Published; The Hard Questions For Your Tech Team

Thanks to Jim and Ian, Canadian Business Magazines entrepreneur supplement PROFIT published another article by me on asking the pointed questions that ensure you are getting the most value out of your IT Staff or suppliers

The column is for growing business owners, ‘C’ level execs and managers, and briefly covers;

* How quickly can we fix breakdowns?

* What’s our long-term plan?

* How are we managing our tech spending?

* What will we do if a tech disaster strikes?

* How are we using technology to boost productivity?

The full column is here!

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Doing More On Less

I know the press states that things are beginning to look up, and I certainly hope that is true!

Both my much better half and I have seen major slowdowns with this economy, although we both consider ourselves lucky to be employed.That being said, all is not rosy yet, and the popular press can still be saturated with advice on doing more with less.

How About Something Different?

Instead of trying to do more with less by spreading 10 dollars around 10 different initiatives.

How about doing more on less, by spreading that 10 dollars around three or five different initiatives?

Do you have a laundry list of IT Gotta Do’s?

Prune the list, move them all to the back burner.

Vampire projects sucking resources? kill them too.

Trying to boil the ocean? Nope – kill those too.

The SMB Takeaway

Chris Zook, in his excellent book Unstoppable,  writes that sometimes you have to shrink to grow.

Re-prioritize, re-evaluate. Kill what does not fit the current reality.

And use the dollars saved to double up on an initiative that means something more.

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Real SMB IT: 5 Ways to Stop IT Cost Leaks

As managers in the SME space, here are five bad IT spending habits that are so common your firm is likely to be committing at least two of them.

• Tracking only your capital costs

• Falling for a low sticker price

• Permitting ad-hoc purchases

• Paying retail rates

• Letting printing costs run wild

The full article is here.

My thanks to Jim McElgunn and the editors at Canadian Business PROFIT magazine

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Start With Expenses, Not Revenues

For managers in the small business space, an excellent article on the importance of budgeting in your business is on the E-Myth blog

As it states, your budget is a combination of;

past trends and future predictions

I wanted to bring this up, because there is one area that many SMB’s are often losing information on these past trends and future predictions.

And that is in their IT spending

Sure, you accounted for the capital expense of that ERP system years ago.

But how about it’s annual maintenance, licencing and support costs?

Are you accounting for that expensive service that used to be used a lot – but one person is the only one using it now?

Probably Not.

The SMB Takeaway

As a business manager in the Small to medium business, make this year the year that you start that IT spend as a zero based budget. Look at each and every hour, and dollar.

You may find that you don’t know as much as you thought you did about your IT spend.

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2 Images: What is different?

Look carefully at these two images.

Can you see any difference?

Look carefully!

Want a hint?

Here it is;

One costs $28.00 from a popular Canadian tech retailer.

The second cost $5.99 from a Canadian tech distributor.

See the difference yet?

Give up?

Look at this network switch, you have several I am sure.

 

 

 

 

There are 11 cables plugged into it.

Not including taxes, that means there is either $308.00 dollars worth of cables, or $65.89 worth of cables.

You get the picture!

(Note: both  prices were from a spot price check in December 2008)

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IT Spending, It’s A Responsibility

Venture Capitalist Fred Wilson has a post titled; Always Treat Money Like It Is Your Own

As a SMB Business Technology Manager, this is a mantra that I try to live by. I would rather get scolded for not spending enough, or fast enough, than for too much.

I do not mean el-cheapo Bill & Teds made in the basement products, but I constantly ask myself what the risk is in delaying a purchase, or push back on some ‘We gotta have..’ purchase request.

If you are a tech in the SMB space, keep asking your self that question. If you had to pay for it yourself, would you still be spending that money buying it?

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Focus That IT Budget

IT Budget

In the SMB space, most of us don’t have buckets  of cash to spend on IT.

Yet too many of us do not make the disciplined prioritization and planning of an IT budget necessary to understand where we are spending money.

If you have not moved beyond ad-hoc pricing of IT spending, take the time to start a zero based budget.

Include all capital expenses and operational expenses.

OPEX

In the operational expenses, include service agreements, parts replacement, the works.

Plan your purchasing over the budget cycle, it allows you to avoid capital outlays that occur all in the same quarter.

You will find that you begin to see your IT costs in advance, and that starts peeling the kimono off of the black box of IT spending.

As a SMB owner or manager, can you say with certainty what you spent on IT last year? Do you know what you will be spending this one?

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Christmas Lights And IT Costs

Like many, I try and put the Christmas lights on the house before there is 10 inches of snow on the roof making the chore more difficult than necessary.

So, a couple of weekends ago I stretched out my two strings of lights, tested them, and found about 10 burned out bulbs.

That forced me to schedule a stop on my trip home from work one day to visit Canada’s favourite hardware store to purchase 3 packs of replacement bulbs.

The following weekend I replaced my burned out bulbs and hit the roof of the house to install my seasonal lights.

After the chore was complete, I plugged them in;

Three more bulbs died instantly. And over the next several hours, four more died.

I admit, my comments were not seasonal.

So yesterday I had to visit the hardware store again; had to fight through seasonally choked aisles to get three more packs of replacement bulbs. Hit the roof again and replaced the burned out ones.

Money Value of Time

As a business manager in the small to mid-sized business space, you are most likely familiar with the time value of money.

But don’t neglect the money value of time.

Based on my story above, what would have had less cost?

* Two new strings of lights at about six dollars apiece, and one trip to the roof

* Or six packs of replacement parts at about a buck each, but four to five hours of time made up of testing, installing, two trips for parts, and two visits to the roof?

The takeaway.

As in many cases, there comes a time where direct (labour) costs, plus indirect (downtime, loss of productivity) IT maintenance costs outweigh a replacement cost.

And these maintenance costs often start out as small nickel and dime maintenance costs that on the surface seem quite inexpensive and reasonable.

But over time …….

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13 Yr Old Goaltenders, and IT Spending

Like many Canadian kids, our 13 year old plays hockey.

As a goaltender, the full suite of protective gear can easily hit a thousand bucks.

And, like many 13 years old, he is growing.

Wants vs. Needs

We had a discussion because he wants a complete set of new equipment. Primarily the highly visible (and highly expensive) mask and goaltender pads.

Wants

But he needs the invisible chest and shoulder protection that he is actually growing out of.

SMB IT

Same thing. That lesson never ends.

If I had the budget for every want, I could spend a million dollars.

I will spend a lot less than that on the needs.

That is not to say that I will buy the ‘el cheapo’ products for those needs, as I have written in other posts, I plan for the full cost of ownership over that assets lifecycle. Which can mean a few more dollars up front.

The IT of SG&A

Lauren J. Kelley at Sandhill.com has a article regarding reducing G&A expenses. The article was written regarding the mid-sized business in the software development space, however it applies everywhere.

Companies that swing between high G&A spending (often the result of a “problem”) and then major cuts in expenses often have trouble meeting profitability targets

The “boom and bust” concept from Lauren’s article is all to common in the SMB/SME and mid market. And where there is that type of boom and bust spending, I can tell you from experience that there is money being wasted on the IT side.

Even if you do drive some revenue from your business technology investments, I guarantee that there is waste that should be removed.

It goes like this;

Don’t spend a nickel until it breaks then panic & pay too much in money and time to fix the problem.

The IT Staff

Check your ego at the door. Trying to do the superman and fix every failure throughout 48 hour marathons is waste.

Your IT plan should have steady state incremental spending that is forecast over at least three years.

The Business Staff

A planned and conistent steady state investment in the IT lifecycle reduces risk, increases the accuracy of your financial planning and forecasting, and reduces the knee jerk smash to your G&A expenses.