Never, Ever Buy Technology (Or Anything Else, for That Matter)

Do you own a house?

If you look at the hard data around home ownership, you will cry.  General upkeep, repairs, taxes, utilities, snow removal, lawn care and even your own time allfigure into the total cost of (home) ownership, the dreaded TCO number that should define how you decide whether to buy or rent anything.  (Yes, there’s definitely an emotional ROI from home ownership – until the kids grow up and leave, and you’re stuck with perpetual overhead.)

Unless you time the real estate market perfectly –something, by the way, you can never do – you will lose a ton of money when you eventually sell your house.  In fact, because of rising recurring costs, the longer you own your house, the more money you will lose.  Worse, much worse, there are enormous risks connected with ill-timing the real estate market:  look at the losses incurred by those who bought homes in the early 2000s and sold them after the 2008 crash:  some of my friends lost 30% – 40% on their real estate investments from 2005 – 2010.  (The government of course knows how risky and expensive home ownership is so everyone gets a tax break on capital gains, should there be any, though no one ever talks about anything but the emotional ROI of home ownership as the important part of “the American Dream”:  it’s certainly not the financial gains!)

So why own?

In the beginning of digital time, we owned tons of technology.  We owned desktops, laptops, networks, servers, data centers (complete with massive generators), data bases, backup systems, applications – which we actually designed, developed and supported ourselves – and – most expensively – we even owned the people required to maintain and support this sprawling technology infrastructure.  We now own smart phones, tablets and applications – still (especially “legacy” apps that we cling to even when everyone below the age of 50 insists we abandon these digital children and all of their offspring).

We even own digital strategy and innovation.  How many companies believe they have the “best” people doing all the right things, that “we don’t need no stinkin consultants!”  Companies still invest in strategic tiger teams and centers of excellence to disrupt their own business models and processes.  It seldom works:  it’s hard to find perspective – and innovation – from people who’ve been sitting in the same office, talking to the same people and entertaining the same clients for years.

But we now have alternatives.  Companies don’t need to buy, own or support anything digital.

Anything. 

Ever.

Let’s start with hardware.  There are a couple of ways to go here.  First, you can lease hardware from willing vendors who will also support all kinds of devices.  This frees you from the constant upgrades necessary to keep your employees happy, productive and competitive.  You can also embrace BYOD (bring your own device) models where employees use their own digital toys to do their work.  While you will have to worry about compatibility and security with so many different devices running around your networks, remember that you don’t have to insource standardization or security either – you can get help for these tasks as well.

Will you spend more renting versus buying hardware?  On paper, yes.  But like your home, when you add it all up, renting will save you money – and aggravation – and let you focus on your business, not the operating infrastructure of your business.

Now let’s look at software.  Assuming that you no longer write applications, you no longer need to buy any software to run your business.  Everything you need to do you can do with software you can rent from the cloud.  You can even develop applications in the cloud if you just can’t control yourself.  SaaS meets PaaS on top if IaaS.  Aside from technology vendors, why are any companies in the software design, development, testing, deployment and support business?  Not only that, in the era of consumerization, employees download applications all the time that no one – especially “IT” – even knows about!  How does any company control that?

Services?

Leave the help desk and “break-and-fix” worlds behind and never look back.  Why does anyone still have in-house help desks?  I realize that not everyone’s happy with offshore support, but were your internal help desks really all that good?  At the very least, you should want to get out of the line of service fire.  Like the hardware and software businesses, it’s time to move away from the technology services business.

Strategy?

Why does anyone need internal strategists?  Rent your strategy.  (Isn’t that why God made McKinsey?)  If you decide you don’t like your strategic landlord you don’t have to fire anyone you know.  Just call the Boston Consulting Group or Bain.

Digital innovation?

Innovation requires new perspectives, new people, new products and new services wrapped around old business models and processes.  Most companies cannot get there from here.  Harry, Charlie and Linda – who have been with the company for 20 years – now run the new Innovation Center.

Really?

What about people?

We’re in the age of outsourced CIOs, CTOs, CMOs, CSOs, COOs and even CEOs.  We sometimes call these Chiefs “interim.”  But we all know “interim” CXOs who have been around for years (which makes them useless for innovation).  Much of this is determined by the stage of the company.  Start-ups and early stage companies barely need full-time employees.  They often outsource marketing, PR, IT and even delivery through an entourage of independent contractors.  Larger companies have a much harder time with renting people than smaller ones, which (among other reasons) is why small companies are more agile than large ones.

So what’s left?  Or maybe a better question is, “what actually is a company?”

Remember when we used to talk about “core competencies”?  We also talked a lot about“reengineering.”  Those were the days of “business process management” and “optimization.” 

Remember?

IT is not a core competency, though continuous digital innovation is.  Is there a conflict here?  No:  all operational technology goes out the door – no questions asked.  Digital innovation should be a collaborative activity involving internal and external professionals.  You should rent – not buy – strategy, innovation and“digital transformation.”  Hardware, software, networks, services, security administration – you name IT – are all out the door and all for rent.

Why buy any of IT?