IT Managed Services, IT Maturity
Asset upgrades can be a tricky call. An asset is an investment, so you’ll want to get the most out of it before updating. But if you wait too long to replace your old asset, it can actively harm your business. In order to better understand asset lifecycles, 1Path recently spoke with Mike Langfald, Director of Business Development at GreatAmerica Financial Services. Langfald provided insight into influential lifecycle factors, the problems that come with asset aging, and ways to finance a new asset.
Here are four factors to help you determine whether it’s time to upgrade your asset:
If your asset isn’t performing well, that’s all the reason you need to replace it. Poor performance can lead to frustration, missed goals, and even revenue loss. Conversely, a newer asset can offer new functionalities, thus increasing overall efficiency.
“As an example, everyone has a cell phone,” said Langfald, “and there’s a danger in not refreshing it. Your phone won’t work as well as it could, and you won’t get new OS updates. From a workflow and efficiency standpoint, you could be missing out on critical features.”
These critical features might include new applications, better layouts, or even important patches. And in the latter case, you’re not just facing a performance issue—you’re also facing a security risk.
Failure to update an asset can be a major cyber security risk. In fact, outdated assets can be so risky that companies often stop supporting them, thus requiring users to update. The recent Windows 7 EOL is a perfect example of how an old asset can lead to problems; Windows 7 users that don’t transition to Windows 10 will lose support, patching, and overall security.
“If you have tech longer than you should have, then you’re opening yourself up to that EOL event,” said Langfald. “In that case, your choice is taken away, and (you’ll have to) write that check.”
Thus, EOL events are an obvious indicator that it’s time for a newer asset. Of course, this doesn’t mean you should wait until EOL to upgrade; at a certain point, keeping an asset is actually more expensive than getting a new one.
3. Asset Costs
If you own your asset, it costs money to store and maintain it. And if that asset is working poorly, you’re putting money into something that isn’t benefitting you. For this reason, a holiday sale or good deal can be a smart reason to upgrade. You’re going to upgrade eventually, so why not do so when it’s most cost effective?
Although the upfront cost of a new asset can be a financial deterrent, it’s often a cheaper call in the long run. Additionally, if you can’t afford to outright buy one, leasing it always an option.
“Monthly payments can help realize your ROI every month,” said Langfald. “Ownership isn’t as important anymore. It’s the era of Uber—people pay for something when they need it, and they don’t own it all the time. Farmers who use to own large tractors now rent them. This equipment can cost millions of dollars, so it doesn’t make sense to own. Instead, pay for use.”
In other words, if upfront costs are getting in the way of saving money, you should consider an OpEx model. Additionally, as your needs change, your assets might need to change, too.
4. Changing Needs
An old asset might have been a perfect fit for your old business model. But as your business continues to grow and change, your assets need to evolve as well. This idea may seem obvious, but in practice, it’s not always applied. If something still works, it can be difficult for someone to switch to something newer—even if that switch is necessary.
“When you make your last payment on a car, you don’t instantly switch to a new vehicle,” said Langfald. “You’ll live in a world of no car payments for a while… until the cost of ownership increases, your needs change with a growing family, or you see that new feature that’s a must have. The hassle of the buying process can definitely get your thought process in a place that stops you from upgrading, even if (doing so) makes the most sense.”
It’s always important to consider asset upgrades from both a current and future perspective. Will this new asset benefit you now, and will it benefit you a year from now? Similarly, is your old one creating problems? Will your business still benefit from that asset next quarter?
“If your business needs change, you might need better, newer tech,” said Langfald. “Other (assets) will offer so much more functionality.”
Asset lifecycle decisions aren’t easy. Ultimately, they come down to a question of performance, risks, costs, and changing business needs. Since every asset will eventually need replacement, it’s important to consider how each one hurts or helps your business. An outdated asset can set your business back, but a new one can help propel your company forward.