Technology in business has evolved from being a tool to help master tasks, such as basic communications and
record keeping, to serving as a critical success factor in a company’s productivity, customer satisfaction, processes and profitability. Owners invest large dollar amounts in information technology (IT), and they expect a sizeable return-on-investment (ROI).
While companies spend considerable amounts on IT, their ROI depends on whether the owner has integrated technology into the business plan, rather than making it an afterthought. “Business owners should ask how technology will impact the company,” says Sassan Hejazi, director of Technology Solutions at Kreischer Miller. “Will it enforce their goals? What value will IT generate both quantitatively and qualitatively?
“Technology projects are really business improvement projects,” he says.
Obviously, investing in must-haves like billing or e-mail systems is critical. These rudimentary “cost of doing business” technologies are baseline components that must be upgraded. But innovative technologies that help a business become more “lean” will separate a company from its competition, Hejazi says.
Smart Business spoke to Hejazi about how to align your IT investment with your business strategy to realize a return through improved profitability.
Explain the difference between ‘must-have’ and innovative IT.
There are certain technologies that are essential to doing business, which should be world-class in terms of uptime, reliability and accuracy. Without them, it’s comparable to not having power. A Web site that isn’t functioning or e-mail that is down will inhibit customer service and your ability to communicate with vendors, customers and employees. Outages and security breaches are serious disruptions to your business. You have to make sure this technology is updated, and doing so is a serious investment for most companies. Still, this ‘must have’ IT won’t set you apart from your competition. That’s where innovative IT comes in. This is technology that will help you improve processes and profitability, and it should be closely linked with your strategic business plan.
How can IT increase a company’s competitive advantage?
First, it’s important to recognize that no two businesses are alike. When you consider ways to integrate IT into your business, you should evaluate the following categories: customers, suppliers, competition, employees and processes. What type of technology will enable your customers to do business with you more easily? Can you attract new customers by offering a certain technology, such as a customer service function on your Web site? What is important to your suppliers? Supplier transactions, shipping, receiving, accounting and other activities can be modified for convenience and ease. What is the competition doing? Also think about your employees and what technology capabilities they require to work productively. From there, review all of your processes and your operation. Are there areas where you could eliminate paper, waste, downtime, etc.? Finally, what ROI do you expect from this technology?
How do you measure a technology ROI?
Before you invest in any technology, you need to take a look at the current state of your business. Figure out how long it takes your company to complete a certain process. Survey customers and employees. Learn where the weak points are in your business so you can decide how technology can provide an advantage. If, for example, your current technology enables you to ship orders in two days, how much time and money could you save by cutting this shipping time in half to just one day? From a customer service perspective, perhaps an average service call takes one hour. Can you provide an online tool for customers so they can solve their own problems? And, if so, how much labor, time and money will that save you? This measurement process is tedious, but important to determine the true ROI of technology.
What is the biggest mistake business owners make when investing in technology that prevents them from realizing a substantial ROI?
Often, we forget to include people who understand technology early on in the business-planning process. As I mentioned before, technology projects are business projects. Management has to be aware of technology and include it in their strategies. If you devise a business plan and technology isn’t a part of it, you will put yourself at a disadvantage. Technology sets the stage for your success.
SASSAN HEJAZI is director of Technology Solutions for Kreischer Miller in Horsham, Pa. Reach him at (215) 441-4600 or email@example.com