The fast, the cheap and the good of technology for a scalable business
Wednesday, May 20, 2015/
Big business does technology differently to small business and we can learn a lot from it. The old story with technology is the three choices of fast, cheap or good quality. Typically you can have any two of the options.
When we start our business we need fast and cheap. If the business is going to fail in the first year or two there may be no point in investing in quality systems that will last in excess of three years. Of course this may be a plan to fail as the downtime caused by fast and cheap technology may cost more than the savings.
My theory for technology in business came from my time providing IT support in large enterprise and government. My stance is that it is always about the total cost of ownership and the scalability of the business. Now, not everyone that starts a services business gets to employing eight staff in under 18 months or leaps to over half a million dollars turnover in the first full financial year in business or ranks top 10 in the Smart50 Awards. However, if you want a scalable business that uses technology to underpin success, a strategy for success is important right from the start. You need to value your time and appreciate that time fixing technology or paying others to fix technology has a big impact on total cost of ownership.
Today we have massive benefits in our startups and growing businesses because of the great functionality we can draw from cloud computing. Starting with cloud applications and platforms means a commitment to spend money every month, and that can be daunting, but it beats having large lumpy payments before credit histories have been established. Setting up computers and servers is an expensive proposition but when you do have to quality really does matter.
Quality in hardware has a direct correlation with the amount of time you need to spend getting it working. Selecting hardware that matches your software’s certified platform list is a key to this.
For example, when using complex drafting software in an architecture business, speed and price may seem important. When it takes two days of troubleshooting to get the software to run on the machine the money saved on the hardware just went up in smoke. Even if you do not have the work coming in to justify the expense, the time would have been better spent working on sales activity that drives the business forward.
‘Just buy the approved machine and pay the premium for the testing that was done to get the certification approved!’ I hear you screaming, but it does not always work out that way.
True even the best machines experience faults. Having managed and monitored thousands of machines over 13 years in business we know statistically that approved machines deliver better results at a lower cost. It is why the big companies with fleets of many thousands of machines use the brand name computers.
Factoring the cost of buying and maintaining your technology into your expansion plans helps to keep the growth balanced. If you are adding a staff member, factoring in an extra PC, licensing costs and data storage costs should be part of the process. It is just part of the hidden on-costs of hiring staff. When you design your systems with scalability in mind you can factor in both growth and contraction in your business and can then understand the cost of the planned growth.
I have observed that IT systems and other systems in a business follow patterns as the business grows. These have been levelled off a little by cloud solutions but the rules of thumb still apply. Very few systems or platforms are needed for fewer than five staff. At six people you need the systems for 12 staff and the investment hurts. Having made the investment you then grow to 15 people and feel the squeeze. The next investment in better systems and expanded capacity will see you fit for about 25 staff and you will grow to 30 but then you need the systems to support 50 and so on. Very few businesses invest in technology before they needed it yesterday and then they want cheap and fast. Good planning and budgeting will see you put in fast and good quality and drive better efficiency and a much lower cost of total ownership from the technology.
Here are some key steps towards investing in quality tech:
- Buying equipment with a manufacturer’s warranty that can be extended to four or five years.
- Standardization of hardware brands and models to minimise the number of different problems one upgrade causes.
- Implementing servers or cloud platforms that include redundancy and uptime guarantees.
Of course there is more to it than that, but if you get your mindset right early in your business life you will get more done with fewer problems and less unexpected expense.
With the government’s recently announced $20,000 tax write-off for business assets, now is a great time to make that investment in upgrading your tech infrastructure, but remember that your return on investment is dependent on the quality you are willing to pay for.
David Markus is the founder of Combo – the IT services company that is known for Business IT that makes sense. How can we help?