Burying Your Head in the Sand Won’t Help
Many small business owners wonder if it is worth the cost to replace older computers on a planned basis. They assume that budgeting for this upgrade would prove detrimental to their profits. Ignoring technology updates is like burying your head in the sand. Market research shows planned refreshment of a business system, replacing older computers, servers, printers, etc. is a strategy for success in today’s world. Search the internet and you will find numerous websites telling you why it is to your advantage to replace older computers on a regular schedule. This includes increased profitability from having new machines, as well as tax benefits from securing new equipment (as long as it is in 2013). Not having a scheduled “refresh plan” places businesses at a disadvantage in today’s consumer market. Nevertheless, you, the owner, are right in wanting hard evidence before undertaking the expense to replace older computers.
First, what are the reasons businesses don’t replace older computers using a defined plan? The primary reason is usually financial. Small businesses have to lay out substantial funds up front to acquire new servers, computers, printers, etc. The impact is felt immediately, while the benefits of replacing older computers may take time to become apparent. There is also the disruption of workflow. Installing new equipment takes employees temporarily away from their duties. Related to this is a third reason: user training. Users will need to adapt to a new technological environment (hardware/software) which may initially slow down productivity. Another reason to avoid replacing older computers is the aphorism: “if it ain’t broke, don’t fix it.” While this idea is quaint, it isn’t applicable when it comes to getting the most out of your technology. Maximized technology along with good small business practices produces ultimate profitability.
International Study on Replacing Old Computers
Studies show a number of startling facts that businesses like yours need to know as to when you should replace older computers. A white paper by Techaisle in 2013 shows how aging systems drag down marketing, productivity and profitability. While a business owner may think only in terms of immediate cash outlay, the study shows that other factors equally impact a business. Aging computers are slower, prone to more errors, wider open to security breaches and require more money for repair /maintenance than newer models. Slowness and frequent errors are inevitable in older computers. Even temporary upgrades only delay the need for a new machine and often at a higher overall expense. Meanwhile, the security of a company may be at risk because of the inability to install new patches which are continually updated. (A major concern should be that as of April 2014 Microsoft will no longer support the OS Windows XP, including updates and security patches. See Article Here) Maintenance and repair are far higher for an older machine. In general, a 4+ year old computer can cost up to one and a third times as much just to maintain as a newer model. Loss of work hours per year for an older computer is double that of a newer version. Practically speaking, the formula is to add the annual costs of maintaining a computer workstation to the hourly cost of an employee idled by downtime. When you do, you find that a 4+ year old computer costs a business 1 ½ times as much as a replacement. Multiply this by the number of older machines/users, and the assumption that it is more cost effective to keep computers as long as possible falls to pieces.
2013 Tax Benefit of Replacing Old Computers
A final note to keep in mind is that under a temporary tax incentive (Section 179 of the IRS code), replacing older computers may afford your business a tax break. Unlike older depreciation schedules, this section allows for immediate deductions for purchases under certain circumstances. The law has certain stipulations and you need to consult your accountant. We at E-N Computers are ready to make sure you comply with the conditions for replacing your older computers with new equipment so that you can get that tax break. But hurry! The tax year 2013 is about to expire and along with it section 179. Don’t take the chance of it being extended or revived. Act now!