Everyone who has started a business has developed a budget that outlines how the company's resources are to be expended. And when that general budget is developed, equipment, including technology equipment, is nothing more than a line item, even though for some businesses it can be one of the top three expenses.
In order to understand what technology is needed for your business, an effective technology plan should be developed. This plan will give you a blueprint as to where you are currently technologically, what technology is available, identify your needs and develop a budget.
David Moskowitz, president of Productivity Solutions Inc., a computer and business consulting firm in Bala Cynwyd, PA, is adamant that one of the first things that a company should do is understand the value of planning. Moskowitz has run into a number of companies where he says the company's management needs to sit down and develop a technology plan that fits the company's short and long range vision. "Without this, the company could wind-up spending money needlessly while constantly playing catch-up and never having a system in place that allows for growth," he says.
In order for technology plans to be effective, they should be short- rather than long-term, since technology changes so fast that it's almost impossible to plan what type of technology will be available for use five years down the road. Therefore, one year is about as far in advance as you will want to plan to make purchases of certain types or brands of equipment.
If your schedule allows only long-term planning, tie it to your company's budget cycle. Pull out the plan every year during the budget process and review it to make sure the plan has not tied your business into buying outdated equipment. Do not let an outdated technology plan lock you into old technology and applications. Newer, more powerful, lower cost technology may be available to replace what is specified in a 5-year-old plan.
An effective technology plan will focus on applications, not technology. In other words, make your technology plan outcome-based, not input-based. Develop a plan that specifies what your staff should be able to do with technology, and let those outcomes determine the types and amount of technology your plan requests.
Expand Your Technology Plan
Many companies' technology plans deal only with computers. However, there are many other types of technology available that have appropriate uses in your business that must be included in the plan. Document imaging, for example, may be a viable technology to include if your business processes many documents or customer correspondence. This technology, which allows you to scan documents into a file and store them on alternative media, such as CD-ROM, storage tapes or microfilm, can save money from outsourcing, increasing customer productivity and saving storage space.
Assess Where You Are
Before you can move ahead, you must assess where your business systems are right now. You will inevitably find strengths and weaknesses that you must acknowledge. Use staff questionnaires and interviews to come to an understanding of your starting point, the basis from which you can begin to formulate your plans.
Most businesses possess a range of technological skill, equipment and readiness. You need to understand where your business and staff stands in relation to technology before you can proceed. Determine what technologies and equipment are currently being used, how proficient and knowledgeable your staff is, and whether you have in-house people who have the ability to assist with training and implementation or whether outside assistance will be needed.
In order to assess these areas:
Inventory your existing technical support personnel. Where does your staff turn when they have systems questions?
Reminder: A useful technology program depends on a hospitable environment and an effective support system. Survey your existing facilities and procedures so that you can plan and budget for:
Develop a vision statement
A vision statement should be short, but meaningful, and based on the answers to questions such as these:
As you develop your vision, keep in mind that you are more than likely already utilizing technology to run your business efficiently. To offer true value, your technology plan must take your company to the next level: It must assist you in gaining market share, satisfying existing customers and winning new ones, and keeping your businesses prepared for our rapidly changing business world.
Exploring Available Technology
Exploring the use of technology in business involves extensive up-front research. What are the technology choices available? What are your needs? What can you build on that exists today?
You should identify the areas you are interested in, and then investigate what is available. Remember the parameters of your vision statement. It will be tempting to go beyond these once you realize all that is available.
You will want to research the following:
Below is a list of helpful sites on the Internet that will assist in identifying available technologies:
C/Net
This site is all technology, from the Internet to extranets. You'll find many useful channels on the site, such as equipment and software reviews, Internet Service Provider (ISP) ratings and guides to building a Web page. You can also tune into C/Net radio to hear the latest in technology news.
Ziff-Davis Publications
Ziff-Davis is the publisher of computer magazines, such as PC Magazine, PC Week, Computer Life and many others. All of their publications are available on this searchable site.
CMP Media Publications
This searchable site is home to CMP, publishers of PCWorld and other computer books, and is chock-full of product reviews and articles on new technology.
CurtCo Freedom Publications
CurtCo publishes Home Office Computing and Small Business Computing, along with other business computing magazines. Directed toward the small business owner, these publications focus on affordable technology and implementation.
IDG Group
IDG Group studies the technology market and releases periodic reports on new technology and its effects on business and the industry. A great source for researching how new technology is being integrated.
Also check with trade publications in your industry. For a complete list of trade magazines, check out www.enews.com. This site lists and links to just about every magazine published. You can search by industry and type.
Other sources of information include professional organizations, like the American Society of CPAs , and other professional trade groups that would cover new technology in your industry.
Developing a technology plan
At this point, you have arrived at the point to which all your efforts so far have been building. It's now time to draw together all that you have learned about both technology and how your business utilizes it, couple that with the course you set in your vision plan, and design a technology plan.
This is where you outline the "who, what, when, where, why and how" of the technological changes you want to incorporate into your business. The following items should be considered in your plan:
Other items to consider:
A point to keep in mind, when it comes to sifting through the different factions that shape a smart purchasing decision, the bottom-line dollar cost is often out weighed by the importance of the items' function to you. Below are some steps to help put this in perspective.
Step 1. Calculate the real cost of buying.
For example, figure out how many hours you will have to work to earn the money for the $3,500 notebook computer. "Then," says Ken Wedge, who runs a purchasing consulting business in Darien, Connecticut, "calculate again-- this time taking into consideration your corporate tax rate and the number of unbillable hours spent on marketing, billing and whatever, to get the business that you need to pay for the purchase." Now you have a good idea how much money you really have to earn to pay for that new business tool.
Step 2. Estimate the time it will take to get up and running.
That inexpensive database software that you purchased may have seemed like a bargain, but the interface may be so troublesome that you spend more time learning how to use it and getting it to work correctly, than if you bought a higher-end program with a more compatible interface. Similarly, a disassembled computer stand may seem like a bargain at the discount office supply store, but putting it together could take up an entire afternoon's worth of billable time.
Step 3. Have a clear idea of your requirements.
"The first thing I say to clients is 'What is the function? What do you want this thing to do?'" says Wedge. He points out that people tend to leap head-first into exercises in comparing brands, prices, bells and whistles without considering their core needs. Write down the exact specifications that the item or service you are considering must deliver to directly improve your productivity and profitability. Must the computer have enough memory to crank out graphic designs or is it going to be used to generate a mail list? If it's the latter, can you get by with a plain-
vanilla system?
Charles T. Davis, purchasing manager for Hearth and Home Distributors, Inc., a Columbia, Md., fireplace supplier, goes through this process whether he is buying a new phone system for the company or choosing a new computer for his home-based product distributorship. "Sometimes when you start analyzing a purchase, there isn't much benefit, other than convenience," he says.
Step 4. Figure out how much convenience is worth to you.
For instance, says Davis, you may be thinking about buying a top-of-the-line color printer to churn out only 20 presentation-quality charts a week. If your volume is that low, it may well be worth the time to take your files to a quick print shop and have them printed out there for about a dollar each.
Your plan must be both ambitious and realistic at the same time. Follow your vision, but be aware of the constraints inherent in your particular situation. Your plan must address both the immediate needs and the future directions of technology in your business. Develop a timetable that spans one to three years, so that your growth is deliberate, consistent and cumulative.
Developing your budget
Having set your specific goals and objectives, identified your equipment needs, and established your timeline, you will now need to determine the cost of the project you envision. Develop a budget that spans the same period as your timeline, preferably 1-3 years. Place a dollar figure on everything, assuming that you were to purchase it all. Laurence Stybel, president of Boston -based Stybel Peabody Lincolnshire, a company that advises corporate executives on starting their own firms offer this on planning for technology spending.
"When you are working for someone else, you look at things more objectively and with a longer horizon. But when you have your own business, you tend to spend money the way a consumer would for a consumer product."
The difference between investing in a product or service, with an eye towards future return in productivity or financial gain, and spending income on a consumable can be difficult to grasp. A laser printer for example, is the best solution for printing high-quality documents. But laser printers also cost more than your average ink-jet printer, sometimes several hundred dollars more, even though you would spend less on laser toner cartridges than you would on ink-jet cartridges. You'll save time and money in the long run, Stybel says, if you weigh buying decisions like those based on the long-term growth benefit to your business rather than shopping with immediate benefit in mind.
Include the following in your budget:
The desired outcome of effective technology planning is that the most appropriate technologies are infused in the most natural manner into a maximally-effective business environment so that all parties concerned have equitable access and achieve efficiency benefits from routine use of the technologies.
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