IT’s a mess. Your management team built a successful small business by pinching pennies and operating on shoestring budgets. But those same attitudes toward keeping expenses down are also preventing your information technology solutions from adding to the bottom line. You found a way to help meet the new profitability goals the CEO laid out last week, yet how do you get approval for that project when your existing budget barely covers the daily expenses of fixing what’s not working? In other words, how do you educate non-technical people about a new tech option, which might cost money but could actually increase efficiency, productivity and profitability?
As a resourceful technologist you’re looking for answers, so here’s a plan to get you started. First, understand the top business goals (and hindrances to achieving them) of the management team, ensuring that you know what business problems need solving and how they’re ranked. Equipped with the knowledge of business pain points, identify focused solutions that address the real needs. Next, loosely research and put together some options that address varying degrees of the problems, outlining the costs and the value of these technology options, while keying in on your company’s degree of risk tolerance and workflow opportunities.
That sounds simple enough, but what does it really mean? Transforming a small business into a forward-thinking, proactive IT powerhouse requires active support from the top down. Identify what drives the business goals, and tailor your solutions toward that end. When leaders see you supporting their initiatives, they tend to look more closely at the value your solutions offer.
“A real savvy technologist would never tell me ‘We can’t afford that’ or ‘This is the cheapest option,’” says Mike Phillips, president of Phillips Architecture, a 30-person design firm based in Raleigh, N.C. “Instead, he would show me the options and let me weigh the total value for each and their effects across all aspects of the business. He wouldn’t have it all figured out, but would instead show flexibility and listen to my needs.”
One way to get better insights on management priorities is to spend time with your executives. Take Phil Leiter, an IT manager at a private investment firm in New York City. He routinely schedules debriefings with executives. “I spent half a day with each executive,” Leiter recalls. “We discussed what they did during the day, what they liked or disliked, and what might make their work easier or more productive — but nothing about technology specifically.” After these discussions, Leiter sought out technology tools that addressed the challenges cited in the one-on-ones. When Leiter later approached the team with options, numerous managers initially balked at the price tag, but he “emphasized that they needed to focus on how the
solutions would improve their workday and, by extension, the business’ performance.”
Leiter follows the meetings with a series of solutions that will help affect executives’ goals. “As a result, technology in management’s mind has gone from a ‘novelty’ to ‘useful’ to a critical component of the business,” he reports.
Another important consideration is to identify the risk tolerance of the decision-makers in your company. Not every solution easily pays for itself. Oftentimes, security, redundancy or disaster-recovery projects lack a clear payback in terms of profits or reduced costs, but provide business insurance. Clearly identify the risks, and potential losses as compared to costs. “As a business owner, I do not like risk,” says Michael E. Lubbehusen, a partner at Primary Engineering in Fort Wayne, Ind. “My partner laughs at how paranoid I am about data loss.”
Often, unseen or unknown threats are difficult to communicate to a non-technical decision-maker. Similar to an insurance underwriter or actuary, you need to identify the potential for a risk occurring, and also the cost of loss should that risk occur. It’s unlikely the solution should ever cost more than the losses of exposure. Generally speaking, you can multiply the likely percentage of loss by the cost of loss, and get a ballpark budget for a solution. This is a very loose number and must be weighed by your management team against their risk tolerance.
This is an area where IT and automated applications can have the biggest potential effect on your company’s efficiency. “I have been on both sides, as the IT manager and owner of a small consulting firm, and the key to getting funding for IT is to find ways to improve the workflow and abilities of the firm,” recalls Lubbehusen. “If you don’t understand [the processes of the organization], how can you justify that your investments are valuable and improving the employees’ work?”
In the past, for example, survey crews at Primary Engineering collected data onsite, but then spent the next day converting the data into 3D models. By equipping teams with notebooks and high-speed cellular modems, the data could be sent to internal servers in real time, saving the crews two hours each day.
As the case flow in the surveying division improved, they invested in robotic data collectors, doubling throughput of the field teams and further adding to the bottom line. “When I provided these numbers to management, they thought it was a no-brainer,” said Lubbehusen. “Sometimes you have to make IT a no-brainer for management, so they don’t take a short-sighted view on expenditures.”
Workflow isn’t the only area for IT to focus on. Employee satisfaction, customer perception and other factors can drive new technology investments. Work with management to understand the business philosophy for each of these (or other) generalities, and then begin to move toward more specific and solvable problems. If you discover a need to improve productivity, ask questions that will pinpoint the processes most in need of refinement: What teams are overworked? Which departments struggle to meet objectives? What teams generate the most feedback? Stage a thinking meeting with key people to gauge staff willingness toward change.
Remember, successful projects have everyone on board, so put yourself on their side. “What can I do to help you?” is received much more readily than, “Your process is broken.”
You’ve talked to the bosses, and now you have some ideas on how to solve the problems. Before you run in and proclaim victory, take a few minutes to put some numbers behind your solution, besides raw cost or return on investment. ROI focuses on value, rather than just costs and attempts to quantify increases in efficiency, productivity and/or profitability. One simple ROI formula is: (cost to acquire + cost to maintain during expected life) / (money saved/month + increased abilities/month) = (number of months to pay back).
Try this rule of thumb: If the solution will pay for itself in half of the expected life, send it to management for review.
Dress up your homework, research and number crunching like you’re taking it to the prom. Prepare your solutions expertly. If the solution improves the business’ bottom line, show an ROI calculation along with your assumptions. On the other hand, if the solution provides insurance, include a prioritized list of risks and associated costs. Present the plan clearly, providing an outline or executive summary. Phillips shares his owner’s perspective:
“IT people should demonstrate that they share the sense that the dollars going out for IT are outrageous, and show a fight to find the best deals,” Phillips says. “Management also buys-in better if you frame numbers with metrics from last year, or from other similar companies in the industry.”