Despite the recession, now might not be the time to skimp on IT investment. After all, technology offers a way to maintain and raise service levels when other aspects of a business are under pressure.
Perhaps that's why a recent independent survey for systems integrator Connect found that 81% of UK SMBs (small and medium-sized businesses) believe their IT spend will remain constant or increase during 2009. Connect's operations director, Mark O'Dell, believes this is because the economic climate has focused SMBs' plans. "As companies downsize and lose staff, their remaining employees are even busier so they need to be fully productive," he says.
Connect has seen a growing interest in flexible and home working, often on the back of companies downsizing, closing offices and requiring staff to work fewer hours. "This has led to a growing interest in centralised IT environments, where we are co-locating servers, and providing VPNs [virtual private networks] and mobile email, allowing companies to work productively from any location."
Clearly, in a tougher economic climate, budgets will be tight and any expenditure will have to be fully justified. "This brings companies back to the need to demonstrate a positive net present value," notes David Elton, a member of PA Consulting's management group - in other words, they need to prove that spending money on new technology will deliver more of a return to the business than just putting it in the bank.
One advantage that smaller businesses have is their relative freedom to experiment, compared to larger enterprises who are more likely to be encumbered with legacy systems. "For example, open source software offers a wide variety of applications now which means that, for less money, SMBs could gain access to good functionality, with a more favourable return," Elton notes.
Prioritisation is vital. SMBs will need to be sure of their return on investment (ROI). "Having a vision is the best driver for any investment in technology," Elton says. "IT will be a component of that, but it shouldn't be the main focus. It's more important to know as a business where you are going and why."
This may be to provide a more personalised service, something small companies tend to excel at because they can get closer to the customer. By cleverly harnessing the latest communications solutions, they can take this to the next stage. Integrated voice and data communications solutions can provide richer customer interaction without high levels of human effort. "Convergence provides a cost-effective opportunity for a small business to look like a much bigger enterprise," Elton says.
While cash flow is always a challenge, there are ways of buying sophisticated IT solutions without having to break the bank. Hosted, pay-as-you-go solutions are becoming commonplace, allowing the smaller business to quickly tap into new functionality for a small monthly charge, safe in the knowledge that they can switch off the service (and cost) at any time. It's now possible to have entire IT infrastructures hosted and managed externally.
Allgas, a supplier of gas and electrical products in Yorkshire, turned to such a solution to tackle its stock control challenges. Owner Elaine Whyle has no illusions about trading conditions over the coming months, but feels the current IT investment plan is Allgas's best bet for riding the storm and growing the business. Currently, its stock control information is out of sync – if one branch sells a product, the other branch's systems won't show that information until the following day. Updating the systems is a laborious process that takes place out of hours.
Killing two birds with one stone, Allgas decided to invest in a solution from Gooroo Software that would streamline stock control while opening up the company for business online. The business case was easy. "My current PC, database and accounting software cost me £9,000 to buy and £1,000 a year just to support - and it is no good to anyone else," Whyle says. "The new setup will cost me £25-30 a month for five computers.
"I'm up against companies with phenomenal software that I couldn't dream of being able to afford. Not investing wasn't an option, but I had to find a way to do it affordably. Of course, it's a scary time at the moment, but if I did want to open another branch, it would be easy now, as everything is on the internet."
Money will undoubtedly be tight this year, but – as Whyle's story demonstrates – some small businesses will be spending money on IT. If they do it wisely, they will cut costs, increase their agility and steal market share as a result. So rather than asking if you can afford to invest in new technology in 2009, perhaps a better question is: can you afford not to?
