During the difficult economy of the past year, businesses of all sizes have had to scale back, looking to increase their efficiency and productivity while keeping spending to a minimum.
For many small businesses, this has meant cutting back on investing in information technology. Others have found this the perfect time to upgrade and improve while their larger competitors were forced into reductions. Local business consultants say the right technology can make all, the difference in making small businesses more efficient, productive and competitive.
“Small businesses are spending less across the board, and technology is no exception,” says Bruce Barchus, partner in charge, of Clifton Gunderson Technology Solutions, Oshkosh. “In 2009, we have seen postponing investments in new software or hardware unless it is absolutely necessary, hiring freezes (or even layoffs) of IT employees, server consolidation through virtualization, and more clients moving to a managed services contract for IT services.”
“Overall, there's a positive upturn in the economy in the late summer and early fall,” says Tom Maurer, director of technical solutions with Schenck SC in Appleton. “The first nine months of the year, it was, ‘How can we become more efficient with what we have?’ Now, people are starting to realize the economy is turning around so they can start investing again. There is more technology that's out there that people haven't incorporated because they didn't want to spend the money. Now they're willing to spend the money. Some of it is the economic stimulus package and incentives the government is helping out with, some year-end tax incentives.
“To a certain degree, a lot of companies spent only if there is return on investment or an efficiency component involved. They didn't go after new software changes, they went after upgrading if there is return on investment.”
For example, Maurer says, the software publisher Sage incorporated paperless office into their latest release, and this eliminates the need to print anything out.
“We were very success implementing over 100 of our clients to the latest version to paperless because they saw return on investment and they saw that was something that had immediate impact,” he says. “In the small business market, we didn’t see a huge slowdown. The economy goes, but you still need to keep up with technology to protect your business.”
John Tiedt, vice president of IT Services with Camera Corner/Connecting Point in Green Bay, agrees.
“Small businesses have been pulling back on buying new, but keeping up with upgrades and in repairing things,” he says. “Most businesses are tied to technology in some form. In order to run a business these days, you need technology and you can’t ignore it. They've had to maintain their systems and make sure that they're running efficiently.”
Brad Hansen, of Heartland Business Systems in Little Chute, didn’t really witness a slowdown.
“We serve at least 2,000 small businesses, and we found they actually spent this time investing in technology and infrastructure to niche out the bigger players who had all coiled back from the recession,” he says. “Small business ratcheted up their IT investing to niche out their competition. They saw technology as a way to operate their business more efficiently when it became imperative to do so.”
When does it make sense for a small business to upgrade IT?
“Upgrading IT only makes sense if there is a solid business reason to do so,” says Barchus. “We never push the latest hardware or software just because it is new. If a technology will help a business save money or become more efficient/productive — that is when it makes sense to upgrade.”
“If their hardware is aged or if they've been neglecting upgrades in software versions, that is the time,” says Tiedt. “If the economy goes, you still need to keep up with technology to protect your business. They should be looking at new technology that can help with security and productivity. They should be maintaining their systems and making sure that they’re running efficiently. If technology proves to be beneficial in improving efficiency, it makes sense from a business standpoint to do it.”
No business, regardless of size, should invest in or expand IT unless it has a concrete return on investment model, Hansen says.
“At the end of the day, it’s about making money when you own a business,” he says. “Our staff of consultants and engineers work with customers on designing unique and specific solutions for them with a return on investment model.”
Hansen says small businesses that have been investing in IT all had one thing in common: the desire to reduce costs and increase their competitive stance.
IT investing “shouldn't be a major jump every three to five years,” says Maurer. “It should be incremental, staying current with the latest version of your current accounting software. If that accounting software is no longer viable, then it's time to look for a different solution. Software publishers are staying current with technologies. You're got to keep your software current with your hardware. If you upgrade one, you do need to upgrade the other.
“Also, with every release these software publishers come out with, they have enhancements built in that customers have asked for.”
Maurer says small businesses also should look at reinvesting if their software is from an older company whose products no longer are endorsed by any publisher.
“If their current software publisher is no longer endorsing their product or they're not longer in business; if your server crashes and you need assistance, nobody is there to assist them because their publisher is no longer around,” he says. “They need to evaluate whether their current software still is worthwhile to upgrade or whether there is a better program out there that's more compatible with their future business plans.”
What are some new technologies or software?
“One IT investment that delivers a solid return on investment is virtualization,” says Barchus. “Virtualization uses software to consolidate physical servers into multiple 'virtual' servers. Each virtual server runs as an independent machine with its own operating system and applications.
Virtualization helps companies save money by reducing capital investments by consolidating servers (one client went from seven servers down to two), decreasing administration costs (fewer servers reduces overall maintenance costs), decreasing energy bills and reducing data center space requirements
“Another program that small businesses should be looking at is managed services,” he says. “Most small businesses cannot afford to hire a complete IT department, so they can contract with a service provider to be their IT department for a fraction of the cost. The small business pays a manageable monthly fee.”
Barchus says most managed services contracts provide network management, server management, help desk, data backup and disaster recover. He says small businesses benefit by getting expertise when they need it, proactive support at a managed monthly cost, live phone support and threat monitoring and protection
Maurer says over the past couple of years, many small businesses have been going to integration of different software packages or other third-party products. That can include scanning devices connected directly to accounting software and purchase orders submitted automatically into vendors' sales order systems.
“It's ultimately faster and cheaper,” he says. “It’s all about employee efficiency. Nobody could afford this technology 20 years ago. Small businesses can now sell to large businesses. I have lots of clients, businesses of one or two employees, selling to Home Depot. You could never have done that in the past.”
Another new trend is paperless, he says.
Tiedt says an important consideration is making sure data is backed up in the event of a disaster.
“You would be able to recover data in a short time,” he says. “That should be the primary goal of any business. One of the bigger trends is getting away from traditional tape backup and getting to replication on a disc at an off-site location. We're starting to move away from the traditional backup tapes.”
Hansen says another newer offering is “cloud computing,” where customers use products and services in Heartland’s data center rather than having all their equipment on site. This also offers disaster recovery and business continuation capabilities.
“The hottest trend just starting to take off right now is desktop virtualization,” he says. “Now the push is going towards all the power in your PC on your desktop crunched at a different location so that the computer on your desktop just becomes a powerful terminal. There are several advantages. No matter what PC you go to, your desktop and work can follow you from computer to computer. Another big advantage is configuration. The IT staff does not have to touch all of the PCS to put in configuration for all of these employees.”
How do IT solutions help small businesses?
Maurer says Schenck does systems review and needs analysis. “We can come out and analyze people’s existing system, find where there are inefficiencies and let them know what's available as far as the latest solutions to hep them automate their business,” he says.
Tiedt says IT solutions help with the productivity of the business.
“If you can add remote access to a small business, they’re able to access their data and be productive whether they’re in the office or on the road,” he says.
“An organization like ours can help companies determine ways to reduce costs while providing the same or better functionality at those reduced costs,” says Hansen. “Most importantly, around any IT scenario, is developing a return on investment.
“Since we do these things for multiple businesses across multiple platforms, we are able to do it more efficiently than the in-house IT capability.”
Barchus says Clifton Gunderson provides a wide range of business management, networking, application development and security solutions.
“Some solutions, such as virtualization and managed services actually help businesses save money by running more efficiently,” he says.