 Volume 3, Issue 1
How do you judge when to upgrade your business information systems? The short answer is, “when benefits exceed costs”. But how is technology measured?
Each of the following system elements has both costs & benefits:
Hardware
The obvious costs for hardware are equipment outlays. Benefits include increased speed, better security, system stability & data reliability. Software Costs include pre-programmed packages such as accounting applications. Soft costs may be a program’s inability to convert data to a new system, lack of data readability & training unavailability.
Outside labor Costs of upgrading a system include software installation, customization, data conversion, data testing, training & ongoing support. Professional technicians efficiently identify & perform tasks. Expertise in technology is usually less expensive in the long run than a “do-it-yourself” system conversion. Personnel Hourly personnel costs include wages employer payroll taxes & workers’ comp insurance as well as health insurance, training & retirement. Personnel inefficiency costs are often overlooked. Redundant tasks, error correction, filing time, finding lost information & manual tasks create inefficiencies. Personnel benefits within systems include streamlined tasks, accurate data entry, quick online lookups & automated tasks.
Procedures either help or hinder data flow through the system. Ultimately, procedures impact personnel costs. Efficient procedures cut personnel costs. Data Data costs include lost or inaccurate data which impact personnel costs. Data security & accuracy are benefits of a well-designed system. After careful consideration of interrelated system components, an owner can make an informed & profitable decision about business information system investment. For more information about upgrading your business information systems contact Jon Boettner at 815-965-9800 or at jboettner@datacraftrockford.com
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Make a profitable investment in technology
The lessor retains property ownership in an operating lease. The lessee has temporary property use. Examples are office space & equipment rented for a project. Lease payments are recorded as operating expense & are tax deductible. However, depreciation may not be taken.
In a capital lease, the lessee assumes property ownership. This is an alternative financing method for the lessee who is actually buying over time. Examples are leases with a $1 buyout. Property transferred is recorded as an asset by the lessee; lease payments are recorded as principal & interest. Only the interest portion is tax deductible. In addition, however, depreciation may be taken.
Here are sites with useful calculators.
“Progress always involves a certain amount of risk. After all, you can’t steal second base with one foot on first.”
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