When every cent spent on IT is off the bottom line, why would you spend anything?

When every cent spent on IT is off the bottom line, why would you spend anything?

As a provider of IT services no one is more acutely aware of the pain caused by the cost of IT than I am. I see it in the eyes and hear it in the words of my clients regularly.

Many of my clients are family-run businesses where the money spent on IT has a direct impact on the take-home income of the person making the buying decisions. I am in the same position in my business where technology is the core of our business, so I can empathise with my clients.

So it is good to stop for a moment and contemplate what life would be like in our businesses without the expensive technology we use. I am not for a moment suggesting we unplug and go unwired. Life has moved on and we cannot go back. The pace of business today is driven by new expectations of quick communication and rapid delivery of service. People, staff or customers, do not want to wait anymore.

Today, communication is by mobile phone, SMS, instant message, email, video phone from the device or PC. Mail is considered slow and fax is an out-of-date device gathering dust. The expectation of instant communication is high. We also expect electronic invoicing, electronic funds transfer and 24-hour delivery of goods.

Every industry is finding ways to be more responsive and less hands-on with what they do. From early product design to inventory management right through production and sales to warranty tracking of sold products. Businesses are using IT systems to manage the flow and reduce costs.

It’s that last point that drives the spending on technology. We spend money on systems to reduce the cost or improve the competitiveness of our business. Today we take technology for granted and so it is hard to stop and assess the value technology provides. Especially if we provide a service not a product where we can equate savings with a few cents per item produced times the number of items produced to get to a precise value.

[Total value of IT = Cost saved per unit produced x number of units]

If only it were so easy to calculate in a services business or a complex business how much was saved on a unit of work done!

In manufacturing there is a methodology called LEAN whereby people are taught to assess where there is waste in the business and trim it away to get a more productive system. In services businesses, from accounting to legal and others, there are ways to assess where time is wasted and to put a cost to it. Often the issue is with systems that are working but are not as efficient as they could be. Sometimes it is a lack of adoption of new technologies that save time.

A great example of time saving technologies with poor uptake in services firms is unified communication where inter-office meetings can be held over video telephony systems rather than in face-to-face meetings. The hours of travel and the lack of frequency of communication can lead to higher cost of business than is required. Inefficient systems for regular events like capturing expenses or tracking billable time can bloat administrative time and so offer opportunities for cost reduction. Of course there is the old bug bear of unstable computer systems requiring regular restarts or failed connections that reduce productivity, increase stress and send employees seeking alternate work places.

Every business needs technology and needs to keep budgeting something for its maintenance and up-keep, but also needs to pay attention to how that technology can be updated to further trim costs or drive new capabilities in business. When the business capabilities created by the technology are truly appreciated the cost of the technology is justifiable. What parts of your business could be trimmed of waste? Can better IT systems help reduce your costs?

David Markus is the founder of Combo – the IT services company that is known for solving business problems with IT. How can we help?


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