I have been in Europe over the past 2 months studying the markets to get a better grasp on what sort of fallback New Zealand’s SME technology sector can expect, and what I can advise my clients to do to brace themselves from the further financial woes stemming from the United States.
This has been an interesting process and the situation being talked about in the media in Europe is far more dramatic than we are getting here, so time will tell the result.
I still believe the only businesses that are really suffering will be those that have over-extended themselves in the past 2 years. Nonetheless, there are things you can do to squeeze cost and efficiency from your technology model.
- Stem spending
Depending on your cashflow situation, stop all unnecessary projects immediately. This will stem spending and provide extra cash immediately. This includes any consultancy costs for technology you may be incurring.
- Re-assess your Budget
Re-evaluate your budget for the 2009 year now with your technology provider/ if you don’t have a budget, get one. According to the Wall Street Journal, over 60% of Fortune 500 companies are currently in the process of halting technology projects and completing re-negotiations with vendors. If you can, re-negotiate with your technology provider on service rates or shift to a more OPEX (Operating Expense) based model. This would include investigating Software-as-a-Service and hosted options, which should cost much less to run and allow you to retain the ability to keep up with things. You may also want to investigate open-source softwares, if it fits your business model, as this will not work for everyone.
I would not however recommend moving to a variable cost model as it has the potential to blow out; the last thing most businesses need right now. Avoid it, unless you have strict guidelines in place with your providers.
- Outsourcing vs In-House
Another option to consider is outsourcing your technology staffing for fixed fees, as generally this should be cheaper than having onsite technology staff. The payoff here will be in response times to issues. However, these should be negotiable.
- Train your Staff
Leverage your existing infrastructure by asking your technology provider for any free manuals or training they can provide for your current systems. You will often find a little training can improve staff output by large percentages which will add to your bottom line.
- Disconnect unused phones lines
Your technology provider can help you with this through the organising of telephony reporting, which has a one-off cost of between $20-$50 and will show where you can make cuts. Avoid new phone contracts at all costs as Voice Over Internet Protocol (VOIP) will save you money in the coming 18 months. Also, Look at getting rid of unnecessary hardware, for example dumping the three faxes and scanner and moving to centralised high quality, multi-function devices. Xerox, although the most expensive in this field, will actually save you the most in the long run. Be sure to negotiate favourable contract terms - your technology supplier should be involved in this - and any hardware redundancy planning.
- Regulation Change Management
The Sarbanes-Oxley financial reporting regulations will swing into action in all business within the next 12 months. On the back of the financial meltdown, the Government will hasten the Acts that the Australian and United States governments passed years ago, requiring, amongst other things, businesses to have 7 year’s worth of all data backed up, including emails. Look for an online backup solution with an insurance policy around data loss. This is very affordable and the insurance component should be tied in by the provider. I believe, similar to overseas, it will become a requirement of commercial lenders for all businesses lent to, to have this in place. The insurance component is key as 90%+ of businesses that have critical data loss are bankrupt within 12 months.
Above all, do not cut your nose off to spite your face. Your technology system is still vital to your business and you need to ensure you are making savings in the right places without adversely affecting the productivity and efficiency of staff