8 Strategic Values from Technology Investments

If you’re running a small business, there are a couple of strategies you’re trying to achieve with technology expenses:

1. Scaleability Strategy. Today, without strategic application of technology, it costs you x-dollars to produce one widget. Technology should reduce your overheads so that it costs less to produce a widget, and even better multiplier effects are felt with increased volume. The more orders you take in, the less cost it takes to process them, or, volume goes up while overhead remains constant. That’s called scaleability. Companies that are labor-dependent don’t scale well because more volume equals more time, and more time equals more labor costs. Strategic application of technology improves scaleability.

2. Utility Strategy. The Internet allows us to think of information and applications as utilities that we can subscribe to, creating zero-dollar barrier to entry with immediate benefit. It used to be that it took years to create a sophisticated IT infrastructure. Today, you can subscribe to services and applications to gain immediate capability but at a disposable expense. Instead of owning IT assets, you lease them, as a utility. Utility Computing and Cloud Computing are synonymous. Why own when you can just lease what you need, and shift risks onto the backs of service providers?

3. Convergence Strategy. VOIP (Voice Over IP) allows us to consolidate voice expenses with data communications expenses. In this model, you strive not to duplicate expenses in either areas and gain economic benefits from consolidation. Imagine if faxes could route through your email, calls could route across the Internet, mobile telephony and data plans merged with your onground data plan, across all of your facilities, into one statement? The more bits you buy, the steeper the discount.

4. No Support Strategy. Increasingly, we need talent that can work independently and be competent with computers. This is both an exercise in training practices, hiring criteria, and in selecting software that’s easy to use. The least amount of support from tech-heads the better, maintaining strong uptime and productivity levels.

5. Green Strategy. Technology can be used to diminish greenhouse gas emissions and position your firm to be competitive in an age of energy scarcity. It’s also great to use tech to win tax credits offered by cities and states to employers who’re using technology to off-set employee transportation costs, or, building inefficiencies. Green investments with tech today can make a “smart building” more cost competitive, and it’s a great PR mechanism.

6. Self-Service Strategy. Stop spending your own labor and shift labor onto the back of the consumer. The consumer feels great that they’re in control, and you feel great because you didn’t have to hire more people. Grocery stores and u-scan machines; kiosks at JC Penny; online inventory and service check-ins on your website. In what ways can you give your customers (and your employees) automated tools to help answer their questions and do business with you? That’s self-service, and it has huge strategic benefits for the small firm.

7. Automated Sales Strategy. Why not have your doors open all the time? How can you be making money even when you’re sleeping? Using the web as an automated sales channel – or, installing technology that enables consumer transactions when you’re not around – creates opportunity for residual income streams.

8. Extended Value Strategy. Tech increasingly extends value of the firm into new domains, like, social media. With social media, brands can be closer to consumers and listen to them, and respond to them – they’re accessible and personified. That extends value in every transaction and can keep the brand relevant, fresh in the mind of the customer. Tech should increasingly extend value with every sale.

Sometimes, just executing 3/8 here isn’t a bad option. Getting 1/8, though, is under-utilization of your IT spending.

Companies that aren’t getting these kinds of effects with their technology spending aren’t seeing strategic returns and should critically ask themselves: why not? What’s the value in tech spending if at least a couple of these effects aren’t being realized? What should we be doing differently to not just maintain computers, but, leverage computers for the business?

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