Small businesses handle the procurement and depreciation of capital equipment in different ways. Is there a best practice for managing these purchases when it comes to tech purchases?
Typical small businesses handle the procurement of technology resources in one of four ways:
1) Leasing on a three or four year term.
2) Hardware As A Service (short explanation is similar to leasing with service included in the monthly fee).
3) Purchase with a three or four year depreciation schedule budgeting for replacement hardware in that time frame.
4) Purchase and use the equipment until it dies.
All of these options except for the last one ensure that employees are using equipment that is four years old or newer.
Why should a business care if they are using older equipment?
Some of the sentiments that small business owners bring up when asked to consider rotating newer IT resources into an annual budget are:
- The newest version of Windows or Office doesn't do anything more than our current version.
- Learning new software is an efficiency killer.
- Technology is expensive - why not use it until it breaks? After all, there is no value to equipment after four years.
Direct Equipment Cost
The average small business wastes 42 hours in lost productivity to older equipment. This can be directly attributed to the repair time lay, or professional IT support, techs spent fixing this older equipment.
Has Small Business Taken This Data to Heart?
TechAisle found that 66% of small businesses are currently using IT equipment that is older than four years old. Many of these previously had a rotation schedule for tech replacement, but eliminated it from the budget as they tightened belts over the last few years. The chart above shows that the cost of maintaining three older workstations per year is actually higher than the cost to replace them entirely. While finding space in the typical small business budget for new hardware can feel tough, and perhaps unnecessary, data suggests it is the smart business decision.
How has your Small Business handled the procurement of hardware?