How to Save Money on Small Business Technology - Page 2

By Gerry Blackwell
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How to Cut Small Business Computer Costs

If a small business absolutely must upgrade its hardware, Garmaise recommends the following options to keep costs in check.

Don’t buy extended warranties
Warranty extensions can add about $100 per PC, he points out, yet PCs rarely break and don’t cost that much to replace if they do – usually less than $800. One caveat: very small businesses with no IT skills in house might want to think carefully about this step.

Negotiate with resellers
Many small businesses buy through commercial resellers that also provide other services such as installation and software integration. These resellers may not always offer the best prices on hardware. If a small business wants to continue buying from a reseller with which they have a good relationship, they should check to make sure pricing is close to what they would pay at a retail outlet, and if not, bargain for a better price.

Join a buying group
A buying group negotiates volume discounts on behalf of all members. Not many small businesses are doing this, Garmaise concedes, but it’s worth exploring. One commercial example is Maxopia Inc.

Consider netbooks
Many small businesses are also finding they can replace out-dated laptops with netbooks which are generally cheaper than full-size laptops and provide adequate power and functionality for many users – and more mobility, Garmaise points out.

Save on Software Support

In addition to tips on cutting hardware costs, Garvaise's firm, Info-Tech Research Group, offers other ideas about how small businesses can reduce IT spending.

One easy way to save is to avoid software maintenance, support and licensing contracts such as Microsoft’s Enterprise Agreement (EA), which provides a bundled price for regular software upgrades and support. Mom-and-pop shops may not have EA licensing but businesses not much bigger do. And Garmaise says they don’t need it.

“It makes you spend more than you would if you got only the [upgrades] you really need," he says. "It only makes sense if you’re upgrading everything all the time, and most small companies aren’t doing that.” Furthermore, he adds, paid-up-front support contracts for products such as Microsoft Office don’t make sense because little goes wrong with such programs.

Another culprit for unnecessary support and maintenance spending is Cisco’s SmartNet program for support on local area network gear. “To Ciscso’s credit,” Garmaise points out, “the equipment is very reliable and [buying SmartNet] can add 15 percent to 20 percent [of the original cost of the equipment] a year.”

Save Money with Open Source and the Cloud

If small businesses are in the market for new software applications, they could consider much less expensive open source options that are developed, regularly upgraded and, to some extent, supported by volunteer programmers.

Companies large enough to need a help desk, for example, could consider some of the open source help desk products, Garmaise says. They may want to pay a commercial supplier for implementation, maintenance and support if they don’t have software geeks on staff, but the initial license is free.

Other possibilities include OpenOffice.org’s OpenOffice PC productivity suite, which provides a good chunk of the functionality of Microsoft Office, includes some MS Office compatibility and is free to download.

And of course many small businesses are turning to cloud computing options such as Google Apps, an affordable set of productivity and communications applications that costs $50 per user per year for businesses — or free for personal use.

Online backup and storage services such as MozyPro for business are also a bargain. And if your business is very small or you have minimal storage needs, Mozy's home version offers free data backup for up to 2 GB of storage.

Cloud computing has become very popular, largely because of the reduced capital costs involved, but some analysts say that software products offered online over the Internet can be more expensive in the medium- and long-term than traditional in-house software applications.

And some people still worry about data privacy and security with services that store a company’s data at a remote server.

HP’s Burch suggests some other strategies for reducing IT costs long-term, but they require an initial capital outlay. One is server virtualization — using software that allows a company to reduce the number of servers it needs by running multiple applications on one box. For mid-tier SMBs, this can save IT management and maintenance costs and hardware costs in the long term.

Related to server virtualization is the idea of adopting a thin client approach in which all software runs on networked server computers, and employees use thin client computers that are cheaper and easier to maintain because they need less processing power, memory and local storage.

Most small businesses, Garmaise advises, would be wiser to remain cautious in their IT spending for the next year or so and continue to look for ways to pare costs.

Gerry Blackwell is a freelance technology writer based in London, Canada. Read his blog, AfterByte

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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This article was originally published on February 22, 2010
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