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Larry and Lou (real guys, different names) are two of the greatest penny-pinching business owners. They run a small, 30-person company that manufactures custom industrial equipment for the food industry.

These guys are not cheapskates. They have money and they’ll spend it, as long as they see the value. Their discipline and focus on keeping costs down is an enormous reason why they’ve kept their company going for so long. But sometimes they overdo it.

For example, both Lou and Larry have never been big believers in upgrading their technology. They have always subscribed to the “If it isn’t broke, then why fix it?” mentality. “Why should I upgrade my computers every other year?” “What? Because Microsoft tells me to do it? No way!” He always advises “Don’t buy in to the always-have-to-upgrade theory that seems to drive the profits of hardware and software makers.” This is bad advice. Why?

Technology is not like your typical asset. It has to be continuously upgraded and frequently replaced. If you don’t, then you and your business suffer–in these three ways.

Hackers like to find machines that are running older operating systems that haven’t been updated with the latest security protections. Hackers can gain access to the network and wreak havoc. Older hardware and software is a huge security risk for your company.

Today’s cloud-based applications are able to talk to each other much, much, MUCH more easily than systems resident on servers and older PCs. Because of their “isn’t broke, don’t fix it” mindset, employees at their company re-enter the same information two or three times and usually make a mistake or two along the way. By embracing change and replacing their older systems, they would see huge gains in productivity.

About half of today’s workforce are Millennials–those who are currently between ages 18 and 34. These people have grown up in the cloud–they’re used to Facebook, mobile devices and apps for everything. When you show a prospective employee around the office and they take one look at your older systems, they’ll run for the hills. Who wants to work for a company with such outdated technology? What is this, the 1980s? Today’s recruits want–no, they expect–to work with the latest and best cloud-based software and to be mobile–collaborating and communicating from their smartphones just like they’ve been doing for the past ten years.