Small and midsize businesses approach tech spending with an abundance of caution — but there are numerous strategies for making sure it's money well spent.
Small and medium-size businesses face daunting competition from larger enterprises. So when it comes to investing in technology, SMBs work hard to get everything they can out of their technology dollars. Sometimes, this isn't so easy. There are "down" years when you know you should invest in a technology, but you simply have to wait until sales pick up. Or maybe you make an investment, but the technology doesn't perform or deliver at the levels you had hoped.
The solutions for moving your technology and your company forward may be obvious in some cases. But in others, there might be effective optimization strategies you haven't considered. Here are 10 ways you can optimize your SMB technology investments, in good times and bad.
1: Pool your resources
Data center co-location (co-lo) is a hot trend in right now, as organizations of all sizes seek ways to avoid further investment in physical, on-premise data centers. You can move (co-locate) servers into a rented space in a third-party data center, link them into your central management network, and never miss their physical presence. If needed, you can even assign employees to the co-lo location to locally manage the applications that perform on these remote servers. Better yet, you can pool your resources into a mutual data center with other SMBs, especially if you are running the same applications. Even SMBs that are competitors in the marketplace have been known to do this! The net result is that you can reduce the energy consumption (and costs) of your in-house data center by moving equipment out. This also reduces your data center's carbon footprint, along with the amount of square footage being taken up by technology.
2: Become a SaaS!
Some credit unions and community banks have entered into agreements where the largest of the group leases its data center with its equipment and IT staff services. In so doing, it becomes a software-as-a service provider (SaaS) to other smaller businesses that are running the same applications and that have the same regulatory and security requirements for their data. The benefit to the hosting company is that it has revenues coming in from smaller companies that help it fund its data center and technology investments. The benefits to the smaller SMBs that are leasing is that they don't have to pay for their own equipment, staff, and data centers.
3: Join the user committees of your mission-critical IT software vendors
Commercial software providers tend to listen most closely to their largest customers when it comes to enhancing their products. This puts SMBs at a natural disadvantage when they are using a standard package of software and must depend on (or hope for) the vendor to put in the types of enhancements they really feel would benefit their businesses.
One strategy SMBs can adopt that will help them get their voices heard by the vendors is to become active participants in the user committees that commercial software vendors form to gather input for what they should work on next in their products. Because it means time away from the office, many companies (including large enterprises) pass on committee participation. An SMB should consider this as a golden opportunity to ensure that an investment already made in software stays relevant to its business.
4: Virtualize your data center
At the end of 2012, 51 percent of worldwide corporate servers were still unvirtualized. With virtualization, hundreds of servers can be reduced to a handful. The savings in floor space, energy consumption, and server investments naturally follows. Everyone knows these facts, but smaller companies tend to delay virtualization because of all the other projects their lean IT staffs have to handle. Virtualization shouldn't be a back-burner project. Eliminating servers (and physical storage) through virtualization can immediately start paying for itself in space and energy savings, with the corresponding increase in return on investment (ROI) dropping directly to the company's bottom line.
5: Consider outsourcing non-
mission-critical applications to the cloud
For SMBs and large enterprises, it still makes sense to keep mission-critical applications under direct management. However, other systems (e.g., payroll, human resources, office applications) are great candidates for outsourcing to a capable cloud provider. The risks of moving to a cloud services provider should first be carefully assessed to ensure that this provider can store your information securely, meet your regulatory compliance needs, and be able to fail over should a problem develop in the cloud. But if these requirements can be met and you have a strong cloud provider, you are in a position to pay for service on a subscription or on-demand basis and to reduce your software licensing fees. These savings enhance your ability to invest in IT elsewhere.
6: Extend the reach of your IT with mobile communications
Tablets and mobile devices are less expensive to deploy than laptops and notebooks, and for employees who use their devices primarily for system access and communications, tablets and smartphones are a great fit. Mobile service can also be subscribed to, so you don't have to invest in your own T1/T3 communications lines. You will save on your telecommunications and personal hardware costs, and most employees will like the move to tablets and smartphones.
7: Develop a strong Internet presence
For an SMB, Internet is the great equalizer with large enterprises. A dynamite Web site can go a long way toward making your company seem larger than it really is. Your firm can also gain credibility with partners and customers. There is an initial investment that can run into six figures if you deploy a high-ranking Web design firm to develop your site. But once it is built, you can run your it yourself and develop you own content.
If you choose to use your Web site for ecommerce, an initial investment of six figures is still far less than what you would pay for most commercial real estate you would build on or lease over time — and your customer base would be worldwide. Web sites can also be run less expensively than physical facilities, since so many Web site processes can be automated. SMBs can enhance their revenue potential and save on operating costs if they turn to the Web.
8: Establish lifecycle rotations for personal computing equipment
IT departments establish three- to five-year lifecycles for most of the equipment in the data center and then amortize the expense of this equipment over the same number of years. They should also apply this strategy to the organization's personal computing assets, like PCs and laptops — and many of them do — but the process can be greatly enhanced if there is also a "cycle down" strategy for these assert as they age. Here's how the "cycle down" works:
You give your newest, most high-power personal equipment to your power users. Then, as you replace these units and the old units become available, you cycle down the older units to your non-power users who have more casual (and less resource-intensive) uses for the equipment. With a "cycle down," organizations can often keep a PC or a laptop in service for as many as seven years. This extends the time that the company recoups its initial investment and defers new investments until they are really needed.
9: Invest in service points of contact (telephone and Internet)
If you want to pick an area where you can outperform your large competitors, focus on technology that enhances your customer points of contact. You don't have to invest in a fancy CRM (customer relationship management) system to do this. Where you need to apply the technology and the effort is to Internet contact (chat, email, etc.) with your customers — and also to phone contact. Customers want to communicate with a real person when they need to solve a problem or obtain service. If you invest in technology that allows you to humanize the customer experience over the phone and the Internet, you can distinguish yourself from competitors many times larger, because they don't tend to do this well. Your customers will appreciate it — and they'll stay with you.
10: Set high usage standards for your software
Clients normally utilize only 20 percent of the commercial software they buy. This isn't good economics, because the price you pay for a software license is for the whole thing. Avoid buying software as a gut reaction, or without first mapping out all your requirements for it and what it is supposed to do for your business. Then, try the software out. If it doesn't give you what you want — plus new capabilities that can further improve your business — bypass it. If it is so difficult to learn that your users absolutely refuse to use it, don't buy it. Most vendors allow for pilots or "try-and-buys" of the software before your enter into an agreement. Take these opportunities to ensure that the software will really be put to work for the business. From an investment perspective, there is nothing worse than shelfware gathering dust at the back of the data center — or software that goes 80 percent unused.
- IT Innovation for Small Businesses (ZDNet special report page)
- Executive’s guide to IT innovation in small businesses (free ebook)