Many small and mid-size businesses are struggling, but they still need to invest in hardware. The challenge is knowing what you need and getting good bang for the buck. BMighty talked to some experts about when to upgrade your equipment and what to consider during the purchasing process.
Amid the paid of recession, the stimulus bill presents a silver lining: Section 179 of the tax code. It lets businesses deduct the costs of certain purchases, such as computer equipment. Congress doubled the amount businesses can write off, to $250,000--but only through Dec. 31, 2009. That leaves companies 10 months to figure out how to make wise hardware investments.
While 78% of mid-size companies and 82% of large ones aim to purchase hardware in the next six months, just 32% of small plan to, according to a recent CDW IT Monitor study. Trepidation is understandable in this economic climate, but it shouldn't preclude action for those needing new iron to stay competitive.
What To Buy
A study from Cisco (nasdaq: CSCO - news - people ), the networking giant, found that businesses want three things from new hardware: customer engagement, employee connectivity and security. The menu includes mobile devices, networking equipment, virus protection and storage.
What should small and mid-size companies be buying? Bandwidth, says Rick Moran, VP of Cisco's SMB solutions marketing. "A broadband connection is needed to connect to the network," he said. "You might choose to use wireless, but you need the combination of both." On the telephony side, Moran said businesses need some sort of mobile device and plenty of storage capacity. To a certain extent, you get what you pay for, in terms of the ability to reduce costs, manage risks and improve customer service.
Ron Kline, director of global marketing for IBM (nyse: IBM - news - people ) general business, reminds entrepreneurs to keep in mind that we're living in a time of "tremendous connectivity." His advice: "Small and mid-size businesses are going to be overwhelmed with the data available, and they need an infrastructure to help them sort through it all."
Because of the interconnectedness, it's important to have a system based on open architecture, Kline adds, which effectively extends the life of whatever machinery you have. Another trend is virtualization, which involves partitioning the hardware's memory to simulate multiple machines within one physical piece of equipment. "There are servers out there that are less than 15% utilized," said Kline. "So if you can virtualize your hardware, you can save a lot of money." An extra benefit of virtualization is that it's a cheap, easy way to be green, mainly through the decrease in power consumption.
Ask, too, what functioned can be outsourced. Too scared to let your data reside outside your own internal servers? Says Kline: "We've got hardened data centers that are partitioned off to particular clients, and the risk of losing that data is less than a smaller company getting corrupted."
When to Buy
Small companies often replace equipment on a schedule--no matter if the stuff is broken, antiquated or in fine shape. Bad move. "Maybe you still want to upgrade, but more holistically rather than automatically," says Kris Barker, chief executive of Express Metrix, which makes software that facilitates tech-buying decisions. "You want to understand ways of providing machine upgrades without throwing one out and bringing another in."
Kline recommends noting what hardware is interrelated--meaning that upgrading one item may involve touching up something else. Example: New switchers and routers can take advantage of improved broadband. However, if the connections aren't compatible, your Web service won't improve. Not that you should buy everything all at once, either.
How to Buy
Believe it or not, there are quite a number of financing options for smaller companies, if not always through traditional banks. "There's a point of ignorance in that small and mid-size businesses don't realize they don't have to go near their bank," said Maryann Von Seggern, senior director at Cisco Capital. "They have other, alternate sources of capital that are available to them."
IBM has its own financing program, too, while Dell (nasdaq: DELL - news - people ) and Hewlett-Packard (nyse: HPQ - news - people ) are gunning for the small- and mid-size-business market by offering special programs, some of which offer 0% financing.
There are even financial rewards for going green. Here are a few ways the government can help:
Loans, Grants and Incentives for Energy-Efficient Projects. Find information about the various programs here.
Tax Credits for Energy Efficiency. Home builders, manufacturers and commercial building owners are among the small businesses that can benefit from federal tax credits available for making energy-efficiency upgrades. Find out more here.
State Government. State, local and regional programs help small businesses become more energy efficient through financial assistance programs that aid small-business owners in conducting energy audits and implementing energy-efficient technology. Find out more here.
The financial crisis has changed the way entrepreneurs invest precious cash--and that means being even savvier consumers of computer hardware. "There are two ways to approach this," says Kline. "Hunker down and wait out the recession, or try to adjust and make sure you're embracing what this new world looks like. You'll emerge stronger and better able to compete."
Source: Forbes
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