Hardware gets cheaper each year. Entry-level laptops of Dell used to be sold at 1500 € seven years ago, now they are at 600 €. DVD players used to sell for 500 € five years ago, this price now looks astronomically high for a DVD player.

The IT market evolves very fast. There is an overcapacity and technology costs are declining. The marginal costs of an extra phone call or data packet is close to zero. Cheap solutions become available. That is why we advise not to lock in your hardware costs with contracts which last 36 months. Your company would initially gain a bit of cash flow, but eventually pay double the real cost over three years.

Meanwhile, competitors are cutting costs harder and faster. If they only manage to cut costs by the small amount of 1% each year, vis-à-vis your cost structure, within 5 years your company will find itself facing an expense gap of 5%. At that moment, in 5 years, your company will ask itself what it did wrong: how can your competitor offer these low prices and still be profitable? A continuous focus on cost reduction is key!

Tags : Contracts, IT, Telecom | 2 commentaires associés