2 b) or not 2 b)

People sometimes think that ALL business owners are multimillionaires which are why they can afford to own multimillion dollar companies. The reality is that managing a company is a difficult venture, full of risks and sometimes the potential for great rewards. Technology has radically transformed the landscape of nearly every business. Technology changes rapidly and randomly – developments in one area open the door to new possibilities that never existed before. Simple concepts like having a webpage can elevate one company’s sales, and be nothing more than a money pit for another company.

Technological change is difficult to implement, difficult to adapt to, and sometimes fails to live up to the hype. Unfortunately, the general attitude of many companies is a ‘keep the lights on’ strategy. Once you have a process in place, you spend the majority of your IT budget on maintaining the existing system. The danger is that your company can become entrenched in maintaining legacy systems, and falling behind companies who adapt and take some managed risks. In addition to this problem, a lot of small companies are supported by single operator technology companies. One IT guy runs around maintaining systems for a base of clients. All your efforts are to maintain existing systems and very little time can be put into learning new technologies and exploring innovative ideas.

I’m not a big fan of statistics, since they can be manipulated to support just about every possible idea you can think of. That said, there are some statistics available from a number of sources that are worth noting. When you look at your budget or history of spending for Technology, you are likely to find that 80% of what a company spends is on maintenance, 20% on upgrades, and zero percent on innovation. Industry analysis also indicates that almost 40% of what companies spend on IT can be eliminated by making changes in how they look at technology. Technology is not a ‘necessary evil’ – they are simply tools, like a hammer or a photocopier. Overall, it is estimated that efficient and managed Technology is approximately 5-6% of your operating expense.

When you are looking at your budget, you need to consider:

1.  Maintenance of legacy systems

2.  Transformation

      a)  Upgrades

      b)  Innovation

I remember working for a painting contractor a few hundred years ago... We bought one of these new ‘electric screwdrivers’ for the jobsite. We were amazed at how quickly all the switch and electrical faceplates and hinges were removed. I think we saved two man hours of labour on the first job, which went a long way to paying for the drill. Innovation can be the difference between getting by and moving ahead. You decision, 2 b) or not 2 b).