Entrepreneurship

How to Spend Money on IT Without Results23 Jan

I recently had a conversation with a small business owner here in Billings. Her business has experienced tremendous growth over the past few years, and it’s obvious (from both a consulting and a customer’s perspective) that they need some help managing it. Luckily, the owner has realized this and is looking for some help.

But she’s moving forward in a manner that I see all too often. She’s going to spend money, time and effort doing things that are not going to help her run her business very much better.

How do I know this? Let’s look and what she told me her problems are and what’s she’s doing to fix them…

Problem #1: “My point of sale (POS) system crashed, we had to do transactions by hand for 3 days, and the vendor said we can’t recover a bunch of data. The vendor said it was related to a server crash and we don’t know if that’s true and even if our PCs and servers are networked correctly.”

Problem #2: “Our POS can’t handle the number of SKUs we have. The vendor (a remote vendor who couldn’t support us adequately under the old system) is selling us a new POS will fit our needs better.”

Problem #3: “Our processes for managing inventory, receiving, and customer relationships are so overwhelming that we can’t keep up. We have to close down the store for 2 days so we can take inventory. We never know what’s in stock because our current POS doesn’t keep a perpetual inventory.”

Problem #4: “We absolutely have to be profitable this year. I don’t really know if we were profitable last year. I think so, but the information is so scattered that I can’t be sure.”

Given my experience in the area, I see a clear set of activities that can help alleviate these pressures.

  • Get a good networking person to analyze your network setup and get any issues straightened out. They’ll make sure PCs and servers are installed and configured correctly, updates are applied, backups are setup, the network is secure, etc.
  • The new POS will undoubtedly have capabilities that the old one didn’t. Now is the time to look at all your processes and make sure you are taking full advantage of the new system’s features.
  • Integrate the information you need across your disparate systems. QuickBooks, POS, customer relationship software. Stop spending time performing manual data entry to keep these various systems in synch. Use the built in interfaces to integrate the information that needs to be shared, and build the appropriate reporting tools to easily get the information out in a timely manner.

What is she actually doing?

  • She has contracted with someone to rebuild their web site.
  • She used the remote vendor to put in the new POS.
  • She hired a networking and support firm to provide tech support.

So she got a tech support person to help them with the networking component. That’s good.

And she got the new system in place which will provide her with opportunities to support streamlined operations. But she has nobody helping update her processes in order to actually use the system more effectively.

And as far as the web site goes, that activity has nothing to do with improving her operations or ensuring profitability in the coming year. To be fair, the existing web site is really bad. But until she gets her back office processes in place, she won’t even be able to support increased sales from a nicer web site.

So overall, her plan gets a 1.5 out of 3. She’ll probably get to the end of 2008 in the same place where she started. Her PCs may be a bit more reliable, and she’ll probably have a decent new web site. But she’ll still be struggling to keep up. I really hope I’m wrong here. But she will probably end up regretting her IT spending because all the money she spends in 2008 won’t end up resolving the big problems she knows she has today.

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Granite Peak Systems, LLC
PO Box 80892
Billings, MT 59108
Tel: 406-672-8292
Email: trupsis@granitepeaksys.com

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Since 2007, I have funded a Kiva account in recognition of my clients. Whenever I get a new client, or find a microloan that relates to the industries my clients serve, I contribute to the account. You can see my lender profile here:

http://www.kiva.org/lender/gpsclients