Analyze Your IT’s Value Against the Cost

More often than not, technology is expensive. You’ll rarely look at your IT invoices without cringing a bit. Nonetheless, it’s imperative that you take a look at these AT LEAST every once in a while to understand just what you’re getting from your technology budget. You want to ensure that your IT purchases are yielding a positive return on investment, and thus providing value for your business.

Examining the Costs
While most users will understand cost in its literal term, it’s important that you consider the other factors that make up cost. By definition, cost is what you give up in order to acquire something else. Cost primarily focuses on what you’re giving up instead of what you get, so it tends to look at concepts such as pricing or other types of investment. Cost can also include factors other than monetary value, including time, effort, or other resources. Scrutinizing cost can help you optimize the way that your assets are applied, thus limiting the amount of waste and ensuring the desired outcome for your business. Still, the cost of an item is only half the battle.

Examining Value
If cost is what you give up in order to acquire something, then value is what you get out of something. Value can be based on financial gain, but usually value is actually the total yield versus the total investment. One of the best examples is beginning communications with a new client, as one good action could create a significantly more valuable relationship with them as time moves on.

An example involving the difference between cost and value for technology: buying a new workstation. It’s one thing to look at the price tag, but that fails to give you the whole picture. Your old workstation hasn’t cost you much because you paid it off a long time ago, whereas a new computer is of considerable cost. Nonetheless, your old workstation might suffer from issues related to outdated operating systems or components, making it a difficult piece of technology to work with. The value in this case is saved time and enhanced productivity.

Calculating Your IT’s Value
If you ever need to calculate how much a particular action or decision will cost your business in terms of value, you can try to compare it mathematically. After all, numbers don’t lie. This helps you keep track of what you’ve invested, as well as how much you’re getting in return for your investment. To determine the value of something, you can use a simple “x=y” equation. In this case, the invested cost is “x,” while the result (the value) is “y.”

Take this example: you need to determine if your organization's technology investment actually equals productivity. In this case, you can use a simple ratio method. Say you invest $25 into a workstation and increase productivity by 10%, when investing an extra $30 will upgrade efficiency by 17%. If investing $31 only raises productivity by 16%, instead of investing more in something else, you just narrow down the cost until you have achieved the maximum value per dollar.

Macro Systems can help your business get more value out of its technology. To learn more, reach out to us at 703-359-9211.