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THE BOTTOM
LINE
Auditing Current Technology
Saves Money
By Liese Hutchison
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The latest version of Microsoft Office is released, should the
company purchase it? Intel develops a chip with super mega memory,
does the company need it? Voice and data integration systems are
the latest trend, does the company have the capacity to handle
the bandwidth required? Fifteen new users are on board this month,
how many will be added next month?
Worldwide spending on information technology is expected to surpass
$3 trillion in three years. Corporations, schools and organizations
of all sizes are spending thousands and even millions of dollars
upgrading software, hardware, capacity, backbones, servers, voice,
data, video and security systems. Before the checkbook is opened,
technology buyers need to determine what technology they have,
what they need now and what they’ll need in the future.
Tom Sears, president of The Network Doctors, says companies can
end up spending money on technology they don’t need or trying
to integrate technology into hardware too old to handle it. “We
get a little excited about the new technology without thinking
about the cost and what it can do for us,” he notes. “Or we try
to ‘bandaid’ old equipment to include new technology.” The latter
can get very expensive, Sears says, because companies end up spending
so much on labor costs—the time it takes an IT expert to integrate
the new software or system into the existing hardware—that it
may be cheaper to purchase all new equipment along with the software
or system desired. “A company needs to look at the return on investment
on the older piece of equipment combined with the labor, versus
buying new equipment.” Sears says his company will do a cost analysis
for a client and apply the rule of one third—if one third of the
cost of new equipment can be saved by not spending money on labor
to work on the old equipment, he advises clients to buy new equipment
or to lease it.
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Worldwide
Spending on Information Communication Technology Grows
A study of the world’s information and communication
technology (ICT) spending reveals that the global high-tech
industry surged to more than $2.1 trillion in 1999, and
is expected to surpass $3 trillion in 2003. The World
Information Technology and Services Alliance recently
released the findings at Digital Planet 2000: The Global
Information Economy at the World Congress on Information
Technology in Taipei, Taiwan.
The study findings are based on data gathered in the 55
largest ICT buying countries and regions. In aggregate,
this group represents 98 percent of worldwide ICT spending.
The data encompasses spending on computer hardware, software
and services, telecommunications hardware and services,
office equipment and internal IT spending, which includes
company expenditures on IT employees, capital depreciation
and the internal portion of ICT spending budgets.
Other study findings:
• Growth in ICT spending in Eastern Europe and Latin
America both reached 42 percent between 1997 and 1999,
far outpacing the mature markets of Western Europe
and North America, which saw growth of 13 and 15 percent
respectively during the same period
• The top 10 information economies represent 80 percent
of the global ICT market
• The total number of Internet devices worldwide grew
to 260 million in 1999, adding 90 million in that
year alone
• PCs installed in schools, homes and businesses reached
nearly 400 million by 1999, with the number of PCs
installed in classrooms tripling between 1992 and 1999
• North America as a region continues to lead the world
in overall ICT spending, which reached $796 billion
in 1999; Eastern Europe spent the least with $30 billion
that year
• The Middle East and Africa saw spending growth of
26 percent between 1997 and 1999
• ICT spending in the Asia Pacific Region grew 18 percent
between 1997 and 1999
• Sweden led the world in ICT spending as a percentage
of GDP, at 9.6 percent
• Switzerland spent more than $3,200 per person on
ICT in 1999 — the highest nation per capita,
while the United States came in third at $2,717 per person
in 1999.
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Another tip Sears shares is that being the first to try new technology
isn’t always the smartest thing to do. “Being on the leading edge
of technology isn’t typically best for the client for two reasons.
First of all, during the introduction of new technology, the client
is paying the highest price for the item; and second, allowing
other people to test the technology will help to ensure the bugs
are worked out before purchasing it,” he notes. Sears suggests
waiting three to six months before buying the latest software,
memory chip or other technological breakthrough to allow for the
price to fall and the glitches to be smoothed out. The Network
Doctors was started in 1996 and specializes in designing, implementing
and installing Microsoft and NT networks in companies that have
50 users or less.
John Orbe, area manager for Nortel Networks, says it’s imperative
to work with clients to ensure they’re getting the technology
they need. “Sometimes the consequences of not buying the right
technology can be significant. If the network is undersized, production
can be impacted yielding downtime and therefore cost to the organization.
If a client buys technology to support a data network, and then
expects to apply voice onto the network (without this element
in the original) plan, the upgrade costs can be significant,”
he points out. “After agreement on a design, we review a systems
assurance with the client to make sure that all elements have
been thought out to mitigate the risk of under sizing the network
or its performance.” Nortel Networks employs almost 90 people
in the St. Louis region and is a manufacturer of data, voice and
video equipment.
Before installing new technology, a thorough review of the company’s
existing technology is needed, Orbe notes. “When a client wants
to buy something, we engage in a review of their ‘as is’ networking
environment, and try to determine a baseline of the network’s
performance. Then we try to determine the ‘to be’ environment—what
services or applications (and therefore bandwidth) will the client
require. From here we make our recommendations. Typically we review
a few scenarios with the client, working with him or her to identify
the pros and cons of each solution,” Orbe says.
In addition to determining where a company is technologically
and where it needs to be, a company must make sure that its business
goals and technology are working together, Orbe says. “You need
to educate yourself and your team on the technology trends; you
need to understand where your business is headed and make sure
the IT and business strategies align,” he states. “Your IT solution
must align with these requirements and should allow you the flexibility
to change.”
Liese L. Hutchison is an assistant professor in the department
of communication at Saint Louis University and a free-lance writer.
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