Is It Time to Spend Money on IT Again?

By Don R. Snyder

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JULY 2005 - The current economic downturn has caused many companies to shelve initiatives, especially technology upgrades or new initiatives. Now many companies are beginning to ponder what is next. But after doing little or nothing for a period of time, many businesses don’t know where to start. The last major updating of technology systems was in 1998–99, in response to concerns about Y2K. For many, this was a rush decision, and the elements of a thorough upgrade were not necessarily implemented, such as changing business models and processes. Companies of all sizes felt compelled to spend large sums of money during this time for a scare that did not materialize. After this update, many businesses reduced their technology, and regular reviews did not occur.

Not long after, the business world experienced a burst of Internet-related activity. Many companies decided that they simply had to be on the Internet. Companies upgraded their websites and nurtured unrealistic expectations without providing the proper tools. The result was another technology investment that failed to provide payback.

Yet another factor that has created an uncomfortable situation for many companies is the state of their information technology (IT) departments and their current systems. During the economic slowdown, many businesses focused on their core competencies, which led to an increase in outsourcing manufacturing and distribution functions. Companies expect their current systems to do more with less; however, many systems cannot handle these demands. Although businesses may be reluctant to allocate funds for technology, companies must examine their current systems to ensure that they have what they need to operate efficiently and remain competitive.

First Review, Then Implement

Before ordering software upgrades that were put on hold during the downturn, look at processes and software that have changed in the marketplace. During the initial tech boom, companies made many “best in class” purchases. Small- and medium-sized businesses spent enormous amounts of money and resources on implementing the best customer relationship management (CRM), enterprise resource planning (ERP), and website solutions. These applications now tend to be bolted together in one complete package to provide business owners with one-stop shopping and one point of contact for an integrated solution. The cost of ownership has decreased enough to make these packages affordable for smaller firms to implement, because out-of-the-box solutions are now available. Instead of having the costs (including continual training) associated with an IT department, a business can now outsource this function or purchase a more cost-effective solution.

Portals provide a powerful entry-point for employees of small- to medium-sized companies to access a decentralized, diverse set of information technology resources. By aggregating information, applications, and services through a single, user-friendly interface, portals are a practical way to create an integrated environment.

Technology also has advanced for the smaller business that is challenged to maintain a fresh website without paying large sums to consultants or employing an IT professional. New software enables small- and medium-sized firms to reduce website maintenance costs.

Finally, any company should investigate whether new laws or regulations will require the use of certain technology for compliance purposes. For example, banks are requiring more information for financing that demonstrates that an organization is protected against computer viruses.

Putting It All Together

Managing a business’ IT plan is a continuous process, with three steps:

  • Assess the current hardware and software.
  • Envision and develop a strategic plan for supporting the goals and objectives of the business plan, including a return-on-investment analysis.
  • Perform a gap analysis between the current technology and the envisioned technology, developing both a budget and an implementation plan.

The areas to consider are:

  • Existing hardware (servers, desktops, and peripherals);
  • Application and office-productivity software;
  • Operating systems;
  • Vendor and support performance and viability;
  • Staff (skills and training requirements);
  • Business resumption plan, including disaster-recovery systems;
  • Software licensing strategy;
  • Communications (e.g., e-mail, fax, instant messaging, voice, wireless);
  • Internet and remote connectivity;
  • Security;
  • Emerging technologies; and
  • Competitive pressures.

Don R. Snyder is senior manager of development services at BCG Systems (, a full-service IT systems solution provider.




















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