Many historians have come to call our present age the “Information Age”, following The Agricultural and Industrial Revolutions as the next wave in economic progress. Although the Digital Revolution started before the 1970s, we seemed to have reached a culminating point, where our lives (both personal and business) are steeped in technology. In 2018, most small businesses have embraced the model – they’ve invested in Cloud technology, deployed devices which their employees have come to expect, and provided digital conveniences their customers have come to expect.
Things change quickly for small business
However, as information technology (IT) continuously changes, small orgs struggle to keep pace. According to a Bank of America Small Business Owner Report (Spring 2018), nearly four-out-of-five entrepreneurs make technology updates at least annually, and 77% see the future of their business as being dependent on technology (23% see technology as a threat). With such frequent changes in the industry, each small business must tackle their approach to IT and its management. Will your business be IT reactive or proactive? What resources will you deploy to ensure productivity and ROI? Here are some guidelines for making such decisions:
The three pillars of IT service
In order to determine how you want to handle IT services, it’s helpful to understand the different functions of service and their respective purposes. One way to break it down is innovation, operation, and restoration.
Innovation – Process enhancement, new platform/service deployment, upgrades, and expansions. Such services require a solid vision in harmony with overall company goals, and the chops to execute. These services are usually handled through point-in-time projects.
Operation – Whereas innovation is for improvement, operation is for sustainment. Examples include: updates, patches (a top factor in cyber security according to Verizon 2018 Data Breach Investigations Report), systems monitoring, and asset life-cycle management.
Restoration – You don’t need to be reminded that tech breaks, fails, and makes you want to pull your hair out. Resources are needed to answer support requests, address outages/downtime, and restore operations following disasters (reminder: most IT disasters aren’t caused by mother nature).
Your customers, employees, and competition will continue to force innovation, company productivity is dependent on reliable operations, and stuff will break; therefore, all services are needed. But the problem remains on HOW to execute/fulfill all these services according to your business needs. These three services require the right resources, and small businesses try everything from assigning a non-IT employee to hiring an entire IT department. Selecting your resource(s) is largely related to your view on how IT affects your business.
IT all comes down to profits
While not all small businesses make profits the end-all, be-all – it’s usually towards the top of the list, and information technology should be held to the same standard. When properly executed, IT can contribute to increased revenues while helping reduced costs (equals higher profits). How does that work, you ask (anticipating a puffed-up sales pitch)? By increasing productivity and reducing risk.
Increase productivity (increase revenue)
- Better tools – get your employees IT devices and platforms designed to help them work faster and more effectively = thrilled customers and victories over the competition
- Process enhancement – leverage work-flows within platforms to enhance/enforce business processes = efficiency
- Communication/collaboration – more accessibility internally and externally, platforms to encourage team work = happier everyone
- Organization – tools across multiple platforms to organize the work-day result in better time-management = higher ROI from hires
- Analysis – leverage business reports to analyze past performance and/or analytics platforms to forecast the future = smarter strategic planning
Reduce risk (decreased cost)
- Down-time – for most businesses, when the local network, server, or phone system is down, the business is down = lost-productivity costs
- Data loss – customer records, financials, employee health records, and payroll all have dollar values attached to them. Lost data = lost money
- Cyber-attack – could result in down-time, data loss, and worst of all: reputation damage
Knowing that your small business needs to manage IT innovation, operations, and restoration in order to maximize profits, should you start building that IT department or should you outsource? Do you need one guy/gal or multiple? These resource decisions are determined in part on whether your business takes a largely reactive or proactive approach to IT service.
Reactive vs proactive IT service
Some small business leaders see information technology as a profit center, others as a cost-control center, and quite a few see IT as a necessary evil. The way you see IT will likely affect the way you deploy IT resources to service your business, and it usually breaks down into three approaches:
- Firefighters – Usually the “necessary evil” camp. Wait until something is “on fire”, and then call to fix the immediate issue. Taking this approach ignores innovation and most operations services. Small businesses who want this level-of-service will most likely work with a local IT support company who they call seldomly in order to avoid significant operating costs like a contract partnership or payroll.
- Managers – Companies with a cost-control center mentality will likely want IT managers to ensure operational stability and be available to put out fires. Could be performed in-house or outsourced, but such resources need professional chops to manage the network, infrastructure, and platforms.
- Transformers – Small orgs who want to use IT to generate new revenues and claim market share will often want a very proactive, strategic IT team to prioritize innovation, operation, and restoration simultaneously. The transformers approach is nearly impossible to achieve without a professional team who can bring the necessary skill sets and availability.
Choosing one of these approaches and accounting for size of operation and network will help determine whether you call the local IT company “as-needed”, develop a vendor partnership, build out an IT department, and deploy a blended approach.
When is MSP the best fit?
Having operated in this industry since 2001, we’ve observed that many small businesses often give their IT the “firefighter” approach while in the “micro” phase (single-digit head count). However, once they surpass “micro” size (via staff size, assets, and applications), the reactive approach hampers operations. Most small businesses have more IT infrastructure than they realize and reach a point where consistent professional service is needed.
Such organizations will then go one of three routes to implement a “manager” or “transformer” approach: build out a dedicated IT department, hire a managed service provider, or use a blended approach. As you may suspect, an internal IT department is more dedicated and controlled, but is significantly more expensive (hiring costs alone are $4-7k for SMBs) than contracting an MSP. The theory behind MSPs is to provide small businesses with consistent, professional IT services (innovate, operate, restore) via a multi-person team and industry-standard automation and management tools. Thusly, small orgs get the needed IT management without carrying the human capital costs and building processes from scratch.
Regarding the third approach, many businesses want both, and will hire internal IT management personnel who are backed by an MSP team for daily management and support. Like most business decisions, situation and strategy will dictate how the IT team is constructed, which needs to evolve as the company changes.
Right people for the right business in the Information Age
In today’s economy, we are all (to some degree) digital businesses in a digitized industry. Small businesses no longer have the excuse of not having access to great tools and IT solutions – their customers and employees expect them to wield such tools at a high level. Take some time to review your IT approach in light of overall business strategy and implement your IT strategy and team accordingly. As always, the right people and plan generate the most profit.