You only have to pose the question, and you know that the answer will be one of those that starts with ‘it depends on what you want….’ True but not helpful. Here are a couple of rules of thumb that might help though.
Start with a few questions:-
Is your network up to scratch? If you have 30 staff and they each waste 1 hour per week fighting with slow computers that crash, loose work, or simply feel as though they are running through treacle – this is the equivalent of one person extra on the staff. Budget to bring the network up to a good standard.
Is email working reliably?
Email has leaped from being a technical curiosity to be a vital business tool in just 5 years. But many companies have not reflected that change in the way they handle it. Cheap email solutions will provide poor services.
How much should I budget once the system is running, to keep it running?
HP has just won an outsourcing deal for Proctor and Gamble ($3bn over a 10 year contract) based on $3,000 per employee. This is causing some interest because IBM and IDS cost on the basis of $3,400 and $3,200 per employee respectively. Industry experts doubt whether HP will be able to sustain this lower price. The contract includes the support of IT infrastructure, datacentre operations, desktop environment, networks and some application support and development. It does not include the business development and facilities management aspects of IT, which are likely to be contracted to IBM or IDS. So as a starting point consider budgeting £2,200 per desktop.
Bear in mind that Gartner group estimate that the hardware cost of IT is only 20% of its Total Cost of Ownership.
They also estimate that it costs 3 times as much to support a laptop as it does to support a desktop computer – so if you have remote users, there needs have to be carefully managed.
In house or outsource or both? According to UK IT expenditure Trends and Forecast survey by Kew associates, UK IT directors are expected to spend £1.36bn in outsourcing in 2004 – an increase of 16.3% on 2003. In the end this is not a budget issue, it is a question of whether the depth of support needed can best be supported internally, or by a third party. With the increasing levels of sophistication in different areas of IT, there can be significant economies of scale in sharing the cost of IT infrastructure across several companies with similar requirements.
Should we be considering specific applications? There are significant productivity and marketing gains that can be obtained through the effective use of IT.
A few, not so obvious places to look are:-
- Do your main customers have any supply chain integration programmes in place that represent an opportunity or a threat to the way you currently do business with them.
How can you distribute company information to those that need it:
- To customers - information such as delivery schedules, stock levels, pricing quotation or invoicing
- To remote offices, out of office workers and partners – the low cost of ADSL and database synchronisation is making this kind of information much easier to share.
- To new potential customers – email and websites.
- To completely new markets – either geographically or through shared marketing approaches.
- CRM (customer relation management) systems can be the most valuable asset of the company.
- One or more of these opportunities may have the potential to transform the business. So make sure that you have the budget to grab the opportunity when it arises.