Are You Investing Enough in IT for your Business?
Hackers can uncover the financial and personal information of millions of their customers by penetrating the IT security of businesses, costing companies millions, and even putting their entire business at risk. Payment and account-based hacks have doubled each year since 2014 according to the PwC Cybercrime Survey. As companies expand and scale, it is even more important to invest in IT that protects and secures. Even larger businesses and institutions have suffered at the hands of hackers: Sony Pictures, LinkedIn, Yahoo, Target, The Archdiocese of Denver, The County of Los Angeles, Home Depot, British Airways, Kmart, to name a few.
Research found that in 2017 that cyber attacks cost SMB enterprises an average of $117,000. This figure was $1.3 million for larger enterprises. Most businesses spend between $145 and $158 per stolen record for data breaches. This cost can be as much as $355 for healthcare information. These steep costs explain why 60% of smaller companies go out of business within six months of an attack.
Substantial investments in IT services are necessary as technological shifts are impacting almost all industries. These shifts never cease, so companies are urged to make continuous investments in IT. If well-deployed, these investments should ultimately enhance customer service and gain operational efficiencies. Many companies profit from such IT investments. The right tools, coupled with the right business strategy, can distinguish these businesses favorably from their competitors.
Unfortunately, small businesses are disregarding a larger strategy of existential threats to their technology – until it’s too late. ‘NOW’ is the time to invest in an IT security program, before the disaster hits. Your company should also have an IT security policy that covers such things as Internet use. The security policy should include passwords, opening attachments, and downloading software. It should also address data retention, remote access, and security equipment. Finally, such a policy should cover the confidentiality of data outside the workplace.
At the same time, companies should know that no cybersecurity policy fits all. Believing in such a solution is like imagining that there is one right cell phone for every business user. Your business will have its own set of unique security needs and budgetary constrictions.
In the meantime, hyper-connectivity is impacting every business, from retail to construction to healthcare. This has lead to an exponential increase in networked devices. Add in the Internet of Things (IoT) and artificial intelligence (AI), and it’s apparent that enterprise resource planning needs a digital transformation. According to theIFS Digital Change Survey, businesses are severely lacking in both data capabilities and IoT. One worrisome observation in this survey: one out of three companies is unprepared for transformation due to an inadequate talent pool in both categories.
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Would that one be you?
Why Invest in IT?
Why should your business strategically invest in IT tech services? Nowadays, the answers are multitudinous:
- Saving Time and Money
Time is at the top of the heap in the pantheon of precious resources. Companies tend to focus on the price tag when they invest in technology. The real focus should be on the use of time. Businesses value time management as a skill for a reason, so management, as well as staff, will certainly value time saved. Investing in technology saves time and money for the business overall.
- Compliance with the Law
IT and security are also critical from a compliance point of view. More than 8,500 US state and federal regulations mandate the safekeeping of corporate records. Depending on your business model, lack of compliance can land you in jail. It can also be very costly. Conversely, the fringe benefits are significant. They may even offset the cost of implementing your IT security systems.
- Improving Workflow Creativity and Efficiency
The right tools and apps can increase the confidence of the entire team. They can also increase credibility and improve customer service, especially if your business has a mixture of field and office-based professionals. For example, your sales rep uses a smartphone or tablet during the discovery stage. Your technical team can then provide services based on the needs captured. The client does not have to go through the same process twice. The result: a happy client.
Note that efficiency by itself isn’t worth much. It’s the reduced labor cost and the increased productivity that matters. Technology can also increase the reach of your services. It leads to improved revenue streams and other benefits.
Businesses can also gain creative advantages from IT solutions. For example, the advent of cloud computing has made online collaboration possible. Such partnerships work for parties located in different cities and even different countries. The cloud also enables businesses to control resources. It is paving the way for autonomous drones and self-driving vehicles. Companies can creatively innovate on their business models using the cloud as their launching pad.
- Customers expect it
Your customers are another reason why IT investments are a necessity. Customers now go online for everything. They research products and services online. They also go online to make purchases and to communicate. It has thus become vital for companies to embrace this move into the digital world. They must invest in technology for their everyday operations.
- IT can help you stay competitive
IT services can play an important part in boosting your competitive advantage. Companies must ensure that they will get a good return on their investment in tech. The pyramid below shows how technology increases your competitive advantage. The bottom two layers show the minimum requirements to enter the market. The top three tiers indicate expenditures for companies that want to increase their competitive edge.
Home Depot uses technology to boost its competitive advantage. The company invests heavily in IT. It sponsors “Battle of the Brains” events to recruit coders. It also trains tech-savvy employees in 12-week boot camps. It hires hundreds of tech employees right out of school. Amazon’s speed and convenience is a direct threat to the brick-and-mortar landscape. Home Depot’s initiatives are an immediate response to this threat.
Depending on the type of business you own, IT may not be a choice, but a necessity. For example, for e-commerce businesses, investing in IT will be a no-brainer. You may even need to add extras, such as an IT service desk. You will need a single point of contact. This contact will move between your company, your customers, business partners, and employees. Our IT help desk services will help you to perform that role.
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How Much Should Companies Spend on IT?
Businesses should consider their size when determining fund apportionment. Business size usually affects the budget, the following but as a rule of thumb,
- Small businesses: 6.9% of revenue
- Mid-sized businesses: 4.1% of revenue
- Enterprises: 3.2% of revenue
Budgets have been increasing as technology plays a more prominent part in business operations.
IT support is both a cost and an opportunity. Technology has become a central part of our business culture. It drives innovation and can help you increase growth and revenue. It can also help solve almost any problem that exists in your company today. You need to look at your current inefficiencies. The next step is to invest in an IT solution that helps solve those problems.
Many business managers wonder if they are spending too much on IT tech services. Others wonder if they’re paying too little, given the uncertain returns. To be certain, you should first define the tactical role that IT will play in the business. Using that as a baseline, you should then decide the commensurate budget necessary in order to achieve your goals. If you don’t take this crucial step, your company will not develop a proper IT platform. You will fail to advance your strategy, despite high IT spending.
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Still, most executives’ experience of IT business solutions as a strategic tool is frustration. You must manage technology, like any other tool in a business’ arsenal. The Japanese see IT as one competitive lever among many. Western business executives would do well to adopt this mindset. Western CIOs often try to develop an IT strategy parallel to the company’s business strategy. In contrast, Japanese managers will examine performance objectives. He or she will then select the technology, whether new or old, to help him (or her) meet those goals.
That said, you should limit your use of old technology. Old tech can limit your productivity. Old tech can also make you miss out on the best opportunities for your business. Can you imagine what your customer would think if he or she sees you’re still using 20th century-era CRT monitors? Old tech can even earn you negative online reviews.
What are some of the costs that you need to consider when hiring an IT service provider? First, there’s the initial cost, which includes hardware, software, and training. Your company also needs to consider the ongoing cost of maintaining systems, as well as the cost of upgrades. Finally, you need to think about non-tangibles such as the amount of time the new system will save. Opportunity cost is another non-tangible. It measures how much potential income you lose by not implementing a system. You must also consider the risks associated with implementing that particular system.
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Weigh Your Needs
Selecting an IT company that considers your core business needs is essential. Small business owners need a trusted, knowledgeable IT service provider. Your provider should be proficient in current technologies and be willing to learn the operations requirements of your industry.
IT cybersecurity is another critical consideration. A secure computer network matters to your customers. The investment poured into IT security systems are well worth it. If you’re in doubt, consider the alternative. Your reputation may never recover after a security breach. Even companies with many resources can suffer permanent damage.
IT security becomes even more critical when operating a business online. As a business owner, you should update your computer operating systems often. You should use encryption to safeguard customers’ financial information from theft. Conforming to these criteria can be challenging for small businesses. Thus, it’s a good idea to outsource payment processing to a company such as PayPal. Smaller companies often don’t have the security resources larger operations possess.
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So, are you investing enough in IT for your business? To answer this question, you must figure out how much you currently spend on IT. You will also need to look at how you can transform the business using IT products. Finally, you need to consider solutions that support growth in the current company.
We close with a brief anecdote from the nonprofit field to illustrate the effectiveness of sound IT decision-making. In Britain, the National Computing Centre Survey of IT Investment recently compared sectors. The survey found that charities made the smallest investments per head in technology. Eighty percent of the charities with IT solutions find it easier to serve their beneficiaries. Orchestras Live serves as a significant case in point. This charity brings orchestral music to underserved communities. Orchestras Live invested in an IT solution to streamline its processes. The principals soon discovered they could now concentrate on the results of what they do. Before, they only measured outputs.