In this economy, many companies are reluctant to spend on technology. But technology alone won't save your business; making smart, strategic tech investments can help your business survive and even thrive.
The credit crisis that Sundia Fruit (see "Sundia Fruit Uses Technology To Weather The Great Recession") went through remains all too familiar to small and midsize businesses. While technology alone won't save a business, smart applications of technology can help it survive and even thrive.
But many companies are reluctant to spend money on technology in these tough times. A Gartner survey of 600 senior IT executives at midsize companies in December found that about half were freezing or cutting their budgets, up from 30% in July of last year. Those cutting budgets were shrinking them by an average of 10%. And even companies that haven't frozen their IT budgets are halting most capital spending.
Don't Miss: 15 Ways To Cut Your IT Costs (free registration required)
Nevertheless, smart business owners and managers are looking to IT to help their companies reach customers, grow revenue, improve customer interaction, and cut costs. Indeed, a Forrester Research survey of 129 IT decision makers found that 77% cited "reducing costs of business with IT" was important, up from 62% in 2007.
So how do you balance the need to cut costs and clamp down on capital spending with the increasingly urgent demand for more innovation? Can you be both cautious and innovative at once? It takes talent. It takes courage and foresight. It takes stepping back and assessing the business value of every IT project. And it may take a great deal of caffeine. Here are some other examples of small and midsize companies that have done it:
- At Farmstead Wines, a $200,000 company founded in 2008, marketing executives turned to social networking applications like Twitter to generate awareness at lower cost. Social media "is practically our only source of marketing and advertising," says president Anthony Nicalo. In the last month, the Vancouver company generated about $2,500 in sales of a limited-edition olive oil through Twitter alone, he says. Farmstead has more than 1,300 Twitter followers who receive "tweets" about food and wine, upcoming olive oil and wine tasting events, and specials, for example, "Rare, artisan olive oil. Today is the last day for free shipping."
- Montage Graphics, a $3 million marketing services provider with nine employees, uses a specialized Hewlett-Packard printer to turn out direct mail that's customized to each recipient. By manipulating digital photos, the company spells out the recipient's name in the foam on a latte or in sand on a beach. Proponents of personalized printing say the return is as much as 50 times greater than that for traditional direct mail.
- Some entrepreneurs are leveraging voice-over-IP applications, wireless technology, virtual assistants, and other technology to keep employees close to customers and suppliers and let the company opt for a low-cost location for its central office. Public relations executive Timothy Williams of Dime Public Relations runs his business from Costa Rica, which offers lower costs of doing business and a tax advantage. Williams' half-million-dollar company has three U.S.-based virtual employees; they use several VoIP routers for calling and receiving calls from the United States without paying overseas charges, and a Web service allows live receptionists in Phoenix to answer his phone. Being located out of the United States but continuing to operate what looks like a U.S.-based business lets Williams charge half of what his typical competitors charge -- many times, even less, he says.
What Farmstead Wines, Montage Graphics, and Dime Public Relations (not to mention Sundia Fruit) are doing to leverage the power of technology offers just three examples of the myriad ways that your business can use technology to drive revenue, reduce costs, and bring in new business without spending big bucks.
Elaine Appleton Grant is a reporter at New Hampshire Public Radio and a longtime business journalist.
