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Focus Research Insight: What determines when to upgrade your IT infrastructure?
In our most recent study, surveying buyers across many IT verticals, 30% of buyers cited Stagnation (in terms of not taking advantage of advancing technology-- including their potential cost savings) as the biggest risk in sticking with their current system. How do you decide when to graduate to the next level of technology? What do you weigh in deciding whether or not to just keep maintaining the system you currently use?
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3 Answers
Sorry, posted my answer before joining so now it thinks I haven't answered. This is a re-post of the above
There are various factors that come into play and these vary by organization. It is a complex decision to make and depends on the scope of what you are considering. Changing the platform for one application, for example, will likely be easier than, say, moving your entire business to new platforms. There is not a generic answer because there are many factors in play.
In general though, it comes down to cost or revenue generation.
If a new system will generate revenue for the business, then it should be considered. Of course, even then it should be weighed against the costs. It won't matter if it makes you a million dollars if it costs ten million to implement.
When considering costs, all costs should be considered. Too often, the only cost considered is the cost of installing the new system, which is only a small part of the costs involved. Some other costs that should be included in the mix are licensing and license maintenance cost, support/maintenance cost, hardware availability cost (i.e. can I get my legacy hardware anymore), general hardware costs (i.e. does the newer hardware cost less), end-user training, developer training, system admin training, support personnel training, etc.
A part of support/maintenance costs is the attrition rate of support personnel. If the current system fails frequently (thus requiring continuous action by support) or the technology is really out dated, people are more likely to get burnt out, frustrated or bored and move on. So you should also consider the cost of hiring new people and the associated training.
Depending on the scope of upgrade being considered (e.g. a full data center or significant portion thereof) you could even be looking at costs like air conditioning costs, electrical usage costs, new wiring costs, etc.
There are also the hard to quantify costs that need to be considered. Implementing a new system often means downtime or transition time from the old system. Sometimes there can be significant losses to the business during this period.
Of course, it depends on the scope of what is being done/considered.
Some of these costs are one offs and thus will have a different weight in the decision.
There are two tipping points. One is when the cost of maintaining/supporting the old system is greater (or projected to become greater) than installing and supporting the new system. The other is when the business needs functionality that the old system just cannot support, or the cost of making it support it is higher than getting a new system.
Businesses are there to make money. If your infrastructure changes don't either lower costs or raise revenues...you should likely not do it.
An overly simlistic answer is does the current system keep me from getting business done effectively. Often times, new features and benefits get cited as key drivers, delivering great ROI, but in the end the new system gets used just like the old one, erasing a good deal of the percieved ROI. I tend to look at replacement from these angles:
1) Is this new system going to make me money - #1 question. Be it customer features, maintaining your market lead or adding emerging capabilities, this has to be considered first.
2) Is the new system going to save money over the old one, including staff reduction, consultancy reduction, license reduction, vendor reduction, MRC fee reduction and maintenance reduction. An example might be a VoIP implementation. If this system can simply save $200 / month in recurring costs, and costs $6,000 to implement, then you break even in about 3 years with no other real benefit. But if the value add it brings is to service customers better (reduced hold times, better call tree navigation, integration to account data etc.) then it becomes a no brainer.
3) Will we really use the features and benefits of the new system (like buying a car, sure the new one can go 150 miles per hour where the old one could only go 120 mph, but when will I actually go 120 mph?). If I am getting the job done with my current tools, and won't really get it done better with the new ones, then why switch.
A checklist for consideration:
Obsolescence
Cost reduction (most likely pertaining to the annual maintenance expenses)
Capacity expansion
Performance improvement
Consolidation/Virtualization (to reduce costs and administrative effort)
Vendor business failure or lack of confidence
Incompatibility with other infrastructure components
Product or Vendor Consolidation (reducing the number of contracts/minimizing required support knowledge)
Moving to Open Source technologies
Each decision should be based on business demand or to reduce the overall cost of the infrastructure.
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