August 18, 2008, 4:38 AM — As a small or midsized business owner, you probably already know whether your company or industry is tilting towards an economic slowdown this year. You probably have already begun to sharpen your pencils to look at what cuts can be made, and how to start stockpiling cash into reserves to survive months that miss projected revenue. One area to cut with care is technology spending and maintenance. An erroneous cut in your technology budget could lead to a huge loss if your network goes down and your staff cannot work. Business owners principally rely on technology professionals, like IT Managers or Consultants, to provide advice in order to make their decisions on what to cut.
However, Are You Getting The Best Advice?
The reason you should ask this question is because many IT Manager came from an enterprise level company and was trained to provide enterprise level advice and solutions that are often two or three times more costly than necessary for small and midsized businesses. Small and midsized businesses need to evaluate their actual requirements, based upon their business plan and goals, and only invest in technology that provides important added value in the form of increasing stability or efficiency.
Tips on Managing IT for Small & Midsized Business in an Economic Downturn
Here are tips to help small and midsized businesses make the best choices when looking at managing their IT budgets in an economic downturn.
1. Outsourcing Internal IT. If your business employs fewer than 100 employees, it makes little economic sense to employ internal IT employees. Employee costs are probably the largest overhead expense in your companyâ€™s budget, including salaries and benefits. If you outsource your IT services to a local professional IT outsourcing firm, you only pay for what you need and donâ€™t pay benefits.
Another benefit of outsourcing your companyâ€™s IT is that you are hiring a company with a full staff of engineers specializing in most IT areas. If you have or had internal IT staff, you probably have already paid IT consultants to come in as contractors to help your internal staff with technology issues beyond their expertise. By selecting the correct IT outsourcing firm, you eliminate double-paying for internal IT staff and specialized consultants.
Prior to selecting an outsourced IT company, you should always ask whether the IT business primarily uses employee engineers or contractor engineers. Contractors come and go quickly, and can frustrate your desire for a stable IT team that knows your companyâ€™s network. There is always some turn over among outsourced IT consulting firms, however, it is nothing compared to firms that primarily use contractors.
Additionally, ensure that the IT company you hire can provide you with:
- An issue ticketing system
- Emergency 24/7 support
- A toll-free number in the event your network goes down and the Internet is unavailable.
- Remote monitoring and support.
Finally, ask your IT outsource provider whether they have engineers who are local (within 20 miles) to your physical location to cut down on time to travel onsite when only onsite service will solve an issue.
2. Hire an IT Consulting Firm To Perform A Technology Audit. In the short and long term, stabilizing your companyâ€™s network creates the largest savings for small and midsized businesses after outsourcing IT staff. An audit of your current technology helps most small and midsized businesses:
- Understand what equipment they have and how old it is.
- The stability of their network and whether it has been designed within the standard of care for it professionals in your area
- Whether or not they have the proper amount of software licenses to operate legally
- Obtain full documentation of the network, so a high ranking member of the company always has passwords to get into all company equipment, know what software is operating on each server, and where your data is being stored
- Understand any projects that need to be done immediately or risk a sudden failure
The projects to avoid a risk of sudden failure are do-or-die recommendations. If your company risks imminent IT infrastructure failure, economic downturn or not, your business stands to lose a large sum from no productivity and revenue because your people canâ€™t work. To stay safe in rough economic times, your network must be up, running, and stable.
3. Hire an IT consulting firm to create a technology plan. Even in an economic downturn, your company should always have a technology plan that works toward company goals and divides the IT costs over time so your business continues to be lean, competitive and efficient.
One of the first rules of thumb in managing IT in your company is to be aware that every piece of technology ages over time and needs a plan for replacement. Failure of technology does not always have to be an unpredicted expense. By allowing failure to happen on its own timetable, you incur unnecessary and sudden budget busting expense. In our experience, by far, most IT budgets run over each year, because of hardware failures for which there was not proper planning for replacement. Some hardware will always unexpectedly go down due to manufacture defect, but these pieces are more easily replaced under warranty.
4. When Thinking About Purchasing Technology, Please Keep In Mind That New Technology Becomes Cheaper Over Time. Every year, servers and other network equipment advance in capabilities and capacity, while last yearâ€™s advances fall in price dramatically as the technology becomes older. If you are being told that purchasing leading edge technology now, saves money by preventing the need to purchase upgrades in the future, that person or company is probably trying to take advantage of you. Of course, there are certain situations where leading edge technology may be required to fix a particular issue, but certainly, not in general, in the small and midsized business arena. Additionally, new technologies often have bugs, some great and small â€“ why be the guinea pig for new technology (incurring more IT support costs) when you can get a later version where the bugs have been worked out? Also, most new versions of software are not necessary, while older versions are still being supported by the same software manufacturer.
5. Hire An Outsourced It Firm That Regularly Reuses Your Older Technology In Your Network. â€œWaste not, want notâ€ is an old expression that is true with IT networks as well. IT companies, who have a history of working with small and midsized businesses, should have learned that to be budget conscious, it should reuse older network equipment that still runs, to perform non-critical functions to lessen the burden on newer network components.
Keeping your businessâ€™ core software and data on the newest and most reliable equipment, and using older equipment to handle non-critical systems that may fail without major disruption to the business is the smartest and best use of a companyâ€™s technology in an economic downturn, because the older equipment is extending the life of newer equipment by taking the burden of nonessential tasks off of the newer equipment. This reclamation process also saves the company money by preventing the company from purchasing new equipment to run non-essential functions and overspending on technology that will be cheaper the next year, or when the older equipment finally fails.
6. HIRE AN OUTSOURCED IT CONSULTING FIRM TO CREATE A DISASTER RECOVERY PLAN. There is a great temptation in times of fiscal belt-tightening to not authorize the creation of planning documents, such as a Disaster Recovery Plan. Please avoid this temptation. In a down economy, if a natural or man-made disaster strikes and takes your companyâ€™s technology down, you could be out of business for good without the proper planning.
A Disaster Recovery Plan is a plan that identifies every point of failure in your IT infrastructure and creates a repair plan for every point of failure within a time-period with which you are comfortable. For example, if your Internet connection went down, and you could not send or receive e-mail or do research, this is a point of failure. Your IT consulting firm should ask you, how long you are comfortable with having your Internet down. Based on this answer, your IT consulting firm should present you with options, such as (i) the option to have a redundant Internet line from a different provider at your location to the e-mail server; (ii) the option of switching to an alternate web-based email solution or outsourced e-mail hosted solution if feasible for the size of your company; and (iii) an option to house your network at a co-location with built in redundant Internet (as well as air conditioning, redundant power, backup generators, state of the art fire suppression devises and round-the-clock security). After receiving these options, you need to balance your tolerance for risk of your network being down versus the cost of the solution to get your company back up.
7. WHEN CUTTING DESKTOP SUPPORT SPENDING, BUDGET TECHNOLOGY PER DEPARTMENT, NOT OVERALL FOR THE COMPANY. Many small to midsized businesses have a single IT budget that all departments rely on and use. In companies between 50-100 employees, allocate IT spending in each individual departmentâ€™s budget. This is a proven technique for discovering which department spends or wastes the most IT support budget. For example, if a company finds that the finance department is costing the most for desktop support, have your IT consultants look at the support requests being made and see if there is a pattern. Perhaps 75 percent of the issues involve operation of particular financial software and additional training on that software would eliminate 75 percent of the IT support requests. By budgeting IT spending per department, not only will you have saved IT costs, you have found an ongoing solution that will eliminate future IT desktop expenditures.
Surviving an Economic Downturn or Recession
By following the tips in this article, your company will succeed over any competition that slips into fear and stagnation, cutting IT indiscriminately, waiting for the sky to fall as an economic downturn or recession hits.
ABOUT Uâ€™NAME IT SOLUTIONS
Uâ€™Name IT Solutions, Inc. (UIS) was founded by Paul Dorian and has been providing Information Technology (IT) Services since 1996. UIS services a diverse 100 company clientele of small businesses, midsized businesses, and large nonprofits in the San Francisco Bay Area. We provide all areas of IT services, including creating new networks, maintaining existing networks, business moves of IT equipment, VoIP phone installations, and many different reports on the status and recommendations for a businessâ€™ IT infrastructure. For more information visit us on the web at www.unameits.com.