Growing for the Gold
Making the Commitment
As much as a company's owners know that the business needs a technology infusion, writing the check is a killer. "There's always an argument for delay," Boggs says. "That's the scary part. Next year it will be cheaper and easier to use." However, he says, by waiting a year, the business loses the productivity benefits of the system, while it concedes some superiority to the competition.
Professor Bhaskar says that the reluctance to invest in IT may have been justified when systems were closed, because companies could get locked into a system that would not meet their needs in the long term. But thanks to open source and modular systems, companies can start small and get bigger later on, he says. In Orange County, where he is based, he has noticed that several small manufacturing companies have been able to run with just-in-time inventory, something that would not have been feasible just a few years ago.
Spyder offset the opportunity cost of waiting by choosing Web services versions of its IT applications. "We used an ASP [OneNeck IT Services] from the beginning," Smith says, which reduced the risk of equipment investments while speeding up the implementation time. "You're leveraging the depth and breadth of expertise that the partner has." That also saved the company from a big investment in hardware, and it made the upgrade process much simpler. Smith and his staff never have to take the entire business offline to add an application or install a software upgrade. As long as the host provider has capacity, Spyder can expand the breadth of its system.
As part of the implementation, Spyder's team arranged its data in a logical, consistent style. Bhaskar says that this is a key to success. "You need to indicate what the architecture will look like from the front," he says. "The database should be set up in advance so that everyone knows exactly how a customer is defined and entered, and that each item in inventory has the same name in each application." Otherwise, the data can't be shared, frustrating staff members as they sort through the different statistics in different reports.
"One of the things SMBs can learn from large companies is that there are two ways to grow profits. One is by reducing costs and one is by growing revenues," Bhaskar says. "If you want to do it by growing revenues, you have to do it in such a way that every six months, you're not fixing IT." To meet that challenge, Amarr's management chose to go with an in-house infrastructure rather than outsourcing. It was a strategic decision, made in part because Crawford's staff had many years of experience handling IT for the company. Senior executives knew that their people were capable of system maintenance and upgrades. And, Amarr's shareholders were willing to make the internal investment. "You can do that as a private company," Crawford says.