).  Add them all up and there you have it, your current estimated cost for your Information Technology.

I didn’t get into the Pros and Cons yet, but we needed a good starting place, and knowing your current and future costs to maintain what you have is the best place.

I promise I’ll get into the Pros and Cons in the next post.