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Evaluating Technology’s Costs & Benefits

September 20, 2004

© 2004 by Nick B. Nicholaou, all rights reserved
President, Ministry Business Services, Inc.
Reprinted from The Clergy Journal’s Faithful Finances

Microsoft’s Bill Gates once said, “Why would anyone want more than 640k of RAM memory?”  That was a couple of decades ago, and a lot has changed since then:  few had facsimile machines (now known as faxes), only doctors had pagers, cell phones weren’t around, and the Internet was a text-based communication system for government agencies and contractors.

Today our computers are a zillion times faster (is that a technical term?), and their operating systems are graphically based rather than text based.  Many of us have faxes (although they are beginning to move towards obsolescence), pagers, and cellular phones.  And the Internet has become a graphically based system that’s rocked the very way we do commerce and communicate around the world.

Today’s PCs process more information faster than anything imagined in the early days of computing.  Today’s PCs let us use software that is powerful while also simple to use and pleasing to the eye.  The software is demanding, however, and needs a lot of resources to work well.

The Cost of Getting By With Less
Most in ministry work with minimal overhead whenever possible.  That’s appropriate.  We believe it’s good stewardship to pour as much into ministry programs as possible.  We want to be known as those through whom the Lord is able to accomplish much with minimal resources.

The question is, “When is it good stewardship to upgrade computers?”  At what point does it cost more to work with older computer technology than it costs to upgrade?  There are typically three ways that running older/slower systems cost us more than they save:

  • Some of newer software technologies require faster computers with current operating systems.  If our teams are not able to run those software technologies, such as graphics programs and databases, they may be spending more time doing some jobs manually that could be done faster and better on a computer.
  • Some newer software and operating system technologies require faster computer processors and more RAM.  RAM is the portion of memory that is used for active calculations and “thinking,” and computers that have too little RAM must make up for it by creating virtual memory on the hard drive, which is very slow to write to and read from.
  • Older systems can—and often do— require more support.

Some of those costs can be easily measured, like support costs incurred when having a computer repaired.  However, there are also costs associated with all three of these which are not as easily counted, and can become very high.  It’s only when putting both of these kinds of costs together that you can objectively determine if investing in technology is objectively worth it.

Calculating the Soft Costs
The soft costs associated with running older/slower computers is due to lost productivity and lost opportunities.

  • When your team is spending more time doing jobs manually that could be done more efficiently on a computer, there are human resource (HR) costs associated with that extra time that costs your ministry money.
  • When your team has to wait for their computers to finish a task longer than would be necessary if the computers were up-to-date, that costs your ministry money.
  • When an older computer is down and needs to be repaired, the person who relies on that system to do their job loses time, and that costs your ministry money.

There is a way to put a dollar figure on how much running older technology is costing.  When annualized, these costs can become quite large.  Here’s how we try to calculate these costs.  Try it, and see what happens when you apply it in your ministry!

  1. Add together the annual cost (salary plus benefits) for all team members affected.
  2. Divide that by the average number of work week hours.
  3. Multiply that by your estimated lost hours of productivity.

Here’s an example:

  1. A ministry office of 5 where the annual cost of salaries and benefits is $240,000.
  2. Divided by their 40 hour work week  = $6,000 (team cost/week).
  3. Multiplied by 3.33 hours (the estimated lost productivity of five minutes each hour, or 40 minutes/day/team member) = $19,980.

Using the formula, lost productivity due to older/slower computers is costing that office of 5 nearly $20,000 annually!

Numbers Needed for Calculation

  • The average annual cost per employee, salary & benefits
  • The number of employees using older/slower technology
  • The average number of hours in a work week
  • A conservative estimate of the average amount of lost time each week due to older/slower technology

Here’s How the Formula Works

The conclusion we would draw from the above example is that it would make sense for that office to spend as much as $20,000 to upgrade their systems because it would breakeven within the same year.  It may even be wise to spend 1.5 times that amount if it meant they would be that much more productive for the next couple of years.  However, a $40,000 system upgrade might be hard to approve unless phased in over 2-3 years.

Getting More for Your HR Dollar
There are potentially a lot of lost productivity causes, and slow computers is just one of them.  And the reality is that we probably won’t cut staff because we’re able to get the current work done quicker.  What typically happens in ministries is that we find we’re able to accomplish more with our team with increased quality, and that can help lead to faster growth as we meet needs better.

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