Guarding against tech-driven obsolescence

Businesses have been struggling for too long due to tech obsolesce and the treatment of these investment provisions in their balance-sheets. This colossal waste of monies because of this has managements and auditors embroiled in continuous deliberations on how to manage these disruptions.

This has become a bone of contention between auditors and the management when reviewing company balance-sheets. Reflecting on the merits of these concerns, it is essential for business leaders to understand techn obsolesce issues and safeguard businesses against its fallout. This needs to be to mitigate impaired investments swelling on the company’s books.

Bloated assets with difficult to ascertain viability and mapping of their business gains is a constant challenge in balance-sheets these days. Managements need to take proactive measures before making investments in new tech applications to mitigate obsolescence risks.

It is crucial to carry out in-depth reviews of current needs and future scalability in line with the emerging industry landscape. The selection process must include a third-party review and done to ensure an optimal RoI (return on investment).

It is imperative holistic reviews are done and not hoodwinked by sales propositions from service providers. In my own experience, I have seen that in more than two instances in 18 months, technology costs were written off due to inordinate delays in project implementation and an alternative had to be introduced due to changes in requirements.

One can imagine how such write-offs impact balance-sheets. Considering the current technology headwinds, business leaders must try to have clear foresight and ensure their tech investments, licensing, maintenance and implementation costs are both productive and sustainable.

Owners should also safeguard capital assets from obsolescence by outfitting their businesses with leased equipment versus purchasing the items outright. By adopting this approach, the company is free to upgrade to new technology at the end of each lease or include a provision that allows for technology trades.

Technology specification is a fundamental construct that includes considerations such as database design, architecture, and hosting framework. These decisions must not be left to CTOs and consultants alone and should be well within the radars of CFOs and CEOs too.

These are critical factors for future scalability or lead to functional logjams that would eventually seed obsolesce. Audits are useful instruments that should be used to assimilate risks for calibrating tech-related budget planning.

The rapid pace of development of new generation software and hardware should not be underestimated before making such investments. before taking technology investment decisions. If organisations want to be sustainable, they will need to reflect and take action on mapping issues as we all know that obsolete software can drain valuable organisational resources like termites.

Developing a long-term strategy for automation is critical, and it is imperative to have a technology sustainment plan, including allocation of full-time internal and external resources. An effective mitigation strategy starts with a long-term view of the challenges as well as management of change.

The plan should be linked to the overall strategy with a five- to 10-year outlook.

An effective obsolescence management process must be put in place as an integral part of the organisation’s software and systems life cycle management. This entails the upkeep of inventoried databases of the components in use and how they should be managed throughout their life cycle.

Patent information should be used as guiding principles for the development of proactive obsolesce management at every stage of the product life cycle with clarity on end-of-life (EOL) and/or end-of-support (EOS).

Tariq Chauhan is Group CEO at EFS Facilities Services.