Thursday, November 18, 2004

Management Implications of Tech Trends

Q: What are the implications for management of each of the following trends:
  • Reduction in cost of hardware with time
  • Reduction in size of hardware with time
  • Increase in power of hardware with time
Implication means consequence. The obvious benefits are better management of information and better productivity. The benefits listed in the text are better quality information, more accurate, helps to provide improved service, increase in productivity (which means doing a lot more in the same amount of available time). Instead of completing 5 things in 8 hours you are completing 30 things in 8 hours. They also provide competitive advantages.

One would think that the trends stated above would have a positive impact on your business. The key word in those items list is time. The only positive benefits that can be reaped is in the future purchases of that better hardware. There is no benefits to a business currents state and does impact a business in negative ways. This is not stated in the text provided.

Taking your current business state with the huge investment in hardware, software, engineering and ongoing support costs, a reduction of cost, size and an increase in power of hardware can affect the business by allowing competitors who are in a position to purchase and deploy the hardware into production immediately.

Most businesses have a fixed budget in which they can afford to purchase, lease and write-off the hardware as a capital expense. If a business is held in financial hostage and can not afford to make the purchase of the faster better hardware, then they are at a disadvantage point against those who can make the purchase.

I see this every day as businesses try to squeeze every last ounce out of their purchases to get a return on their investment, more commonly know as ROI. Microsoft in there marketing packages called this the “Total Cost of Ownership”.

How to know when to upgrade is easy. Is the overall cost of doing business losing money using the existing hardware? If so, can the current company financial state afford to make the purchase relevant to the loss in doing business with the current hardware?

So the overall implications as a result of faster, smaller, cheaper hardware puts companies with current heavy investment at a disadvantage. However as the company is able to afford in the future the newer faster, smaller, cheaper hardware it will greatly benefit the company.

Another key word in the question is “hardware”. Notice that there was no mention of software. Software has its own dynamics.

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