By Peter Wolchak

Corporate budget expenditures often come under fire during economic slowdowns, and one obvious target is those fat information technology allocations.

Cutting back on new tech investments seems logical; 500 desktop computers in your organization are now three years old and they’re scheduled to go. But what if you held onto them for another year? Yeah, they’re getting a little slow and some users are already moaning about that, but they still work and at $1,000 a pop plus setup charges you can save a lot of money by putting off the purchase.

Done deal, dollars saved and you start looking at other departments to trim.

But some industry observers are quick to point out these savings will end up costing money later as employee productivity is hindered, electronic security falls out of date and the cost of maintaining the older machines rises.

Looking at a larger canvas, some are even warning that Canada’s national competitiveness could be compromised if too many companies let their technology fall behind.

The current situation

The standard wisdom commonly holds that a computer’s desk-life is about three years. For notebooks—where there is far more ongoing innovation in components and form factors—the benchmark shrinks to about two years. After that it’s time to swap in newer and more powerful machines.

But according to Vito Mabrucco, group vice-president of IDC Canada in Toronto, Canadian companies are extending this cycle by about one year across the board. He said about 60 per cent of the nine million personal computers used in Canadian workplaces are more than three years old, leaving employees using systems that are not keeping pace with advancing software and new workplace demands.

“It is short-sighted to save money on the front end but hurt enduser productivity,” he said.

Mabrucco used himself as an example. He recently upgraded to a new notebook, but before that he often sat waiting as the older unit churned through PowerPoint presentations or complex spreadsheet calculations. He was wasting time. His new unit not only responds faster but also has built-in Wi-Fi wireless network access, which allowed him to catch up on e-mail during a recent one-hour wait in Air Canada’s mobile-equipped Toronto airport lounge.

The one-hour measure

A number of other industry players measure productivity in onehour increments.

Doug Cooper, Intel Canada’s country manager, argues that if replacing a desktop PC with a new notebook computer generates one extra hour of productivity per week, then that “easily justifies the extra cost of the new computer.”

His own company has recently engaged in a major notebook push. In 1998, 20 per cent of the personal computers in use at Intel were notebooks. By June of 2002, 95,000 PCs were in use and more than 65 per cent of those were notebooks.

In addition to transitioning to notebook computers, Intel has also shortened its computer life expectancy. It used to acquire highend
computers and try to stretch their corporate life to five years, but it now purchases less-expensive systems and refreshes them on a three-year cycle. This gives employees access to newer and more reliable technology, and has dropped Intel’s hardware expenditures by 25 per cent.

George Atis, a partner at Toronto law firm McMillan Binch, also believes in one-hour efficiency gains. His company uses up-to-date notebook computers connected to a corporate wireless network. “If you can capture one hour here or there then that translates into
more billable hours.”

Ramping up billing is good for the company but staying current also makes lawyers and customers happy. “We lawyers already work long hours,” he said, “but maybe we can also work more efficiently now.”

Clients often complain that lawyers are slow to respond to inquiries, Atis also said. “We had to look at our ability to reply to emails
when we had free time. It may be as simple as saying ‘I got your e-mail,’ but you need to do that.”

The costs of cutting back

According to Intel’s Cooper, overlong delays in tech upgrades hurt companies in three ways: end-user productivity drops, companies open themselves to increased security risks and support costs go up.

At the heart of all three concerns is the fact that older computers are too slow to handle modern business applications, use outdated operating systems that do not incorporate new security features, and cost more to maintain as hardware fails and older software is no longer supported by manufacturers.

An example of the latter is the January 2004 deadline Microsoft has placed on support for Windows 98 and the recent ending of Windows NT support.Withdrawing support means the vendor will no longer assist with technical problems and companies that stick with the older software will have to get by on their own or hire outside assistance.

On a national scale, the proliferation of older and slower computers will begin to reduce the overall effectiveness of Canada’s workforce, according to IDC’s Mabrucco. “One of the biggest challenges we face is how to get our competitiveness and productivity up to a world-class level.”

Security, too, can be compromised when new threats outpace older technology. Because law firms like McMillan Binch handle client information, the need for security “is simply a given,”Atis said, and that requires current operating systems and security software.

This plays out on a larger scale, too. E-commerce is taking an increasingly important role in national economies and solid technical
infrastructures are required to support that. “In the ecommerce space we need strong security and encryption, but the technology has to be in place to enable that,”Mabrucco said.

The move toward e-commerce also means companies which are reluctant to stay current may simply fall off the competitive map, according to Harry Zarek, president and CEO of Compugen, an information technology solution provider in Toronto. Participation in electronic transaction systems, Zarek said, will be mandated by customers and suppliers. “If you can’t plug into that technical ecosystem you will be isolated very quickly.”

The good news, according to Zarek, is now is a good time to acquire new technology. “Given the quick rise of the Canadian dollar the cost of technology will go down. That should be a really strong catalyst.”

At McMillan Binch, the company’s tech investments have already proved their worth. Lawyers are more productive, opportunities for billable hours are being created and the staff feels more in touch with its clients. “It pays to be slightly ahead of the curve,” Atis said.