Making advances, thanks to automation

IT can have a positive impact on your business in two important ways, both related to the practice of automation:

• Automating processes: Not too many years ago, business processes were manual. For example, your bookkeeper may have calculated payroll entirely by hand with the assistance of only a ten-key adding machine. What used to take hours, days, or weeks can now be accomplished in minutes or even seconds. Other processes that are commonly automated are inventory tracking, customer service, call analysis, and purchasing.
• Automating personal management functions: More people than ever are moving their calendars and personal planners onto computers. Although paper-based planners aren’t going to die completely, many folks are finding that computers are much more powerful management tools than their manual counterparts. Small business owners use computers to schedule meetings, track projects, analyze numbers, manage business contact information, conduct employee performance evaluations, and more.

Before you run off and automate everything, keep this piece of information in mind: If your manual system is inefficient or ineffective, simply automating the system isn’t necessarily going to make your system perform any better. In fact, automating it can make your system perform worse than the manual version. When you automate, review the process in detail. Cut out any unnecessary steps and make sure your system is optimized for the new, automated environment. The time you take now to improve your processes and functions is going to pay off when you automate.

Improving efficiency and productivity

The explosion of IT accompanies the shift in business from old-school standards, such as cigar stores, video rental shops, and shoe repair outfits, to those producing web design, app development, and online retail products and services. The personal computer industry, still in its infancy a few decades ago, has grown into a market worth many billions of dollars in annual sales.

The idea that businesspeople who best manage information have a competitive advantage in the marketplace seems obvious enough. The sooner you receive information, the sooner you can act on it. The more effectively you handle information, the easier you can access that information when and where you need it. The more efficiently you deal with information, the fewer expenses you incur for managing and maintaining your information.

New business owners often cite the preceding reasons, and others like them, as justification for running up huge start-up costs to buy computers, install email and voice-mail systems worthy of much larger organizations, and train employees to use these new tools of the Information Age. But have all these expenditures made your own workers more productive? If not, perhaps you aren’t taking the right approach to implementing IT within your business.

Before spending the money, a business owner should take time to identify the questions that need an answer:

• Who needs the answer? (customer, supplier, employee, owner)
• How fast do they need the answer? (real time, one minute, one hour, one day)
• How frequently do they need the answer? (daily, weekly, monthly)

When the answers to these questions become clear, you have a rational basis for evaluating alternate technologies based on how well they meet the criteria needed for your “answers.” A lot of technology seems to be designed to provide a real-time answer to a question that may need to be asked only once a month.

When planned and implemented wisely, IT can improve an organization’s efficiency and productivity. Recent studies are beginning to show a relationship between the implementation of IT and increased productivity. Examples like the following bear out this relationship:

• Implementing a computerized inventory-management system at Warren, Michigan–based Duramet Corporation — a manufacturer of powdered metal and now a part of the Cerametal Group — helped the company double sales over a three-year period without hiring a single new salesperson.
• By using IT to provide employees with real-time information about orders and scheduling that cuts through the traditional walls within the organization, M.A. Hanna, a manufacturer of polymers that merged with Geon Company to form PolyOne Corporation, reduced its working capital needs by a third to achieve the same measure of sales.

Although evidence is beginning to swing toward productivity gains, studies indicate that merely installing computers and other IT doesn’t automatically lead to gains in employee efficiency. As a business owner, you must take the time to improve your work processes before you automate them. If you don’t, office automation can actually lead to decreases in employee efficiency and productivity. Instead of the usual lousy results that you get from your manual system, you end up with something new: garbage at the speed of light. Don’t let your organization make the same mistake.

Taking steps to neutralize the negatives

Just as information technology can help a business, it can also hinder it. Consider a few examples of the negative side of IT:

• Widespread worker abuse of Internet access has reduced worker productivity.
• Hackers have sent periodic waves of computer viruses and malicious attacks through the business world, leaving billions of dollars of damage and lost productivity in their wake.
• Email messages can be unclear and confusing, forcing workers to waste time clarifying their intentions or covering themselves in case of problems.
• Employees are forced to wade through spam and junk email messages.
• The slick, animated, sound-laden, computer-based, full-color presentations so common today can take longer to prepare than the simple text and graphs that were prevalent a few years ago — especially if you’re not technologically savvy.

You have to take the bad with the good. But don’t take the bad lying down. You can maximize the positives of IT while minimizing the negatives:

• Stay current on the latest information innovations and news. You don’t need to become an expert on how to install a network server or configure your voice-mail system, but you do need to become conversant in the technology behind your business systems.
• Hire experts. Although you must have a general knowledge of IT, plan to hire experts to advise you in the design and implementation of critical IT-based systems.
• Manage by walking around. Make a habit of dropping in on employees — wherever they’re located — and observe how they use your organization’s IT. Solicit their feedback and suggestions for improvement. Research and implement changes as soon as you discover the need.

Know your business

Before you can design and implement IT in the most effective way, you have to completely understand how your business works. What work is being done? Who’s doing it? What do employees need to get their work done?

One way to know your business is to approach it as an outsider. Pretend you’re a customer and see how your company’s people and systems handle you. Do the same with your competitors to see how their people and systems handle you. What are the differences? What are the similarities? How can you improve your own organization using IT as a result of what you’ve discovered?

Create a technology-competitive advantage

Few business owners understand how technology can become a competitive advantage for their businesses. They may have vague notions of potential efficiency gains or increased productivity, but they’re clueless when dealing with specifics.

Information technology can create real and dramatic competitive advantages over other businesses in your markets, specifically by doing the following:

• Competing with large companies by marketing on a level playing field (the Internet)
• Helping to build ongoing, loyal relationships with customers
• Connecting with strategic partners to speed up vital processes, such as product development and manufacturing
• Linking with everyone in the company, as well as with necessary sources of information both inside and outside the organization
• Providing real-time information on pricing, products, and so forth to vendors, customers, and original equipment manufacturers (OEMs)

Now is the time to create advantages over your competition. Keep in mind that the winner isn’t the company that has the most data, but the company that manages that data best.

Develop a plan

If you’re serious about using IT as an edge, you must have a plan for its implementation. When it comes to the fast-changing area of technology, having a technology plan — a plan for acquiring and deploying IT — is a definite must. Many businesses buy bits and pieces of computer hardware, software, and other technology without considering the technology that they already have in place and without looking very far into the future. Then when they try to hook everything together, they’re surprised that their thrown-together system doesn’t work.

Business owners who take the time to develop and implement technology plans aren’t faced with this problem, and they aren’t forced to spend far more money and time fixing the problems with their systems.

Technology is no longer an optional expense; it’s a strategic investment that can help push your company ahead of the competition. And every strategic investment requires a plan. In their book eBusiness Technology Kit For Dummies (John Wiley & Sons, Inc.), Kathleen Allen and Jon Weisner recommend that you take the following steps in developing your technology plan:

1. Write down your organization’s core values.

   For example, core values might be to provide customers with the very best customer service possible, or to always act ethically and honestly.

2. Picture where you see your business ten years from now. Don’t limit yourself.

   Will you be in the same location or perhaps some new ones? What products and services will you offer, and to whom will you offer them? How many employees will you have? 1? 10? 50?

3. Set a major one-year goal for the company that is guided by your vision.

   This goal might be to create a system that tracks customer service complaints and gets them in front of you in real time.

4. List some strategies for achieving the goal.

   A strategy to achieve the preceding one-year goal might be to hire a consultant to develop a set of recommended solutions within three months.

5. Brainstorm some tactics that can help you achieve your strategies.

   Specific tactics to achieve the preceding strategy might include assigning responsibility for the project to a specific employee or vendor, and setting milestones and deadlines for completion and reporting of results.

6. Identify technologies that support your strategies and tactics.

   Provide some guidance by bounding the technologies to use in achieving the one-year goal, strategies, and tactics. For example, you may require that any new system work with existing systems or that the new system be web based.

Gather your thoughts — and your employees’ thoughts — and write them down. Create a concise document, perhaps no more than five to ten pages, that describes your IT strategies as simply and exactly as possible. After you create your plan, screen and select vendors that can help you implement your plan. Close out the process by monitoring performance and adjusting the plan as needed to meet the needs of your organization and employees, and to produce optimal performance.

Keep the following points in mind as you navigate the planning process:

• Don’t buy technology just because it’s the latest and greatest thing. Shopping for the latest whiz-bang gizmo is fun. Unfortunately, just because an item is new, has lots of flashing lights, and makes cool noises doesn’t mean it’s right for your business. It could be too big or too small, too fast or too slow, too expensive or too cheap. Or it might not even be compatible with the systems you’ve already got. Be sure that whatever technology you include in your plan makes sense for your business.
• Check in with your IT guru. Make sure your planned purchase is compatible with existing systems. You also want to find out whether the program you’re thinking of buying will be obsolete within a couple months.
• Plan for the right period of time. Different kinds of businesses require different planning horizons, the time periods covered by their plans. If you’re in a highly volatile market such as smartphone app development, your planning horizon may be only six months or so out. If you’re in a stable market such as plumbing or garage door repair, your planning horizon may extend three to five years into the future.
• Consider the benefits of outsourcing. You may be able to save significant amounts of money by outsourcing appropriate functions to further streamline systems and create efficiencies.
• Make the planning process a team effort. You’re not the only one who’s going to be impacted by all this new technology that you bring into your company. Make employees, customers, and vendors a part of your planning team. If you take time to involve them in the process and get their buy-in ahead of time, your technology rollout will go much more smoothly.

Get some help

If you’re a fan of technology and pretty knowledgeable in it, that’s great — you have a head start on the process. But if you’re not, get help from people who are experts in IT. Are any of your employees knowledgeable about IT? Can you hire a technician or technology consultant to fill in the gaps? Whatever you do, don’t try it alone. Even if you’re a full-fledged techno-geek, recruit others for your cause. Technology is changing incredibly fast and on every front. No one person can be an expert in every aspect of the IT necessary to run and grow your business.