Blue Technologies: How to create an IT budget that’s predictable and cost-effective

Technology is impacting business owners at jet speed with accelerating volatility and rate of change — and it’s caught some off guard.
Historically, if you were making a product or providing a service, your only job was taking care of your customers, says Bill Julka, vice president of Blue Technologies Smart Solutions.

“Now, technology has become so pervasive, it has become the business. If business owners neglect technology, they do it at their own peril,” he says. “They have to pay attention — hiring the right people and interfacing with the right vendors who can help them navigate through technology and all its myriad uses in their own business.”

Smart Business spoke with Julka about business technology and IT budgets today.

What has changed with technology?

Technology has gotten complex. The days of needing computers and an IT department for just basic accounting functions are gone. With social media and mobile devices, the world is connected any time, anywhere. Employees want to print from their mobile devices and access office computers, information and databases when on vacation.

This makes it difficult for business owners to do everything in-house. Companies depend on reliable technology vendors, which act almost like business partners. By partnering with somebody attuned to technology, business owners aren’t spending time in areas they aren’t comfortable with.

When creating an IT budget, what’s important to understand?

Many business owners feel their largest discretionary expense is IT. But you need a consistent IT budget, good times or bad. In good times, it helps you run your business and create satisfied customers. In bad times, you need to spend the IT dollars wisely to improve efficiency to gain a competitive advantage and provide better service at a lower cost.

When setting IT budgets, management needs to understand and be able to measure the direct relationship between IT and productivity. A trusted, proven vendor can help provide analytics that show the results of technology adoption.

What are common IT budget concerns?

Many business owners feel IT budgets keep increasing, while the level of service deteriorates. They also complain about the unpredictability. For example, software upgrades aren’t easy to manage.

In addition, companies are finding they need electronic content management software to take full advantage of their technology, research and data. Without software to rapidly search the enterprise’s servers, efforts are duplicated or wasted, further stressing IT budgets.

Why is outsourcing a good answer, and when doesn’t it work?

Technology has indirect costs often left off IT budgets. The budget needs to account for the energy it takes to house infrastructure or the cost of rolling out technology. With labor, outsourced support can provide services more efficiently. The outside provider monitors a network cost effectively with better-trained people assigned over a large number of clients. Also, what if you need one-eighth of a network engineer and half of a firewall expert? Outsourcing helps a company only pay for what it actually needs.

One company switched to an outsourced vendor and its IT budget went from increasing 10 or 20 percent annually to 3 percent. Customer service went up in a measurable manner. With an outsourced vendor, costs are predictable, no matter the technology and how often it’s upgraded.

However, there are exceptions, based on the product or service. If your unique product or service doesn’t have skilled vendors for your particular area, you won’t achieve economies of scale. Also, you may not want to share proprietary knowledge with anyone, even an outsourced vendor.

What’s key to measuring ROI?

First, calculate where you are now. Then, implement the technology and gauge key performance efficiency measures, with help from your vendor. Certain efficiencies are instantly noticeable, such as customer service or costs. Other complex technologies may take a few months or a year to generate results. It’s a matter of developing a strategic plan, following it and then measuring the results.

Bill Julka is vice president at Blue Technologies Smart Solutions. Reach him at (216) 765-1122, ext. 8211 or [email protected].

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