When we hear the term sunk cost fallacy or bias, we tend to think of it in terms of relationships. Namely, people screaming into the void of online forums. The message is clear though – just because you have spent untold amounts of time, effort, money, or emotional energy into something, it does not necessarily make it worthwhile for the long-haul.
Often, there’s no prize to be won at the end of the game and participation ribbons are never awarded. Well put into words by Daniel Kahneman, ‘the sunk-cost fallacy keeps people for too long in poor jobs, unhappy marriages, and unpromising research projects.’ We understand this is getting a little to philosophical for IT services but regarding business technology, the same rings true.
A nice big cup of budget.
Figuring out your IT budget can be one heck of a daunting task. Not only do you need to make the correct technology choices for your employees but also the ones that are most cost-effective.
A study by Deloitte found that on average, businesses spend about 3.5 – 4% of total revenue on various IT or technical functions a year. However, depending on your primary business function that number varies widely. Industries requiring more robust security solutions to protect sensitive or private information require a lot more wiggle room in the IT budget.
What every business needs to stop and consider, is how much technology influences the success and overall function of your company. Yes, it is nice to save money and push off replacing those desktops until next year but if it is a frustration for your employees, your problem is bigger than dollar signs.
A recent post by Tyler Caskey, partner at TheBeanCounters, expressed quite poignantly that ‘Ease of IT matters to people’. He once had a friend that decided a career in law wasn’t for her when the printers at her office wouldn’t work well. Imagine losing a potentially amazing employee all because you decided to limit your IT spend.
On the other hand, some SMBs may find themselves in a cycle of spending way more to band-aid technology rather than pay the upfront cost of a replacement. Here is where sunk-cost fallacy fits in. You may feel like you have invested too much into a certain software or technology to make a change. By doing so you may run the risk of low prod uctivity or revenue loss. Both of which will probably end up costing your business way more in the end.
Frustration included, bat and fax sold separately.
Need some help decided when to replace your technology?
You know what an old device looks like, no matter the prevailing function. The screen is not quite as crisp, music sounds like a struggle, the shape isn’t quite right, and it is just plain hefty. No matter how much you love your old computer or want that fax machine to hang on a little longer your hardware will probably have other ideas.
On average, you should look at replacing various aspects of your office technology every 2-4 years. Yes, that is a bit of a gap. How often you replace your businesses technology greatly relates to how labor intensive your processes are. Regularly used devices will age faster than some used for only for occasional situations.
The basic rule of thumb is, if your device is unable to keep-up with it’s daily tasks the time has come look into upgrading. Of course, there are several steps you can take prior to throwing your PC out the window.
You may of course try solutions like updating programs or software, removing unnecessary files, or resetting to factory defaults but in the end, a new device might be your best solution.
For a quick clean-up, CCleaner offers a free and safe way to help get a jump on cleaning all that unnecessary junk from your computer. Of course, your managed service provider should have all those tricks in their back pocket. Afterall, a good IT services provider will implement procedures that allow your business technology to continually run successfully and be able to catch potential issues before they happen.
Need Help Figuring it all out?
Vodigy is here for you. We specialize in finding the most reliable and budget friendly solutions while also keeping everything running smoothly. Reach out today to find out more!
