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What are the implications for management of each of the following trends: reduction in cost of hardware with time? reduction in size of hardware with time? increase in power of hardware with time?

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Prepare a 2-3 page paper (350 words per page) explaining the following:

What are the implications for management of each of the following trends:
reduction in cost of hardware with time?
reduction in size of hardware with time?
increase in power of hardware with time?

Solution Preview

The total cost of ownership of computer hardware can be broken down into four major categories shown below. Would recommend you tackle your essay along these lines:
a) Reduction in cost of hardware with time?
Cost to acquire vs. Cost to maintain
b) Reduction in size of hardware with time?
Cost to retire
c) Increase in power of hardware with time?
Cost to finance

Of note you need to perform the following financial calculations: Return on equity/investment, Service charges versus payback period, cost-benefit analysis (relating the cost of purchases with investment in machinery), GAP analysis (i.e. graphical interpretation of closing the gap between purchases of IT equipment and generation of profits for the company).

Cost to acquire
Here are some strategies for reducing costs in acquiring equipment and technologies:

Reduce number of vendors. This strategy will generally lower purchase costs because of larger discounts associated with larger orders.

Buy direct. Buying direct is usually best and is the model many manufacturers are moving to. Since technology changes quickly, this may be one of your key business practices. The good news is that you don't have to be a major corporate customer to buy direct.

Discount contracts may not be best. It may not make sense to sign any sort of upfront, discount contract with your vendor. This is especially true for small to medium size businesses. For some vendors, it's better to negotiate a price on each ...

Solution Summary

Here is just a sample of what you'll find in this solution:

"Cost you don't anticipate. Other hidden costs for not jettisoning the old equipment include paying personal property taxes or storage costs on equipment no longer in use."

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