Technology Systems to Maximize Operations

This resource examines various technology systems for entrepreneurs and small to midsize businesses to consider when maximizing business operations to run smoothly and efficiently. Our systems review resource focuses on developing a systems culture and the importance of varying system disciplines, particularly to save money and add enterprise value.

Evaluating Technology

There are many parameters utilized for the evaluation of new technology for your business, such as speed, cost, or efficiency. At the Giersch Group, we suggest looking through a strategic and operations lens and asking the following questions before implementing new technology:

1. How will the system increase business profitability?
2. How will the system save time through efficiencies?
3. How does this system add value for my clients?

Part of the challenge for the smaller company is actually quantifying the answers to these questions.  Many times investments in technology are made without full analysis, because there is little time and there is a bit of emotion to the expenditure.  It is the analysis that balances the emotion. An this balance is part of the discipline of business.

Beyond these questions, there are clearly cash flow limitations for the small business owner in the evaluation of technology. There are multiple free or minimal cost solutions available (mentioned throughout this resource) to begin operations and set the foundation that will bring about the business’ growth. Unless required for the business activity, we suggest growing technology as the company grows and predominantly funding this from cash flow. For example, many small business owners immediately purchase CRM software upon opening their doors. Microsoft Outlook or an Excel spreadsheet can serve the purpose sufficiently until the number of clients grows exponentially or an increasing number of employees need simultaneous access to the same contact data.

Unlike large companies, most small businesses do not have the funds to engage in the creation of customized technology nor the platform or staffing for implementation. As a result, small businesses tend to purchase packaged solutions and then seek to make it work for the business.  Affordable online options which may allow some level of minimal customization are also utilized.

It is widely recognized that most software solutions are highly under-utilized. Most people do not use even the widely-known Microsoft Office Suite to its full potential. As new technology is evaluated, it is important to factor into the budget appropriate training costs for staff—both in time and in classes.

While items mentioned in this resource are exceptions, not all business technology systems are web-based. Systems can include efforts to save money through technology, such as efforts to reduce electricity.  An Inc.com article titled “How to Cut Costs with Green IT” provides helpful non-web-based tips to increase the efficiency of a business’ technology systems.

Storage and Software Systems: Cloud Computing

Cloud computing, the act of buying electronic storage and software services on an as-needed basis, is rapidly growing due to its ability to reduce IT costs. Compared to the alternative, that of buying an internal server monitored and maintained by the company itself, small businesses are finding cloud computing as a cost saving solution while the company grows.

Pricing for cloud computing varies, but can be based on the number of individuals, the central processing unit usage, or a flat fee.  Crain’s NY estimates that companies that use the cloud for e-mail services typically pay $2-3 per month rather than an average $10 per user for an internal server.  For file sharing between staff, consider using Dropbox.com that provides 2GB of free storage per user. Additional free or cheap cloud computing resources include Google Apps, Apple MobileMe, Amazon EC2, Mozy, Box.net, and ESNIPS.   Any business should choose its online server carefully. As with all vendor choices, you want to ensure that this provider will still be around if the economy dips.

One primary issue of cloud computing is the security of information.  Although a company takes a risk in placing information on an external server, vendors selling cloud computing capacity usually tout their ability to ensure security of information first among all other features.  

An additional fear of cloud computing is the potential for shutdown and the inability to access needed information.  If the business is using Google Docs and the Google server shuts down, the business experiences limitations until the server is back online.  This was the situation twice last year for both Google and Amazon servers. For a large price tag, a company can have its own server and call in its IT department to address the problem immediately.  While shutdowns of shared servers are rare, it is a possibility. For those with a paranoid orientation, we face similar shut down issues for our business in snow storms, power outages. On balance for the smaller company, we cope with these inconveniences quite well.

Although there is time involved in transitioning files, the efforts are often outweighed by the tremendous cost savings and flexibility of accessing files from multiple locations wherever there is internet access. If the system is user friendly, cloud computing can certainly bring efficiencies to the business thereby enhancing services to clients and increasing profitability.

Sales Systems:  Customer Relationship Management Software

Customer Relationship Management (CRM) software is used by companies in order to manage, automate, and track the company’s interactions with clients, customers, and sales prospects.  There are several pros and cons to CRM software, all which depend upon the size of the company and the effort a company makes to utilize the software. For solopreneurs or businesses with less than one hundred clients, a CRM software is not always necessary.  Creating an excel spreadsheet with names, contact information, frequency and method of communication can just as useful without the cost. For many smaller firms a contact manager, such as Outlook, which combines the e-mail, calendar and contact information, works reasonably well.  

For companies with a large number of clients, CRM software can provide enormous amount of data that can be useful in managing a client relationship to drive it to profitability.  Many CRM programs track past emails and their content, date, and communication frequency as well as every stage in the sales process for each prospective client. Many also provide alerts when communication with a particular client has been scarce or provide insights into opportunities or sales forecasts with integration of product knowledge.  Managing the client relationship is crucial to sales and for some, a CRM system is the perfect solution to ensure individuals do not fall through the cracks of the busy everyday business activities.

CRM requires placing contact information directly into the software which can often be time consuming and detail oriented. In our experience, too often business cards sit in piles only to be entered as a group when time permits, negating benefits of quick relationship management. In addition, the typical CRM software is not industry specific, often having several features that remain unused and/or a burden to the user.

CRM software is a tool; the system and data it provides are only helpful if the company utilizes the information. In order for a CRM to increase the company revenues, it must be used consistently, data entered on a timely basis, and reports or tracking for follow-up accessed regularly. If data is entered but not accessed, it becomes inefficient to growing the business.

There are several popular CRM systems available, including the popular Salesforce.com. CompareCRM.com is a wonderful resource that assists with the complex and time-consuming task of selecting the right CRM system. Outside of providing reviews and comparisons for over 200 CRM services, it can work to personally connect businesses with the right CRM vendor that best matches the business’ needs while providing insider's advice on how to buy the system and advice on how to negotiate the best CRM deal.

Marketing & Analytical Systems

In the internet age, nearly every business must have an online presence.  We address different options available in our Web-marketing: Driving Revenue resource.

Designing a website can range from $500-$10,000.  Some companies spend more than $20,000 to build a website only to find that it is not utilized to generate revenue.  Instead, the Giersch Group recommends building a basic functional website and investing in the site as the company and cash flow grows. One option for website design is 99designs.com, a service that allows you to create a contest in which 73,000 designers work with you and submit website designs to compete for a cash prize that averages around $500.  This service also works for designing a logo, online banner add, Twitter background page, stationary, etc. However, a programmer still needs to be employed for the site build-out.

Purchasing the website’s domain typically costs $9.99 from sites such as GoDaddy.com.  It is important that this domain is purchased before legally registering a company. A common practice for domain hosts is to purchase the basic domain name of a start-up company immediately after the company is registered, requiring the start-up to pay higher prices for the domain it desires to use when it builds the website. Hosting the website once finished can cost anywhere from $5 to $500, depending on the company needs. Network Solutions and GoDaddy are two common site hosts for small businesses.

Google Analytics is a free service that can provide rich insights into the traffic of a website.  Specific features include how many people have visited the website, both unique and repeat visitors, how they have engaged with the content, the specific pages viewed, and the percentage that have left the website after viewing only one page.  This information system is crucial to determining an online business strategy, indicating interest of current and potential clients, as well as how effective your online presence is compared to your overall sales.

Accounting and Inventory Systems

For accounting and inventory, using technology is a must.  Not only does it allow businesses to get things off of paper and onto the computer, saving time and headaches, it also allows the business to operate with the now standard bar code system for accurate inventory tracking.  

Again, a large company has the resources available to purchase or customize its own accounting system.  For small businesses, there are several ready-made software packages such as QuickBooks available on the market. Many of the newer software programs are user-friendly and offer initial training to help you learn basic system features.  

Key Technological Systems that all small businesses should consider include:

• Financial software, such as QuickBooks
• Offsite data back-up and remote access, such as Dropbox
• Shared calendars, such as Google Calendar
• Website hosting, such as Network Solutions

Action Steps

1. Evaluate the technology solutions that your company is using against the three initial questions: profitability, efficiency, and value added to clients.
2. Consider what technology systems could be added to grow your business.

 Articles for Further Reading

1. Taylor, Mark. “Ten ways to make your business more efficient.” 2 June 2010. http://www.articlealley.com/article_1578754_15.html
2. Quittner, Jeremy. “Virtual NY’s life on the cloud.” Crain’s New York Business.  1 June 2010. http://www.crainsnewyork.com/article/20100606/SMALLBIZ/306069997#
3. Fitzgerald, Michael. “Technology: When the Forecast Calls for Clouds.”   1 Jan 2009. http://www.inc.com/magazine/20090101/technology-when-the-forecast-calls-for-clouds.html
4. Carmichael, Evan. “How Entrepreneurs Can Use Technology To Grow.” http://www.evancarmichael.com/blog/2010/04/08/how-entrepreneurs-can-use-technology-to-grow/
5. Wehrum, Kasey.  “How to Cut Costs with Green IT.”  1 Dec. 2009. http://www.inc.com/magazine/20091201/how-to-cut-costs-with-green-it.html

For more information, please visit the Giersch Group at www.gierschgroup.com or contact us at prosper@gierschgroup.com.