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The Best Bang For Your Tech Buck

With new offerings hitting the market like a tsunami, entrepreneurs should spend their precious IT dollars with care.

It's not that Rob Shoenfelt has too little to spend on technology. The CIO of Ohio-based Celina Insurance Group says his 2004 tech budget is between $1 million and $2 million, "healthy" for a company that has $60 million in annual revenue and 150 employees. He would like to replace Celina's 18-year-old PBX phone system. He also would like to increase the data storage capacity. Combined, the projects would eat up as much as 20% of Celina's total IT budget, so Shoenfelt doesn't think he can do both this year.

Such tech spending dilemmas are common these days. After several years of keeping their wallets closed, small companies are beginning to buy again. Surveys conducted by research firms Gartner and the SoundView Technology Group predict small-company demand will drive tech in 2004 as business owners move, en masse, from the "stall mode" to "controlled spending," in the words of SoundView's Arnie Berman.

The question is, what will they buy? Most spending will likely be earmarked for traditional line items--new hardware and software upgrades. But there are also several heavily advertised new technologies that will vie for your dollars. Linux and voice-over Internet protocol telephony are among those innovations being most aggressively promoted, on the grounds that they will help companies save money. Will the investments really pay off? Likewise, is new security technology really a must-have?

CIOs like Shoenfelt, who have joined the management teams of private companies in growing numbers according to a recent Gartner report, will surely advise business owners on pricey investments. But, as with most spending, the key decision maker at a private company remains, in many cases, the owner. Here are some points to consider before you go shopping.

Laptops versus Desktops

Time to face facts: Four-year-old PCs no longer cut it. Upgrade before the cost to support those machines saps your IT budget. The question then is: laptops or desktops? It used to be the latter were cheaper and easier to maintain. That's no longer the case. The reliability of notebooks has come so far that last year, according to NPD Techworld, dollar sales for portables surpassed desktops for the first time ever.

The new generation of laptops is as sturdy and boasts the same lifespan as the typical workhorse desktop, owing in part to the fact that they increasingly share the same components. Loss or theft is still a concern--and upfront and maintenance costs are calculated to be 25% more for laptops. But those expenses should be offset by productivity gains if, for example, every employee who gets a laptop works an extra two or three hours per week at home.

Mercury Instruments made the decision to ditch its desktops in favor of portables this year. The Cincinnati business designs and develops instrumentation for the gas industry. Now, the company's engineers can take their machines onto the plant floor to demonstrate exactly how a new device should be built. "With a laptop on our wireless network, we can respond to customer needs even if we're in a meeting," enthuses Javier Lopez, the international customer service manager.

Laptops' popularity also has grown as screens have become bigger and brighter. The viewing area on a 15-inch laptop screen is now comparable to that of a 17-inch monitor. Manufacturers have also put machines on a diet, so ungainly weight is no longer a deterrent to buying a portable. Frequent travelers should buy something in the three- to four-pound range, with a 12- to 13-inch screen.

A word on cost: PC prices are about as low as they're going to go. Manufacturers are offering deals on many machines, so you can find powerful PCs for as little as $1,000. Look for promotional campaigns that offer extra RAM or rebates--and if you do get a rebate, make sure you actually mail the thing in and collect the money.

Processor Smarts

Don't get woozy over the latest, most expensive Intel processor. It's overkill for all but heavy power users like graphic designers. In fact, you might be surprised at how much trading down in processing speed can save you.

Go to Dell's website, for example, click on the Dimension 4600 button, and you'll find a number of processors to choose from. The top of the line is a 3.2GHz Pentium 4, while the bottom is a 2.66GHz P4--slower but by no means slow. The 3.2GHz machine comes in at $1,497, while the one with the 2.66GHz processor, which is perfectly fine for most users, comes in at $1,217. Now further compare that with a Dimension 2400 with a 2.4GHz Celeron, Intel's budget-minded processor. The price plummets to $717, less than half the price of the high-end P4. The same is true for PCs made with AMD's Athlon processor. They're fine for the majority of users and cost far less than a high-end Pentium 4.

Office 2003

Great moments in work history do not necessarily include paying $399 to $499 for Microsoft's Office 2003 upgrade, no matter what the software maker's relentless ad campaign states. In short, if you're already running Office XP, it's tough to find compelling reasons to upgrade, particularly given Office 2003's price--and the fact that, um, it's already 2004.

The newest iteration of Office is designed for businesses that spend a great deal of time collaborating online. If you have facilities around the country and would like everyone to have access to the same files, then maybe the cost is justified. Bear in mind: Application upgrades can be purchased as standalones. Want the latest version of Outlook but not Word? It's only $109.

Linux

The cost of deploying Linux on the desktop is hard to quantify because there are so many factors to consider, but it's safe to say the upstart OS is anything but free. Sure, licensing fees from Red Hat and other providers can be far less than Microsoft's. But because Linux is open source, every company selling it has their own idea of what the desktop should be--there's no standardization. The differences from one provider to another could hamper processes as basic as managing files or burning a CD. And besides inconvenience, there's the opportunity cost. Your IT department may be kept busy answering questions that stem from Linux when they could be doing other things.