IT investment for the small businessman and novice.

Previously:

The advantages a small or medium business has  over their larger competitors and how they can save vast amounts of money in implementing high productivity software and gain the benefits faster.

1. It investment should never cost you money, it is an investment and the ROI should be clear.
Build a business case professionally and then invest with confidence.
The question to ask is; who would you rather trust with your capital, your own business, some investment bank, or maybe a fund manager?

2. Cash invested in your own business via IT systems or any other properly planned investment is always going to outperform any other investment and it remains within your control.

3.  In a free market economy, you always have to match the performance of the market leaders sooner than most of your competitors, or you are out of business. It’s not optional.  If they have automated successfully, you are at risk until you follow suit, or outdo them.

Types of IT investment

One thing every business man/woman or at least his/her CTO should understand is the dynamics of costs and returns  for different types of IT investment in different sizes and types of organisation and for different purposes.

There is absolutely no broad sweeping brush that can be used here and there are few reliable rules of thumb.  There are huge risks for the unwary and there are massive opportunities for the savvy, there are things that are not optional and things that are very much optional.

IT infrastructure versus productivity systems

The first big source of confusion is between the purchase or replacement of networks, servers and workstations, printers, operating systems and office systems like Microsoft Office.  The risks of a failure are dramatically less in this area and the potential to realise benefits and make gains are also much less.

Putting off the upgrade of workstations or operating systems by a year will rarely have any effect on bottom line unless you are losing time due to stoppages and unreliability.  This is an area where business cases need to be scrutinised with great care.

1.       Unless there is real risk of lost productivity, or very high maintenance costs, it is going to be hard to justify not keeping the old stuff as long as possible.

2.       Upgrading to smarter tools with new cool features will only benefit the one or two geeks on the team unless you take steps to train people on the new capabilities. Is that included in the business case?

Automating process

This is what business systems are really all about. The database replaced the card index and made it possible to share that information with colleagues globally, to search on fuzzy logic and to send a message at a single mouse click.  This was a pretty easy decision on hindsight and the business case is obvious now, but at the time, ditherers and weak leaders continued with their card indexes until they saw their customers walking into their competitors arms.
Plenty of leaders continue in the same vein today and every new step forward in technology will have innovators, early adapters, last minute Harrys and hard luck stories.

Technology is not the enemy

Since records began, businesses have had to find ways to deliver better products or services, do it at lower costs and win and keep more customers. There’s a percentage at the top end of this battle and there’s a percentage on the way out, the rest are headed in one direction or the other .  Businesses that choose to close their eyes to the importance of technology in this struggle have already consigned themselves to the scrapheap.

Face facts and make the most of it
Success at harnessing technology requires understanding a few basic rules and working with people you can trust to deliver.

Strategic advantage or state-of-the-art

The first big differentiator between software systems is their status in your market segment.
If you are considering a system that you hope will bring you in line with the main players, then this is probably “state of the art”, though if you are a long way down the pecking order it may still be classed as “strategic advantage“.
E.G.  If you run a large business carrying out maintenance type work like Sky TV maintaining satellite dishes, you will have automated scheduling that plans the shortest routes and sends jobs directly to the engineers PDA or mobile.   This has cut operating costs by 25% on average for these businesses and is a fast maturing industry.   If you want to bid for sizeable projects then you won’t stand a chance of winning competitive bids unless you have this in place.  That’s “State of the art” IT.
If you run a local cleaning business with a few dozen teams in vans and you are growing and ambitious, you probably don’t have this systems yet and your direct competitors probably don’t, so to you it is still probably “Strategic advantage” IT. If you are serious about growing, guess what you will be planning now!

Not only will the ambitious smaller firms be scrambling to get this competitive advantage, but the guys at the top are already planning to push the bar up higher and guess what you will have to do when that happens!

There’s one fact that is simply unavoidable whether it thrills you or fills you with horror;
Competing and winning in business in the 21st century is primarily about winning the technology battle.
 Where has all the money gone?
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