While various types of expenditure are the bane of the accounting team who worry that spending will exceed the planned budget, it’s the technology expenditures that can cause the largest concern. Technology spending is seen as a growing problem. For many companies, they’re experiencing rapidly increasing investments to fund improvements in Customer Service, AI-driven technologies, and smartphone usage. As a result, technology spending can become a runaway budget line item. To help with this problem, this article covers how to manage tech spending in a business.
People in Charge Need Technical Knowledge
While the Information Technology department may recommend the new technology purchases, there’s a need to better appreciate what each of them is and why they’re needed.
Get Someone Who Knows What’s Being Ordered
Certainly, it helps if there’s someone in the middle who can understand the technology aspect sufficiently to determine when the latest software or hardware is a requirement or a ‘want to have.’
Avoid Being Early Adopters
Let’s face it, many technology people are early adopters. In fact, they’re some of the very earliest adopters. This can lead to problems with overspending on technology that’s not required yet or hasn’t passed the testing stage where all the bugs have been found.
Avoid Overlap or Redundancy
Redundancy or overlap between different products is rife in the technology space. It’s especially the case with software, but it can also be true with hardware equipment. This is because scope creep is so common with tech products that they tend to get overdeveloped. As such, where once four software packages were needed, now only three products are because of their increased capabilities. As such, ordering more software to solve one new problem is not always the answer.
Don’t Chase the Technology Hare
Suggested purchases need to be examined through the lens of what it does that we cannot do already, and why it has value. Along with the need to avoid becoming early adopters, chasing the perennial technology rabbit to get the latest, greatest software features or upgraded hardware that’s not much faster than what’s already owned isn’t worthwhile.
Qualify the technology purchases. That way, you’ll be sure that they’re worth investing in. Even if you need to borrow to repair and maintain existing equipment, and occasionally replace expensive technology by financing it, at least it’ll be justifiable for the business this way. Then everyone is covered.
Finance Equipment & Repairs Spreads the Cost
As stated earlier, when repairs are needed, it’s worth borrowing to fix and maintain costly equipment. This applies across the board including outside of the technology space too. It’s almost always less expensive to repair and properly maintain equipment than to replace it with something new. What’s new can be temperamental and not have all the bugs worked out yet, making it trouble you don’t need. If you’re in need of financing for equipment repairs, check out AdvancePoint Capital to see if they can help.
By managing the technology expenditures in the business, it allows the company to invest elsewhere too. Also, in difficult trading markets, they’re likely to have more cash equivalents on hand. And that’s never a bad thing either.