Small and midsize businesses need to invest in hardware, but during these tough economic times, any purchase must be done wisely. bMighty talked to some experts about when to upgrade your equipment and what to consider when buying hardware.
Though the recession is dragging on, and small and midsize businesses may not have a lot of cash flow going on, the stimulus bill presents a silver lining: Section 179 lets businesses deduct the costs of certain purchases, such as computer equipment. Congress increased the amount businesses can write off from $125,000 to $250,000 -- but only through Dec. 31, 2009. That leaves companies 10 months to figure out how to invest in hardware wisely.
Ron Kline, director of global marketing for IBM general business, is enthusiastic about the recently passed stimulus bill. "The government is going to pump tons of money into the market," he said. "If you look across the world, governments are going to pump trillions of dollars into economic stimulus." And with the extra cash flow, those recipients can invest rather than cut back on things like energy-efficient servers and data centers, the government sector, and health care. "Firms that will be prepared to emerge will also be able to be competitive," Kline said.
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And at least some enterprises are heeding the call to buy hardware -- 78% of midsize companies and 82% of large ones plan to purchase hardware in the next six months, according to a recent CDW IT Monitor study. But just 32% of small businesses said they plan to.
Perhaps what those reluctant, cash-strapped businesses need are some guidelines. bMighty spoke with some experts to get tips about hardware shopping.
What To Buy
A study from Cisco found that businesses have three goals for the hardware they purchase: customer engagement, connecting their employees, and making sure their business is secure. So the purchases those companies are making include mobile devices, items that provide speed and access to networks, security in the form of spam and virus protection, and storage.
OK, but what about what small and midsize companies should be buying? Rick Moran, VP of Cisco's SMB solutions marketing, recommends improving performance by investing in bandwidth. "A broadband connection is needed to connect to the network," he said. "You might choose to use wireless, but you need the combination of both." On the telephony side, Moran said businesses these days need some sort of mobile device. And they need storage capability. Fortunately, there are several storage options -- on-site, portable, or online -- as well as a range of prices.
When it comes to checking out prices, sometimes paying a bit extra is a smart idea. "Make sure you buy good enough so you get quality and you get good support so that you have someone to call when it doesn't go right," Moran said.
Another way to look at prices is to figure out the return on investment, meaning, what monetary benefit will you get from buying a piece of hardware? Kline stands by his recommendation that if your business invests in reducing costs, managing risks, and improving service to your company and supply chain, you'll get an ROI.
Kline reminds businesses to keep in mind that we're living in a time of "tremendous connectivity." So no matter the size of your company, think about what equipment will make you competitive, he recommends. "Small and midsize businesses are going to be overwhelmed with the data available," he said, "and they need an infrastructure to help them sort through it all."
Because of the interconnectedness, it's important to have an open architecture, Kline said. "Midsize firms can't afford to throw away what they have," he said, and open architecture equipment lets you extend the life of what you already have. "We're beyond the desktop as a hub for all this activity," Kline said.
Another trend is virtualization -- and it can save your business cash you'd spend on more hardware as well as reduce the burden on your IT staff. Virtualization involves partitioning the hardware's memory into separate and isolated "virtual machines" that simulate multiple machines within one physical piece of equipment.
"There are servers out there that are less than 15% utilized," said Kline. "So if you can virtualize your hardware, you can save a lot of money." When you virtualize hardware, you get higher utilization of the equipment, which decreases energy consumption and therefore decreases capital expenditure. "It's a smart investment in this environment," Kline said.
When it comes to buying hardware, look at your existing infrastructure to see if you can drive costs out of what you already have. "A lot of money goes into cooling data centers, so see if you can consolidate and virtualize," Kline said. An added benefit of virtualization is that it's a cheap, easy way to be green, mainly through the decrease in power consumption. Blade servers also use less energy and less hardware.
In order to buy even less hardware, ask yourself: What can I outsource? And what can I get from the cloud? "They both might be more secure as well as cost-effective," said Kline. Putting your data in an outside company's hands is more secure? Indeed, said Kline: "We've got hardened data centers that are partitioned off to particular clients, and the risk of losing that data is less than a smaller company getting corrupted."
While security in an open and interconnected environment is certainly a vital concern, smaller companies need to look at their capabilities and the costs involved in handling their own storage, for example. Why not outsource that task to a company whose expertise is storage, and then you don't have to maintain it yourself?
Next Page: How To Know When It's Time To Buy Hardware
