Posts Tagged ‘replacment’

Technology Planning via Life Cycle Management

In a previous post, I introduced the idea that technology planning and budgeting can be a paradox.  The opposing forces of the business’ need to budget and technologies rate of change, can result in a lack of a coherent trajectory for technologists.  When I was first tasked with the responsibility of managing a technology group, the primary means of developing a multi-year technology budget was to leverage a life cycle management approach.  Essentially we assessed the amount of money spent on equipment and determine the number of years this equipment should provide usable service.  With these two values, we could then fill out a multi-year replacement budget plan.  For instance, if we spent $40,000 on a firewall and it should provide us useful service for 4 years, then every four years we’d need to spend $40,000 to replace the firewall.

The primary benefit of this approach to budgeting, forecasting, or planning is that it establishes a predictable funding schedule.  Of course this schedule is based on the assumption that what we spent previously for the technology, is what it will cost to replace the technology.  Moore’s Law is the chief contributor to this assumption, and for many technologies this assumption is valid.

The difficulty of such an approach is that if doesn’t address incremental upgrades or enhancements, which fall outside the life cycle window.  Another difficulty is that this approach fails to encapsulates features or service differences or opportunities.  For example, when I first started purchasing wireless equipment the scope of this function was narrowly defined to provide an overlay or convenience.  Today, wireless networks are the primary networking medium students, faculty, and staff use for internet connectivity.  Had we solely utilized the life cycle management approach to budgeting, we’d could never appropriately fund the equipment to meet the increased demand and additional features.  A third difficulty with this type of approach is that the default motivation to replace equipment is because it’s funded.

While not perfect, leveraging life cycle management can be useful in developing technology spend forecasts.  It’s relatively easily to construct, give the amount of industry information related to replacement cycles.  However, such an approached doesn’t really provide a narrative or articulate where the technology or an organization’s use of the technology is going.