eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
It’s hard to be the company Scrooge—especially around the holidays—but someone’s got to make sure that expenses don’t outpace profits.
At the same time, companies can’t grow without the right technology and sometimes, that means spending money to make money. After all, without powerful servers, efficient networking, ironclad security, effective backup, productivity-enhancing software and knowledgeable IT workers, what chance does your company have to succeed and grow?
But the smaller the company, the less formal the processes are, and the less money likely to be to invest in technology. It’s only when a company reach about 50 employees is there is even a chance that it has a designated tech budget, said Merle Sandler, research manager for SMB programs at IDC.
So it comes down to this: How can an ambitious company looking to grow and expand stretch its limited IT dollars?
First, take stock of the company’s organizational structure and long-term technology needs and growth. Companies with an IT manager or CIO on staff probably have more formal processes and internal knowledge, which will allow them to make more intelligent decisions.
If the decision-maker is the company president, chief financial officer or another executive not involved in IT, the stakes are different, Sandler said.
Second, invest in intelligent technologies, like virtualization, which can be a good way to increase efficiency and reduce costs in smaller organizations.
“In a company with 100 or more employees, it’s not unusual to see up to 100 servers, and the more servers and applications you consolidate through virtualization, the greater the benefits,” said Charles King, principal analyst of Pund-IT. King estimates the break-even point for a virtualization deployment to be between 20 and 40 servers.
CompTIA (the Computing Technology Industry Association) conducted a study of the technology and spending habits of companies with less than 1,000 employees. The study, commissioned by consultancy AMI Partners, found that the areas SMBs consider priority investments in the coming year include secure data backup, storage and disaster recovery. Next on their priority lists are VOIP (Voice over IP) and Wi-Fi wireless networks.
Investing in these technologies and others, however, requires significant knowledge and expertise, both to ensure that the technology is appropriate and will stand the company in good stead for the long term, not to mention making sure the company secures the right technology at the best price.
Because of staff or time limitations, many smaller companies don’t have that knowledge and expertise in-house. An external consultant can evaluate a company’s technology needs and recommend the most cost-effective approach. Even though it seems like a consultant will increase the cost outlay, the payback is more than worthwhile, King said.
The same goes for developing solid relationships with vendors.
“Sometimes, companies are under such financial pressure to make every penny count that they tend to buy whatever happens to be on sale. But if you chase after price too much, you end up with a data center full of mismatched products and an IT staff that has to deal with multiple support organizations,” King said. “Instead, do some research to find the vendor and channel partners who know what they are doing and have most or all of the types of products you need, and build a relationship with them.”
Moving some applications or processes to a hosted or outsourced model can also make good financial sense. Many areas of technology, including storage, security and IT services, are offered in an SAAS (software as a service) model.
“If you choose the right things to move to a SAAS model, you can save significant money,” Sandler said. “You could possibly even save an entire salary, because a function is now outsourced.”
In the end, stretching your IT dollars really means one thing: thinking strategically instead of tactically.
“If businesses really want to get the most out of technology and the resources it can bring to bear on their businesses, they have to start thinking further ahead,” King said. “Even something as seemingly unimportant a simplifying maintenance procedures and support contract can yield financial benefits in the long run.”