It's one of the great truths of capitalism: Businesses want to grow. Small businesses want to become midsize businesses, and midsize ones want to get big.
But getting bigger involves growing pains, and nowhere do many up-and-coming companies feel that pain more acutely than in IT. We've all heard horror stories of companies whose growth was hobbled -- or worse -- by inadequate support systems.
Like a child who always needs new clothes, your successful business will likely outgrow its IT outfit several times as it gets bigger. And in the same way that new parents learn coping skills from more experienced families, small and midsize businesses that want to ensure their IT infrastructure keeps pace with their growth can benefit from what big companies already know.
Just what do they know? We picked the brains of IT professionals who work at firms that provide outsourced IT services to companies of varying sizes (most have in-house experience as well) and broke their advice down into six basic lessons.
Their main message? Think strategically. Make decisions not on the basis of what you need right now, but on the basis of where you want to be in six months or a year.
Your changing IT needs "will be upon you even faster than you expect," warns John Baschab, president of the management services group at Technisource, an IT and engineering outsourcer. Heed these six pieces of advice, Baschab and other experts say, and you'll never have to go to work with an IT infrastructure that just doesn't fit.
It's tough for cash-strapped young companies, but it's crucial: Make sure IT has enough space in your budget. "Small businesses don't know how to budget or plan for IT," says Dave Brewer, president and CEO of BC Networks Inc., a managed services company focused on the small and midsize market. "In an enterprise, they might budget $10,000 to $12,000 per employee per year. A small business might have a hard time spending a tenth of that, for both budgetary and vision reasons."
In particular, Brewer says, small businesses rarely if ever budget enough for support or training. Often the result is that employees are not up to date on the latest software and are not working as efficiently as they could. Brewer's advice: budget 10% to 15% of salary per employee per year for IT.
And then institute some way of knowing that you're getting your money's worth from your technology investment. Don't just add money to your budget -- come up with some kind of financial model that will enable you to know whether you're getting what you're paying for, recommends Dan Hoover, vice president and area director at Ciber Inc., an international systems integration consultancy.
Enterprise IT organizations use return on investment analysis or some other investment evaluation method, Hoover points out, but small firms that may not have established such a formalized approach to ROI can get by with a simple payback period analysis, he says.
To perform such an analysis, Hoover says, companies should first identify all the expected costs associated with a technology investment (software, hardware, internal and external resources, communications fees, workspace and so on). Then they should forecast all of the expected financial benefits (reduced labor costs, lower inventory-carrying fees, increased production and the like) and quantify them.
"If your costs are recovered in the first year," Hoover says, "the project is worthy of serious consideration, especially if the benefits are high. If the payback period is more than a year, it may be best to look elsewhere."