Finance | CBC Solutions, Inc.

17
Aug 15
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Using technology to gain a competitive edge

Tags : Budget business strategy business supplies Finance

Large corporations are growing at an astronomical rate. Big business is offering better services, faster response times and lower prices than small and even mid-range business can afford. If SMB is going to survive, there needs to be a competitive edge that allows them to stand out.

Sure there are big benefits to working with SMB. Personalized service, support local business, being there when you want them, flexibility rather than rigid corporate rules, and yes, even pricing can be competitive. All of this means nothing though if your potential customers aren’t reaching out to you or you’re not responding quickly enough.

When someone goes to Amazon to buy a product, it isn’t always because they know they can find the best price there. It isn’t free shipping or even a wealth of products to choose from. It’s certainly not because they get a personalized service. It’s because it’s quick and easy.

Pull up a website, find the product you’re looking for (and instantly compare it to like products), read reviews and make the purchase. It’s there the next (or even same) day. Easy.

So how does a local retailer, for example, compete with that kind of legacy? What must a local retailer do to bring people in their shop and still be able to offer good pricing?

Take another example. A local distributor of industrial equipment offers basically the same catalog as Grainger, the mother of Industrial supply, but goes a step further. By calling one number, the local distributor can shop the best rates, and get the product to you faster than Grainger and even find those odd ball parts that Grainer doesn’t have. This offers a competitive edge, but does that alone get customers coming back to them often enough? Maybe, maybe not. Grainger has every part in their catalog and the whole thing is available online as well as a record of what’s in stock.

If the customer calls in, waits for the right person to take the call, then waits some more while the local distributor needs to look up the SKU, check the warehouse, reserve the part, then call the customer back to let them know it’s ready and take the order and then, after the order is taken, they send an invoice a week later it puts unnecessary strain on the customer. The customer is touched three or four times just for a simple part.

What’s a local business to do?

By implementing some simple technical integrations, local businesses can offer a similar ease of use that cuts through the larger competitors.

Web Presence

One of the biggest things that sets a big corporation aside is their web presence. It’s not just how good their SEO is, or where they drop on a Google search, but more the interactivity on their site. Let’s take something closer to home. Say, Home Depot. From one site, I can find the product I’m looking for, compare vendors, find out if it’s in stock and at which store, make a list of the parts I need to do a job, even find out what aisle and shelf it’s on. When I go down there, I’m in and out.

Every SMB that wants (or needs) to compete with this type of monster should invest a lot in their website. This doesn’t necessarily need to be cost prohibitive however. Little changes mean a lot. A simple relational database integration between supply and a web based inventory system can be cheaper than you think. Online E-Commerce is also pretty affordable. If you ship product, consider a shipping integration that allows the customer to create a UPS or FedEx ticket on order.

If you can’t put every product on your website, consider a “featured product of the week”. Highlight some of the hot sellers and keep changing it up. This will allow you to stand out and show off your product line. You don’t need to be an expert web developer to update this daily.

Integrated Calling

One of the best parts of working with SMB is the experience when calling in for something. When you call a local or smaller company and you usually get a human right away that can answer your questions and take ownership of the issue. Call a major corporation like Amazon or Home Depot and you’re likely to have to dial an 800 number, answer 7 choices from a menu, get transferred three times and eventually get someone who can help you.

In order to offer fast and complete service on the phone, a Voice over IP (VOIP) system can offer some great features to make sure you don’t miss a call and that your calling is integrated with your normal office applications like CRM, Email, Scheduling and even mobile phones.

You don’t need to buy an inordinate amount of infrastructure and equipment to take advantage of this system either. A Hosted VoIP system is a monthly service that provides everything you need. You pay a simple monthly rate for each extension and plug the phone in like a computer. Everything is configured by a web based interface.

If you have many different departments, a simple Auto Attendant can get the caller to the right department. If you have experts that are away from their desk or on the phone a lot, a good call routing plan can make sure incoming calls are sent to several phone at once, forwarded to mobile phones, even group voicemails and send to a team email.

Sales organizations benefit a lot from this. CRM & scheduling systems linked with outgoing calls can track call volume and conversion rates.

Business Analytics

Most businesses keep track of internal data. For example a property manager is likely to be tracking lease terminations and they’re probably tracking repairs. But what if they could equate lease terminations to repairs? If a lot of leases are not renewed in a building that has a high repair rate, maybe people are moving out because things don’t work right. This would help determine if renovations are in order and cost-justify it.

Most businesses do marketing events of some kind, but how many of them know if those events are paying off? A simple tracking and analysis of event costs to conversion rates can tell you.

Communication is Key

There’s another thing big business has over smaller ones. They become a household name. If I say buy online, you immediately think Amazon.

I’m not saying you need to spam everyone to death here. By you do need to give your customers enough of a reminder that you exist and care about them to keep yourself at the top of their list. Customer Resource Management can help you to know who you’re talking to and about what. This customizable system allows you to track opportunities, events, follow up and even sales pipelines without a lot of work. A CRM that is integrated with Email and Phones can solve the problem of people not putting data into CRM.

Other products like Sidekick or Constant Contact can help you determine the popularity of your emails and ensure that an important email thread isn’t dropped. Sometimes it only takes a day for a prospective customer to buy a service from someone else even though you’ve had an ongoing conversation with them.

None of these need to be exorbitant and costly systems. It’s simply a matter of keeping your technology aligned with the business. This systemic approach will help you get your IT costs under control, streamline your operations and most importantly, help you gain a competitive edge over the larger competition.

27
Jul 15
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What’s in your toolbox?

Tags : business strategy business supplies Finance

I pondered this question while doing some DIY projects around the house. Being an ex-carpenter, I have a lot of tools from the trade.

As a Carpenter, I had two assets that defined the excellence of my work. My skills at the craft, and the tools in my possession were equally important to ensure the job was done right.

Business works the same way. The right tools are essential to an effective business. When we talk about tools in business, we usually refer to technology (at least for the purpose of this discussion).

Your Business Toolbox might hold a good CRM system for managing customers, or an ERP system if you’re in Manufacturing. Your Marketing department probably owns a Website and a couple of good Graphic Arts applications. You probably have a collaboration platform.

But buying technical tools is quite different than running down to Home Depot to buy pick up a new hammer.

Purchases need to be planned as a strategic business decision, adequately budgeted and the right subject matter experts need to be involved. A carpenter doesn’t need an expert to know what type of hammer to buy, but a business might.

There are several options to finding a subject matter expert:

1. Use in-house staff to research products online: Not a bad plan if you trust your IT staff. However, sometimes working within a specific toolset for a long time can cause a narrow viewpoint. Why? Because the technology changes too rapidly for the average IT person to keep up with and still do their day to day job effectively.

2. Talk to Vendors: Who knows more about the product than the Vendor that sells it, right? Wrong. Unless the vendor is truly unbiased and sees each implementation though to know the pros and cons of their solution, and is willing to tell you that.

3. Hire a Consultant to find the right tool: This idea works well, but is by far the most expensive option. Usually you’ll pay a billable rate or retainer for the Consultant to learn your business model, research the right tools and create a project plan to implement it. Though they will be in a position to gauge the effectiveness of the solution.

4. Contact a Procurement Advisor: The least expensive path to getting the right tools is generally through Procurement Advisors. A good Procurement Advisor will look at your business, then find the best tools based continual research in the market. As Advisors, we need to constantly have our fingers on the pulse of the industry and know what tools are effective for the job at hand.

When a deal is brokered through a Procurement Advisor, it generally doesn’t cost you anything upfront for their services. If you have trust your advisor, that’s even better. Your IT staff doesn’t have to spend the time with vendors and service providers to make sure they get the best rate, the broker has already done that.

But how do you know you can trust your advisor? That is a good question and you better be asking it. Here are some ways you can gain trust in your advisor.

1. Review their track record: Has your advisor always been an advisor? Or do they also have experience in Consulting and IT? An advisor who’s sat you your side of the table will have a better understanding of what it takes to earn your trust.

2. Make sure their recommendations are truly unbiased: Ask for quotes from multiple vendors. The advisor should be able to give you comparable quotes. You may even want to pick a couple vendors you know of to see how their prices compare. Look for honesty and openness from the advisor.

3. Find out what the end-goal is of the advisor: If you feel your advisor just wants to close the deal and move on, they probably do. This does not instill trust. A trusted advisor will want to be with you throughout the process and earn your long-term business.

This is a key distinguisher. Your Trusted Advisor will be close to your business and involved in the whole process from beginning to end. The best Trusted Advisors and Consultants understand one thing above all. Your success is their success!

Nothing else stands out more. It doesn’t matter how long they’ve been in business, how big their company is, or what their stocks are doing on Wall Street. It matters how they rate their success. It must align with yours.

Getting back to the toolbox metaphor, your business is more than the knowledge and skill set of the people in your organization. The right tools are essential for keeping up with the competition and energizing your business.

A Trusted Advisor can help you find the best tools with the least amount of effort on your part.

One last parting thought. The technical tools in your organization have to do one thing above all else. They must save you money! Either directly or indirectly.

And so I ask you, what’s in your toolbox?

06
Jul 15
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How to cut telecommunications costs by 20-30%

Tags : Audit Budget Finance Requirements

“If you haven’t completed a detailed analysis of your telephone bills in the past two years, there’s a 90% chance you are being overcharged—possibly as much as 20%.” — FCC

“Rather than getting better as a result of computerization, utility bills seem to be getting worse. They are indecipherable, lack itemization, contain inflated or phony charges, and cost customers billions of dollars a year.” — Ralph Nader

With the rise in Telecommunications costs, it becomes increasingly important to analyse your costs for errors, overages and omissions. Additionally, as the market gets more competitive, carriers are offering better and better deals. This, combined with changing business needs causes companies to have to re-analyze their current contracts on an ongoing basis.

CBC Solutions offers a 5 step process to help businesses find the best cost savings they can get while meeting the business needs of the organization.

Assess business processes & determine voice and data needs
Audit contracts and latest invoices
Identify alternate vendors for service needs
Provide a formal recommendation & assist with implementation
Track invoicing and manage contract renewals

On average, CBC Solutions can find 20-30% or more savings on a telecommunication budget and drive down operating costs. With CBC Solutions at your side, you can be sure your getting the best possible rates. We cut through the loopholes and get the vendors competing for your business.

Our Commitment:

Absolute Neutrality – Our network of over 100 carriers contains no underlying commitments or quotas. We negotiate the best rates with your best interests at heart.
No Risk – CBC Solutions employ a risk-free auditing technique. We find the best rates for your organization so you can focus on your core business.
Lifetime Support – We want to earn your trust. As a result, we treat your account as if it is our own. Our vendor relationships allow us to get better support than the average person and we will support you as long as your contract lasts.

02
Jul 15
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How (and why) to Trust your Trusted Advisor

Tags : Budget Finance Security

I was in a networking group once where we had to go around the room and describe what makes us different than our [sometimes larger] competitors. Although all of us were from different industries, virtually everyone’s value proposition could be summed up into one word. Trust!

When I was a kid, I learned that trust had to be earned. I still believe that today. The question is, how do you trust someone to advise you on something you don’t understand?

I have advisors for Marketing, Insurance and Taxes. Not subjects I went to school for, nor do I profess to be an expert in any of them. However, I do consider myself good judge of character and being an advisor myself, I know what it takes to earn trust.

Results Matter
No one can talk about trust without considering results. Obviously that’s number one. A good trusted advisor will help you develop goals on which to measure success. My marketing advisor develops goals to measure hit count on my website, conversion rates, new sales leads, etc. With my Tax guy, it’s how he manages my deductibles and how susceptible am I to an audit. My Insurance agent makes sure I have the coverage I need. She’s not the cheapest in the world (and she tells me that), but she’s upfront and makes a real effort to understand my needs.

The point is, to measure results, the proper goals need to be set and you should be able to gauge how well you do in achieving them. It goes beyond ‘under promise – over deliver’. Anyone can under promise. Goals should be realistic. It’s also not as important to hit them on the first throw as much as how you can change up the game if you miss your target or don’t get the results you want.

Communication
One of the best value principals of a good advisor is communication. The advisors I trust are the ones who give it to me straight. In sales, we’re taught to tell the customer what they want to hear. Advisors are here to tell us what we need to hear. It may not always be good news, but if you need to hear it, it’s valuable.

Time is Money
Once you find an advisor you trust, how much time do you spend validating their work? If your advisor gives you a quote, do you look for a better one? Maybe, if the time it takes to shop doesn’t exceed the amount of money you might save on the their offer. However, I’ve seen people spend 10 hours to save $100. Not my favorite approach.

Disclosure
Ultimately, the best people I trust are the ones that are forthcoming about their commission rates, competitor pricing, markups and wholesale costs. That doesn’t mean they have to volunteer all that information, just that they’re honest about what they’re making on the deal and how much risk they’re assuming. Not everyone can do this, but the ones who can, usually earn my trust pretty quick.

Dedication
When you have an advisor you really trust, nurture that relationship. They will usually be there in a pinch when you need them most.

I’m not personally a strong believer in the 80/20 rule. At least not in the ways it’s used in sales. The most common translation I see is to focus 80% of your time on the top 20% of your customers. Personally, I strive to give 110% to every customer and I expect the people I do business with to do the same. Because Trust is the name of the game. If you’re advisor gives you the impression they’re putting 110% into you, ask yourself, are you in their top 20%, or do they bring that dedication to every table.

24
Jun 15
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Worry free connectivity on a small business budget

Tags : Cloud Finance IT

How much does your business depend on connectivity? 80%, 90%, higher? It is virtually impossible to do business these days without connectivity to the outside world. Even businesses with only the slightest amount of technology need to be connected to the Internet to conduct business. Information Week estimated that IT outages cost roughly $26.5 Billion in lost revenue in 2011. It’s only getting worse. Add Cloud services, Voice over IP, & web services to your list and the dependency approaches 100%

The good news is that a resilient network is not the work of genius tech gurus who sit on mountain tops and come at a price that would make a Fortune 500 cringe. Creating a resilient, worry-free network is much easier than it used to be.

Vendor Fail-over
Internet connectivity is now so cheap, that it’s affordable to have a redundant Internet connection from a secondary provider. With even a low-cost, commercial security appliance, a secondary Internet connection can sit in a passive, stand-by state waiting for an outage on the primary line. Once this outage occurs, the secondary connection is made active and traffic flows seamlessly.

Cost of a solutions like this can run from $500 – $1,200 for a commercial appliance and an extra $60-$200 per month for a secondary Internet service (depending a lot on the size and scope of your company). Since this is a fail-over service, it doesn’t need to be as fast or reliable as your main connection, just enough to get you by until the primary service comes back on line.

Eliminating Single Points of Failure
While it it not 100% possible to eliminate all points of failure, the more redundancy that is put in place, the more resilient your network will be. A majority of the major players in small business network equipment offer “HA pricing” (high-availability) at a fraction of the cost of the primary device so you can double up on firewalls, routers or switches without doubling your cost.

Cloud Advantage
Making educated decisions about utilizing Cloud solutions can add to your resiliency. Many cloud providers replicate services to various locations so your services are up as much as possible. Did you know that Microsoft’s Office 365 services are replicated to data centers across the nation?

Good cloud providers offer guaranteed up-time measured in 9’s. For example, they might offer “three 9’s” or 99.9% up time. This means they can only be down for around 4 hours a year. Common guarantees are in the three – four 9 range, but some of the big players are even higher. Amazon Web Services guarantees eleven 9’s of up time, or 99.999999999%!

Monitoring – The forgotten necessity
One of the biggest mistakes commonly made when designing a fault-tolerant network is the lack of good monitoring. A good monitoring solution involves a 3rd party service, off your network that monitors up-time remotely. This way, if a redundant service kicks in, someone can be alerted so they troubleshoot the issue or call the appropriate vendor.

Without proper monitoring, you may not know you’re running in a crippled state.

Designing for Fault Tolerance
No matter what solutions you put in place, a fault-tolerant network is more than just a redundant service or device. Specific practices need to be put in place to ensure that devices are configured, proper services are ordered, systems are tested and proper monitoring & alerting is in place.

This takes a designer who can help you decide two metrics which will help budget for such a design. Return to Operation -time required to fail over to the redundant solution and Recovery Point Objective -specific services that need to fail over for business to run smoothly.

Summary
Designing a fault-tolerant network can take the worry out of service outages and equipment failure, but it needs to be designed properly. A good network architect will setup a recovery testing plan and simulate failures to make sure the system is redundant. These systems should be reviewed often to ensure they’re still functioning properly.

CBC Solutions offers Fault-Tolerant Network Design as a service. We perform a business analysis to help you decide the right budget. Then we provide best in industry solutions to take away the worry of your connectivity to the outside world so you can stay focused on your business.

24
Jun 15
-

5 Ways You Can Benefit From A Technology Broker

Tags : Finance IT

Technology Brokers are a unique type of technical consultant. They don’t generally sell any product. Instead they build strategic partnerships with vendors and service providers, then integrate their services into your business. Technology Brokers work on your behave to negotiate rates & contract terms. If the Broker is also a Consultant, they will help you find the right technologies and fit them into your business model. Below are 5 ways they can help:

1. We have a large partner base to work with – It takes a lot of time to find the right vendor or reseller to work with. As a business leader, you may go out on your own to find a vendor through Internet search or word of mouth, and then take your chances that the vendor will be easy to work with, will keep your interest in mind, and will always strive to keep your business. A Broker has a much bigger landscape of trusted and true providers and they know who will work in your best interest.

2. Staying with the same old vendors can lead to stagnation – While vendors don’t like to lose clients, they can also get a bit complacent if they don’t feel there’s any danger of their customer switching to a competitor. A Broker will recognize this and know when to put pressure on the vendor to stay competitive.

3. Switching costs are minimized – The cost of switching providers include loss of customer incentives, learning curves, configuration / integration cost and time in re-establishing a business relationship. When you use a Broker, they can manage a good amount of this for you. Customer incentives are usually well known to the Broker and you may be able to take advantage of competitive upgrade deals, learning curves can be reduced when the Broker provides you with proper training, and the costs of deploying the solution may also be absorbed by the Broker by having them bundle configuration in with the product.

4. They can offer good contract negotiation – Since Technology Brokers work with contracts so often, they can spot issues in contracts and help you mitigate them with the vendor. Contract issues such as auto-renew clauses, termination fees, service levels and contract length can be negotiated by the Broker better since the Broker generally knows what vendors are willing to red-line and what adjustments should be proposed.

5. Anxiety is reduced – Brokers can remove the anxiety of switching to a different product or service. They have been in the business long enough to know what risks exist with certain product switching. They can generally help you be prepared for a hard learning curve, adjustments you need to make on related systems and any other dependencies that the vendor won’t tell you.

CBC Solutions is a Technology Broker and Business Consultant. We analyze your business to find out not only where adjustments need to be made to your current services and products, but also what the total costs are of switching. We help businesses make a smooth transition and follow up frequently to make sure the services are working to improve business functions, reduce costs and manage risk.

24
Jun 15
-

How a telecom agent can help you save money

Tags : Finance

When reviewing a technology budget, look at the cost of Telecommunications. High-speed Internet, private lines, phone services, PBX, long distance and even cloud servers. These are all monthly costs that quickly add up. Many business leaders miss these costs when calculating budgets or working to reduce operating costs. They add up quickly.

To add to this problem, there are new technologies and better pricing popping up every day. This leads to added confusion and budgets can get outdated very quickly. Fortunately there is hope. A growing field in the industry today is that of a Telecom Agent. This person has good ties to multiple vendors and can readily get the best pricing and help you navigate through the noise.

A Telecom Agent that is connected to multiple vendors and is familiar with the industry can save you thousands of dollars a month, often without billing you for their services. They do this through integrated provider networks where they can submit your needs and get the best pricing from multiple vendors. The agent then collects a commission through either the provider or the partner network and never has to bill you for that service.

Here’s how it works.

The Telecom Agent should ask a few questions to get an idea of what you need from a technology standpoint. They may even review your current billing to get an idea of what you’re actually using as far as Internet bandwidth, voice services, long distance minutes, and even Cloud Servers. Then, the agent contacts a list of providers in your area to get the best deals. In some cases they may package services to save you even more money and simplify deployment.

Once the proper quotes are received, the agent will send them to you and hopefully explain the various options to help you make the right decision. If you don’t like any of the options, that’s OK. If you do, you sign the agreement with the carrier, not the agent. The carrier and/or partner network works out commission with the agent.

Another benefit to agents is that they usually have better contacts within the carriers so they can assist with deployment, contract negotiation and support. Consider this. Say you have a long distance service that is $5 / minute. A typical monthly bill shows usage of 80 minutes of long distance. That equates to $400 / month or $4,800.00 per year. Now say the agent can get your long distance down to $1.9 / minute either by finding another provider or through 100 minute blocks bundled in with another service. Now your monthly costs go down to $152 / month and you save an average of $2,976.00 ever year. This same practice can be placed on voice lines and Internet access which, when bundled, can save even more.

24
Jun 15
-

Keys to a healthy technology budget

Tags : Budget Finance

Practically every business these days spends a sufficient amount of money on technology, however surprisingly few have a healthy technology budget. Either they are spending more on products, services and overhead than the solution saves them, or they don’t spend enough to keep systems and applications running efficiently. Move over, many business are still not taking full advantage of the Cloud.

There are many reasons for this. The most obvious is that Technology Professionals are not typically versed in business (and often don’t care to be). Another is that the environment is changing so rapidly that it’s almost insurmountable for a business decision maker to understand the options that are out there. There are a lot of Consulting agents willing to help, but not all of them take a holistic approach to planning a technology budget.

Identify the Business Requirement

In order to adequately evaluate the solutions in place, it’s necessary to have a clear understanding of the process that the solution is here to solve. Take the focus off the technology, infrastructure and product and move it toward the specific part of the business process that it addresses.

Understand your TCO

Many times we get sticker shock when we look at certain solutions which can force us to scale down and ultimately end up with a solution that costs more to operate and support then it would to just purchase the right product or service. It’s thus important to have a full understanding of the Total Cost of Ownership for the product in question. Cheap or free can sometimes lead to huge support costs and unexpected downtime.

Long Term Planning

To be effective and still keep up with the changing landscape, I’ve found it’s important to look at the long term. When I say “long term” in technology, I’m talking 3-5 years. Depreciation cycles should be set at roughly 3 years. Contracts are best as a 1 or 2 year, though there can be massive savings available with a 3+ year contract.

All of this should be re-evaluated every year to make sure the costs and technologies match the offers available. When signing a long-term contract, always make sure you know what options are available to terminate early. For example, you may want to term the contract in a year because you are moving offices. In this case, you have two options. One is to transfer the service to your new location, the other is to end it completely. If you’re moving out of an area serviced by that vendor, you have no option but to terminate it.

Vendors should have provisions in their contracts for early termination. There may be an early termination fee. This cost should be factored in as a risk when the contract is signed. They may also offer a way to move service to your new location for free. To determine the value of this, make sure you know what the cost of that move would be if that offer wasn’t on the table.

Utilize the Cloud

Cloud Computing has commoditized technology, but it’s costs need to be controlled. See Time for IT to Rein In Cloud Computing Control. Cloud services can really help get costs under control. I’m not talking the generic “OpEx vs. CapEx” discussion that most Cloud Consultants use. That discussion is for another day. I’m talking about the costs of building an infrastructure and the costs of maintaining that infrastructure vs. paying for what you use when you use it.

Consider this. Before the cloud, we used to have to spend a lot of time defining the architecture, spec’ing out the right services, building up the servers, network, and access control, and planning for disaster recovery, backups & antivirus before we even install the first application. The graph below is an example of what those costs look like. It starts with a large expense in the form of hardware, software and often services. This expense offers virtually no value to the organization. Next, IT spends time installing and configuring applications and services to bring the solution to life and then starts rolling it out to end users. In the graph below, the orange lines equate to large purchases, while the blue line is the utilization of the service.

I know that the math geeks out there are going to cry foul on these charts. That they’re generic and don’t represent re-world scenarios. I agree. Real costs can fluctuate greatly, but it does provide a model to compare how costs relate to utilization so bear with me.

Once end users start using the solution, the value of it starts to grow. The green shaded areas indicate where the solution is adding it’s most value, while the red regions show where the costs exceed the value. The more the utilization, the higher the value, however, once the utilization reaches a certain point, the infrastructure can’t keep up with the demand and performance suffers. Until another large expense is allocated. Then the costs out-weigh the utilization and the process starts all over. Meanwhile the costs keep going up. Sound familiar?

Software As A Service
Under the Software As A Service (SAAS) model, your costs are directly proportional to the utilization and the net value of the services is more directly propositional to the costs. Again, please excuse the generic graph.

This is the real value of the Cloud. This is a Rent vs. Buy discussion. Think about a house. It’s a big expense. Much bigger than a rental, but you build up equity the more you put into it. Plus, unless you’re in a depressed area, the value of your house appreciates over time.

Now compare that to a car. The car depreciates in value the minute you drive it off the lot and continues to depreciate every year. Even if you don’t drive it. Leasing might be the better option from a purely financial aspect. No dollar you put into your car is coming back to you in 10 years.

Comparatively, the same happens with infrastructure. Your technology infrastructure will continue to depreciate until it becomes an expense to just keep it around. And it will depreciate at a faster rate than your car. Retiring old infrastructure can be quite costly as well.

Factor in Administrative Costs
Ever take a real look at how much time and money is put into supporting your technology infrastructure. The orange region of the chart below relate to overhead costs to support power and cooling, hardware maintenance, patching, virus protection, backups, fail over, remediation testing and upgrades. These are the area’s most IT departments spend a majority of their time. It’s important to note, that none of the tasks I just mentioned add any value to the business at all. The value add starts above the red line. To run an effective IT shop, you have to manage where that line is. The upper layers include software configuration, application customization and service provisioning which is where IT becomes a strategic asset to the company.

When you buy applications as a service, the orange region goes away and IT is working strictly as a strategic asset. The overhead costs are greatly diminished. Plus, when a better solutions comes around, you simply stop service on the old solution. There’s nothing to retire.

Long Term Planning
To be effective and still keep up with the changing landscape, it’s important to look at the long term. Contracts & solutions should be re-evaluated every year to make sure the costs and technologies match the offers available. When signing a long-term contract, always make sure you know what options are available for you to terminate early. For example, you may want to term the contract in a year because you are moving offices. In this case, you have two options. One is to transfer the service to your new location, the other is to end it completely. If you’re moving out of an area serviced by that vendor, you have no option but to terminate it.

Summary

The main point of this post is that your technology budget is a large part of your operating costs. With the right consideration and long-term planning, it can be managed in such a was as to keep the companies finances in order and add value to the organization A good technology consultant who is focused on the business should be able to help you see the long-term hard and soft costs and assist with negotiating the best contracts on your behave.

Tag Archives: Finance

Aug 15

-

Using technology to gain a competitive edge

Jul 15

-

What’s in your toolbox?

Jul 15

-

How to cut telecommunications costs by 20-30%

Jul 15

-

How (and why) to Trust your Trusted Advisor

Jun 15

-

5 Ways You Can Benefit From A Technology Broker

Jun 15

-

How a telecom agent can help you save money

Jun 15

-

Keys to a healthy technology budget

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