10 Ways to Leverage Information Technology

With the right approach, IT can do more than just maintain your business -- it can enable it to thrive and grow. These 10 tips can help

For many small and midsize businesses, computer systems are a cost of doing business. Savvy companies, however, learn to use computers and communications to create competitive advantages, increase efficiency, and grow their businesses.

The shift begins only when business owners understand the right questions to ask, what successful information management looks like, and, above all, what is possible. These 10 tips will help you get there:

1. Fortify Your Business with Risk Management
Risk management can save your business big money. Though it sounds dry and dusty, it's actually an extremely practical and simple method to strengthen your business. Five simple components add up to a direct and quantifiable result:

Risk: Brainstorm all possible things that could go wrong, from trifles to catastrophes -- fires, floods, server failures, power failures, alien attacks, forgotten admin passwords, missing IT staff members, etc.

Probability: List all of your identified risks and assign a likelihood the situation will occur on an annual basis. For example, here in San Diego during a fire year, the probability of your business burning might be 50%. If fires come every 4 years, the annual probability is 12.5%. See Table 1 for sample estimates other probabilities.

Liability: Given the worst-case scenario of each risk, what is the total cost? It may cost $1 million to rebuild all of your paper and computer files if your business burns or is destroyed by aliens. A server without backup may lose data worth $500,000 to recreate. It might cost $500 for a consultant's time to reset your admin password.

Exposure: Assign a numeric value to each risk by multiplying the probability by the liability. If these sample estimates for costs and probabilities are accurate, it would be wise to consider exposure an annual cost and start saving or open an insurance policy.

Control: Your completed risk analysis can be sorted by any column to identify the largest risks for your business. Create a "mitigating control" or a contingency plan with what you're going to do to prevent or reduce the impact.

For example: Maintaining an off-site backup would reduce fire liability to the cost of a building lease, new equipment, and data recovery -- say $50,000. Storing the admin password in the safe might decrease liability to $5 of employee time. Implementing a backup system on the server limits our cost to a new server and data recovery: $5,000. Alien attacks are such a low probability that we'll choose to not create any mitigating control.

Finally, recalculate exposure with the controls in place and repeat the process until you are comfortable with the results. See Table 2.

2. Find Great Staff
Great employees are almost priceless. If your business relies on their expertise and integrity, treat them like kings and queens! IT staff seek these four things, usually in this order: acknowledgment, autonomy (self management, responsibility, and flexible schedule), professional growth, and decent pay.

Your job posting is very important in attracting the right people. Work with your IT staff to write the appropriate job description when hiring new people. When building your staff from scratch, engage a consultant to evaluate your needs, write the job description, and participate in the interviews.

When discussing risk management with your staff, use diplomacy in developing contingency plans for when they are unavailable. Talk about needing a plan to maintain the business to free them up for their vacations. Similarly, try to establish relationships with consultants before you need them, and make them part of your plan.

Next Page: Document, Backup, Organize, Monitor -- and So Much More

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