Duane Lowenstein

4 Ways You Will Increase Profitability With a Technology Refresh

Blog Post created by Duane Lowenstein Employee on Apr 29, 2016

I have a friend who owns a classic old BMW. He loves that car. It’s fast, reliable, and fits him like a glove. It has plenty of bells and whistles—nothing like the newer models, of course, which are rolling data centers. But that’s part of the appeal. There are fewer parts to break. Except that now, when they do break, it’s an odyssey. Replacement parts are getting harder to find and can be shockingly expensive. And it’s harder to find technicians who know the model and can diagnose problems. The numbers just aren’t what they used to be. A car that for years was inexpensive to operate and easy to own is suddenly throwing big, unbudgeted expenses at its owner.

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Test systems are a lot like that old BMW. With steady maintenance, they can run flawlessly and improve your bottom line—until they don’t. At some point, even the best-maintained systems give way to repairs that cost a little more, take a little longer, and leave you with unplanned downtime. As you begin to see increases in maintenance costs and downtime, you’ll know it’s time for a technology refresh. The good news is, you can expect to see four bottom-line impacts almost immediately when you upgrade your test systems.

 

1. Higher throughput

Technology keeps advancing, so newer test systems are not only faster but also more accurate. The cost savings here are compelling. If you currently need, say, nine test stations for your product line, and new test systems are 33 percent faster, you can get the same throughput with six test stations that you’re currently getting with nine.

 

2. Lower OPEX and maintenance

To carry the example further, some would argue that it costs less to own nine fully depreciated test stations than to purchase six new test stations. I would argue the opposite. Nine test stations require nine operators whereas six test stations require six operators—a recurring annual savings that continues every year. Six test stations also means you’re consuming one-third less floor space, one-third less power for heating and cooling, and one-third less electricity to run the systems.

 

What’s more, older systems typically need to be calibrated every year whereas newer models have a two- or three-year calibration cycle. So you’re reducing not only the number of systems you’re maintaining but also the amount of maintenance required for each.

 

3. Less downtime

Unplanned downtime is a special kind of misery and an expense that’s hard to control. It upends manufacturing schedules and deadlines, interrupts nights and weekends, jeopardizes commitments, and bleeds profit. Some companies never recover. Newer equipment tends to be more reliable, and repairs are covered under warranty. In some cases—as with Keysight instruments, for example—a standard three-year warranty can be extended up to ten years, so you can know exactly what your maintenance costs will be for the life of the equipment.

 

4. Lower CAPEX

New equipment triggers a near-term increase in capital expenses, but after the initial bump, CAPEX trends lower over the life of the equipment. And remember that a spike in CAPEX is offset almost immediately with lower OPEX, overhead, and tax deductions. Many of the companies I work with see 100 percent payback on a modernization investment within a few years, then ride a downward slope on CAPEX for the rest of the time they own the equipment.

 

It’s a fact that every machine reaches end-of-life at some point. Having consulted with over 100 companies on major technology upgrades, I can attest to a simple truth: Planned upgrades cost less and provide better outcomes than emergency fixes. Your mileage may vary, but in general, newer test systems are faster, more reliable, more accurate, and have a lower total cost of ownership. And let’s face it, that new-car smell is pretty nice once in awhile.

 

What business benefits could a technology refresh have for your company?   What is stopping you from starting a modernization initiative?

 

Duane Lowenstein is a Test Strategy Analysis Manager for Keysight Technologies.

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