Cost Models for an Enterprise
Financial advisors often recommend buying an appreciating asset and lease a depreciating asset to explain why, for example, it makes sense to buy a house but lease a car. No one would argue that a fax server is an appreciating asset, but it’s interesting how many companies treat it like one.
For the sake of this analogy, let’s assume that you have a 1982 Chrysler New Yorker. It still serves its purpose of getting you from point A to point B, but I suspect that the maintenance cost for oil, tires and repairs is not inconsequential. At some point, both a cost benefit analysis and value-added user experience (i.e., not having your car breakdown on the freeway during your morning commute,) will dictate that leasing a new car with all services covered makes more sense.
The equivalent to the old Dodge automobile for business transactions is a 7-10 year old fax server. If your company still has one, you have probably already capitalized the original cost of the server, but what about the ongoing costs associated with keeping it running? Repair bills for the old gas-guzzler are easy to calculate; the past its’ prime fax server takes a bit of digging.
First, you have the annual support and maintenance contract that vendors love to call recurring revenue. After four or five years you’ve likely paid more in support contracts than for the server itself. If you haven’t considered that cost, what about the electricity to keep that server up 24/7/365? Depending where you are located, the annual energy consumption for a traditional fax server can match the price of the server itself. IT also likes to get paid, so you need to look at staff time for maintaining the equipment, and of course the phone company takes a monthly hit for providing dedicated phone lines.
Of course costs are only one part of the equation. There are numerous new features associated with modern document transmission technology that you may be missing out on with the fax server. For example, with hosted fax services, you can send and receive documents from mobile devices, essentially taking your fax service with you wherever you have an internet connection.
And there are benefits to having turnkey fax services for your company. When the service is hosted in the cloud, your vendor is responsible for connectivity and deliverability issues.
Look close enough and you’ll find that the fax server that you thought was bought and paid for is really an expensive proposition to maintain (and like the old New Yorker, it is probably only worth a fraction of what you paid for it.)