Why SME owner-managers should spring clean their IT

Spring is nearly upon us and it is time for many of us to do some spring cleaning around the house.  However, we probably should also be doing some spring cleaning around our businesses too, espcially if you are an SME owner or manager.  It may well be that you’ve probably neglected some aspects of your business over the last few years as the recession bit.  IT projects probably haven’t been top of the ‘to do’ list and haven’t been reviewed for a year or two.

This is the opportunity to change that.

Why do companies think it’s time to spring clean their IT?

Spring is a good time to look at reviewing and making changes becasue it is still early enough in the year for the positive impact of change to be seen in annual results.  Plus, everyone has a bit more energy as we emerge from winter.

There are a good three or four months now until summer holiday slows us all down.  For the next few months businesses will be at full capacity and will be moving forward at maximum speed.  And as we continue to emerge from a prolonged period of slow growth and general downturn, back office systems should probably be reviewed and updated where necessary.

Why do this now?

• Sales are picking up now but your back office will have been slimmed down over the last few years.  You will want to retain as much of this efficiency gain as possible
• There is new back-office technology available which can keep your costs down as you grow
• You need to retain as much margin as possible to rebuild your balance sheet and invest in other developments
• It is going to get much more competitive soon so this can give you an edge

In addition, connnectivity and mobile functionality have moved forward dramatically over the last few years and, if your back office has been treading water (technologically speaking) then you will not have been in a position to take advantage of these.

There are lots of possible efficiency savings but you do need the right set-up to be able to exploit them.

What exactly should be considered?

What are you going to get if you decide to chose an Managed Service?

1. Costs: a fixed and manageable monthly cost which doesn’t change

3. Guaranteed support level: an aggreed and anticipated level of support month in, month out

5. Access to expertise:  a broad level of expertise across all business requirements

7. Availability:  guaranteed ‘uptime’, that is, availability.  Generally supported by a guaranteed response time should things need tweaking

9. Transparency: there are dashboards to control and monitor the service levels to make sure you get what you pay for

Have I left things too long?

Typically ERP investment cycles are ten years long.  Most businesses would be able to retain a system for this length of time without any significant downturn in efficiency (but without the year-by-year improvements).  Technology has advanced quickly recently so that ten year cycle might be reducing just now (but it won’t be significantly so).

The first thing your current vendor is likely to do is try to sell you some upgrades to your current system.  Whilst this might be a good idea, it might be that this is just a tactic to keep you locked in with that particular system.  The thinking being that you will want to stay with something that you’ve invested in until the ROI calculation turns positive.  You have two options there:

1. Hold off from this type of investment and undertake a review for a totally new system

2. If you have invested in an upgrade, think of it as a sunk cost That means that you can can make decisions on a even basis.

What if there is less expertise left in the business

During a down turn, there is a tendancy to focus staff reductions on back office staff.  That can mean that IT expertise is typically quite thin at this point.  Businesses have a choice when they start to rebuild.  They can chose to do it themselves and employ another IT generalist to support the business, or they can consisder not to employ but to bring in external expertise.  It is imperative to continually improve the performance of your IT, and a good Managed Services will deliver that.

The example here is in the development of back office systems.  A new ERP system now will be configured  differently from only a few years ago.  Take something like SAP B1 – it will provide a step change in performance.  Some companies are chosing to adopt SasS systems instead of on-premise solutions.  There are lots of choices now.

Why should I bring in external experts?

External experts will provide IT services in a different way to those based in-house.  They will want to provide a service which is much more robust and available.  They do this becuase it provides a great service to the client but it also reduces the on-going workload on their service engineers.

The pros and cons of a Managed Service (in brief):

Pros

• Expertise: Not every IT professional is an expert in everything.  Sometimes you might not have the budget or the full-time demand in every area.  Managed Services will fill in for these knowledge ‘black spots’
• Risk: One of the main risks is in your own staff – they can be bogged down in performing mundane tasks and not add full value. A Managed Service can take over the routine work, leaving the internal staff ready to do the things where they can add more value to the business and reduce the overall risk profile
• Budget predictability: Rather than being perceived as an added expense, Managed Services should be viewed as a reliable, standard and predictable assurance – you are only paying for what you use, and can free up resources for other IT tasks or new projects

Cons

• Loss of Control: Or, more accurately, perceived loss of control. For many, it is the perception, not the reality which is most difficult to cope with. It is not business-critical to have full ownership of all IT systems continuously and, even if you did, the burden of maintaining them is expensive
• Off-site: There are perceived security issues here – it is probably more secure to host a service in a Tier 1 data warehouse than on a server on-premises. But it is difficult to quantify the risks properly but when done, off-site is generally safer
• Evaluation: When you are considering Managed Services for the first time, you have to evaluate possible suppliers and, frankly, not all suppliers are created equal. You do need to evaluate the Managed Service staff, security, reliability and background

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