United States

Implementing an obsolescence plan: Becoming proactive with new technology

TECHNOLOGY BULLETIN  | 

Organizations are becoming more reliant on technology, and those tools and applications are often differentiators between your business capabilities and those of your competitors. In the past, companies sought to refresh technology devices and platforms every three to five years. However, with improvements and more cost-effective manufacturing of processors, chips and other components, waiting that amount of time is no longer the standard and can actually negatively impact your processes and profits.

Technology components and software platforms are becoming obsolete quicker each year, as better, more robust solutions are created at a rate faster than previously seen. When do you decide to swap out a perfectly functioning technology or software platform and potentially miss out on achieving maximum return on investment (ROI) in exchange for what should be a better, more robust and newer solution?

Obsolescence planning is the process of evaluating your existing technology against current and emerging solutions. The goal is to determine when, how and why you should replace older technology that works well today with a solution that performs better and, by design, is an upgrade. As technology and software platform upgrades are made available, the cost of acquisition for the newer model in most cases is less than the cost associated with the purchase of the predecessor.

Think about how much you would pay for a flat-screen TV today and benchmark that against what you would pay for a new flat-screen with bigger dimensions and more features. Safe to say you will get more today for your money than you would have five years ago. Obsolescence planning helps you determine when it makes sense to forego the maximum ROI on a device in exchange for the reduced acquisition cost of a new, better-functioning upgrade to that technology.

Businesses are consuming more technology, while also trying to figure out the many benefits of the cloud, giving employees mobile functionality and better addressing data security concerns. With a wealth of new technology options on the market, there needs to be some significant thought into what you can replace in your environment and the best timing for those changes. If you have a thorough, proactive obsolescence plan, you can get more of an ROI from your existing technology by prioritizing what to replace first and being strategic with upgrades.

For example, if you have on-premise systems, a new server strategy may provide better efficiency and uptime with lower costs. In many cases, you can get more memory and a better processor, and it will cost less than the older version that is already in place. 

As technology advances and your needs evolve along with them, you need systems that align with new demands. Mobility and security are key drivers for compressing the traditional implementation timeline; if your servers and systems do not support mobile access or lack robust security controls, it may be time to evaluate a new solution.

Obsolescence planning presents a dilemma for many organizations, as it is difficult to envision replacing a solution that currently meets your needs and that employees are familiar with. However, with the speed of change, potential improvements are likely available. You want to avoid innovating just for the sake of integrating a new platform, but a well-thought-out obsolescence plan can increase innovation and improve several areas of your organization, while mitigating risk. 

In terms of mobility, employees have developed an appetite for solutions that allow them to access data from and on multiple platforms. A steady stream of solutions now allow organizations to be more mobile and secure, while collaborating more effectively. As you implement new technologies, services and software platforms, your business will continue to innovate and improve. If your plan is thorough, as new technology integrates within your organization, you will become more comfortable with your results and improvement will continue.

The cornerstones of implementing an obsolescence plan vary depending on the structure of your business and your goals. If you maintain infrastructure on-premise, with servers, routers, switches and firewalls in a traditional model, more robust technology is emerging with the cloud through hosting companies. The planning process becomes a question of remaining on-site or moving to a cloud provider that may have more capabilities and flexibility and is more affordable and available. When developing a plan, business drivers center on connectivity, sharing of data, access and collaboration, as well as speed and storage. 

Employees tend to know what they have for technology, but they might not know the capabilities, costs and potential benefits of other solutions not currently in place. An effective and thorough obsolescence plan may require the assistance of an advisor that understands prior technology, as well as current and emerging solutions, and can bridge the gap between the old and the new. They also must know your unique business drivers and what differentiates you from other organizations. With these elements, you can discuss the technology you have in place and new solutions that may be beneficial to you along with a realistic implementation timeline.

Proper obsolescence planning requires knowledge, insight, experience and recommendations that are communicated effectively. The likelihood of an organization having a single resource that has all of those qualities within one or two individuals on a consistent basis is not high.

To that end, most organizations benefit from establishing a relationship with a trusted advisor who provides guidance and, in many cases, creates the foundation for the right obsolescence plan. This relationship allows - thought leaders who know technology to maintain a more proactive stance on technology improvements. Instead of responding to needs as they arise, your advisor should be active in boardroom discussions to implement strategy and make better technology decisions.

You must keep pace with technology to avoid falling behind the competition; those that have found a way to adopt technology that aligns with their business goals are more successful. In addition, from a talent retention and acquisition perspective, employees benefit from having the best tools to do their job. Without the right tools, performance will suffer, creating an environment where keeping the right people in place to work at, and for, your organization can become difficult.

Technology systems require investments of varying degrees (sometimes large, sometimes small). It's safe to say that regardless of the size of the investment, a choice to spend money on this initiative or item means that another purchase was not made. Therefore, there is a big incentive to get the most ROI out of a business purchase as possible; with that said, waiting to upgrade or improve means you could be missing out on productivity and a competitive advantage.

Timing is one of the most critical elements of obsolescence planning. If you make a change too early, you will miss out on optimizing your investment. If you wait too long, you are not going to take full advantage of process improvement opportunities. Either of these scenarios can cause you to lose money and directly impact your business. Proper obsolescence planning helps strike a balance between ROI and improvements received from technology and software platform upgrades.

The first step in obsolescence planning is asking yourself if you truly have a proactive plan in place, and one that moves with and accounts for changes within and outside of the business. If your technology is not driving your business initiatives forward and helping to consistently achieve business goals, then taking a moment to scrutinize your obsolescence planning capabilities and the resources participating in the discussion is a necessary step. Keep in mind that, in most cases, having the wrong plan in place can be as damaging as not having one at all. 

Another helpful exercise to determine whether your obsolescence plan is a sound one is by taking a look at the world around you, primarily as it pertains to your competition and how you stack up. You should know where you sit in the marketplace, and if you are losing ground, it may be time for a change. The right technology advisor can help identify what you are doing well, and what your competitors may be doing better, and provide guidance on how proper obsolescence planning can improve your tools, business and position.