Keep Close Tabs on Technology Performance During a Downturn
By Bill King
As southeastern Wisconsin businesses strive to manage costs during the current economic downturn, it’s important not to overlook how your company’s technology is being managed.
Make sure you get the most for your technology dollar and your Information Technology performs at peak efficiency.
Trying economic times require executives to understand the IT component of the business as a whole. Executives know their financials, their marketing and sales, human resources and administration issues. But with technology, they spend money sometimes without knowing where the return on investment comes from because some companies do not establish, measure or track meaningful IT metrics.
Variables such as system availability, frequency and severity of trouble calls, and estimated vs. actual support or performance expectations provide a starting point to determine your technology’s return on investment (ROI).
In a slower economy, as budgets get squeezed, management is pulled in many different directions. Everyone is asking for resources. Marketing wants dollars to advertise; human resources needs funds to attract or retain talent; and IT wants upgrades and improvements. But if business owners don’t understand the value IT brings, they can’t allocate IT dollars wisely.
It’s apparent to management when technology does not deliver but more difficult to truly understand what makes IT consistently work well. This can create a frustrating environment with IT stuck in the unenviable position of having to justify itself and the technology it supports.
During slow economic times, we see a number of tactics that companies can utilize to improve their technology management. For example, department charge-backs – the specific requests IT receives from engineering, marketing, finance, HR and other departments are charged directly to the requesting department. Charge-backs show which areas of a business use IT resources and to what degree. Charge-backs give management visibility to how IT dollars and time are used and the benefits that IT provides across the company. Such benefits include improved productivity, more streamlined business processes or improving the customer experience. This knowledge helps management define the return on their IT investment.
If a department, such as engineering, spends $25,000 worth of IT resources, they need to be able to pinpoint exactly how the dollars used benefited the department. Conversely, charge-backs may illustrate a department’s inefficient use of IT resources. For example, a department with a high number of support calls to IT related to how to use a specific technology could signal a need to improve employee training or Human Resource’s new hire screening process.
Ultimately, any company can benefit from more insight into their expenses and how their IT resource/dollars are truly being used. Investigate if expenses are used for technology improvements, such as adding new capabilities. Or are funds needed for upgrades to an existing function or system or just for maintenance, keeping what is currently in place running – maintaining the status quo?
There are several steps a company can take to better manage technology.
- Learn the mechanics of your IT system(s). What are the individual components of your system? For example, file, print, Internet, email and backup server(s) – security, antivirus, mal-ware protection and remote access capability. Use documentation and diagramming to allow you to understand which functions are performed in-house and which are outsourced or hosted elsewhere. Then you will better understand which system costs are fixed and which may be variable.
- Understand where you are in the lifecycle of your system(s). For example, if all of your workstations are over five years old and your server(s) are over six years old – running Windows 2000, you may be due for some substantial hardware and software improvements in the near future. As a rule of thumb, for budgetary purposes, the typical workstation and server have life cycles of three to five years.
- Learn where your IT resource is being used. Take the information you gathered in the two previous steps to develop and/or analyze what resources are required to keep what you have running – or to “keep the lights on,” so to speak. Think of this as a minimum system requirements exercise. Information gathered through a department charge-back process will help you pinpoint use of IT resources.
- Turn the previous steps into meaningful procedures. Take what you you’ve learned in the previous steps to implement meaningful procedures to ensure ongoing success. By doing so, you will not only be assured that your IT performs in any economy, but also that it will evolve with and support your business objectives.
To further improve your technology management determine your company’s technology personality, set expectations and objectives for how technology is used and how it contributes to your overall business objectives, consistently review plans based on those objectives, establish measurable metrics and collect data based on metrics to evaluate and manage the entire process.
Assess your company’s IT health; take the time to learn about your technology users and where inefficiencies represent opportunity. Work with your internal IT department or your IT partner so you understand where your money is going (hardware, software, support, etc.) and how you can spend it more wisely. Good technology management can pay your company big dividends, especially during uncertain times.
Oak Hill Business Partners is a professional services firm serving small and mid-sized businesses. Oak Hill provides Growth Management Services, Mergers & Acquisitions, Turnaround Solutions, and Bank Management Services. Our deep experience allows us to work “where strategy meets execution” – our strategy and our execution are based on years of experience doing the work.
Bill King is a Strategic Partner of Oak Hill Business Partners, specializing in technology solutions for medium- and small-sized companies.