Would you expect to hit your sales goals if your sales manager has no sales plan? What about earning the right profitability percentages if you don’t have a sense of last year’s expenses? In the same way, each year you should think critically about your business goals and determine if it makes financial sense to do things such as:
• enable new technologies (if you enabled remote access, could people work from home instead of spending more for expanded office space?),
• cut back in costly areas (should I upgrade my main application, look for something cloud-based or just invest in more user training?),
• or upgrade my 3 year old equipment (faster PCs might mean I don’t need to hire as many new staff or if I am laying people off, faster servers might allow us to keep up with the workload).
Ad hoc IT strategy usually means you lose efficiency and effectiveness, resulting in more expensive IT costs.
It is better to prioritize 2-3 business goals each year, determine your preferred strategy for addressing, and execute against those to get the best return on your limited time and budget.
If you see your IT from a whole lifecycle point of view, it can open your eyes to more of the fiscal side of technology acquisition and disposal.We also find it helpful to classify possible technology expenses into 3 categories:
1) – we have to spend for this,
2) – we probably should do this but let’s estimate which of these projects will yield real results and
3) – we don’t know if we should do this, but other organizations our size are benefiting from this technology.
To prepare for budgeting and planning, don’t forget to ask your accounting team for your previous year’s technology expenses. This may require setting up additional sub accounts in your accounting system so you can determine expenses such as:
• telecom/Internet services (if no long term contracts, you might be able to reprice or consolidate services)
• new equipment purchases (are there maintenance warranties needed for updates, support or extending warranties? Most hardware has 90 days to 3 years warranty) and if you need support after-hours (some vendors are 8-5 but charge extra for after-hours or weekends)
• licenses and support renewals (many security tools stop working or lose some of their capabilities without renewing)
• line of business vendor software support (computer guys may know lots about computers, networking, and storage but may not know your application specifically for updates, fixes, troubleshooting and migration). Protect yourself by getting your accounting, CRM, EHR or ERP software support, usually averaging about 15-20% of software costs.
Too many times, we’ve seen technology buyers commit to what looks like a great deal, but is missing something a typical business would need.
Business PCs and laptops have heavier duty cycles typical for running over 8 hours per day. Consumer grade equipment suffers from being designed to be used fewer hours a day, has less testing for working in a business network, and costs are offset by pre-installed consumer applications, sometimes called bloatware.
The more applications installed on your PC, the slower the entire system is (each application pre-loads stuff into memory at boot-up, so the applications don’t seem to start slow). Also, certain applications are designed for consumers for simplicity (fewer configuration options and less tweaking possible) versus stability and manageability as preferred in business (with features for central management, or the ability to participate in business networks like Windows Professional vs. Home).
CompUSA and Computer City are gone partially because of the challenge in training low-cost retail sales reps to properly advise businesses on appropriate technology.
If you genuinely are limited in your IT budget you should be more focused on the full life cycle cost of an asset, not just initial acquisition. Is it better to suffer through an under powered PC for two years when a faster PC helps you accomplish more work and last longer with fewer issues? When budget is truly an issue, we highly recommend looking at leasing programs to make sure you get the “right” tools up front, so your life with the asset is better.
With the right tools selected and capital outlay broken up monthly, it allows you to get more work done and pay off your financed amount. We’ve worked with leasing vendors that finance all hardware, labor for installation, software, software development and other related expenses. With cloud offerings and fixed monthly service fees, a small business has many more opportunities to budget out their technology and get everything they want, all timed on a monthly basis to conserve the all-important cash flow.
Who isn’t familiar with the cost of ignoring regular maintenance? We know the importance of maintaining our own selves, all manner of home equipment, as well as our cars. Adding air to tires, changing the oil, adding gas, replacing wiper blades and a whole lot more are all activities needed at different cycles just to get you to work consistently.
Why would you risk your multi-million dollar business by ignoring the regular maintenance a computer and network need to perform consistently?
Also, be wary of trying to tackle too many projects at once. Change management experience cautions us from stalling operations and confusing our people with too many changes in a short period of time (or without a clear vision of success). It always helps to articulate a vision to your team and follow the old presenter’s technique of “tell ’em what you’re going to tell ’em, tell ’em and then tell ’em what you told ’em (referring to a presentation agenda, content slides, summary page).” Everyone on the same page is a good thing.
Understand how simple networking and naming standards lower your total cost of IT ownership.
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