Here’s a fabulous article by Gene Marks, CPA and owner of the Marks Group, that can help small business owners to identify when they should be considering a new technology investment, The Technology Tipping Point:
We’re all faced with moments in our lives where the decision to do something or take action is made crystal-clear. Small business owners face the same decision points when buying technology. Some guys I know can purchase a six-figure piece of equipment for their factory without blinking an eye, but agonize over a $5,000 software purchase for years. When exactly is the right time to spend the money? Is there a tipping point?
There is, and there’s a way to anticipate when you’ll hit it. Here are a few key technologies that business owners will be faced with buying or replacing during the next few years. We’ll be hearing a lot of hype and sales pitches from technology people telling us what to do. Don’t be distracted by the yammering. Just pay attention to your tipping point.
Customer Relationship Management (CRM) Software. What’s the tipping point for buying CRM software? This is not a gray issue; it’s black and white. It’s strictly mathematical. You buy CRM software because you can mathematically prove that it will help you get more sales. How? By making sure that all quotes are being pursued to their very end. By making sure customers who haven’t heard from you in the past six months are hearing from you. By making sure prospects who may in the future think about buying something you sell are hearing from you frequently enough to make them come to you first. By making sure you don’t look like a dope when customers call because you don’t know who communicated with them last and what problems they may be having. Think of all of all these situations you’ve encountered in the past three years, calculate how much revenue you’ve lost, and then compare that against the cost of a CRM system—and voilà! You have your answer. Here’s another tipping point: You suddenly discover that the airline industry provides better customer service than your company. That’s enough to make anyone take action.
Accounting Software. What’s the tipping point for new accounting software? First, don’t listen to the accounting software vendors. Don’t buy into the jazzy screens and pretty colors. There are just two rationales to cut a check. One is when your current system is slow, unsupported, not giving you the information you need, or becoming unreliable. The other is when you can absolutely, positively prove that a new system will reduce your costs by making your people more productive and (most important) you can prove these savings with a high level of confidence.
Software as a Service (SaaS). SAAS solutions are great for some companies, but may not be great for all companies. The entire world will not be using SaaS technology anytime soon. However, a big part of the business community will be relying on SaaS technology to help get things done. The guys I know who go for SaaS do so because it makes their people more productive. They can get data to and from their people faster, no matter where they are. They don’t have an internal IT infrastructure and find it less expensive to rent the software rather than set it up themselves. They find that maintaining a system in-house is more expensive than the monthly fees they must pay for a rented system. These are tipping points for any potential buyer. Do the math to see if this makes sense.
Buying technology is no tougher than buying that piece of equipment for your shop floor. The tipping point for any major acquisition is to make sure, plainly and clearly, that there’s a measurable return on investment. Otherwise, invest somewhere else. I hear there are plenty of cheap stocks on the market right now.
The article also discusses the following technology buying tipping points for small business:
- A New Server
- Virtualization
- Green Technology
- Web 2.0 Technology
