One size does not fit all: just because a technology solution works for one company, doesn't mean it's best for yours. the key is tailoring the tools to fit your needs - Business Technology

Black Enterprise, March, 2002 by Holly Aguirre

And as the company, which generated more than $500,000 in sales for 2001, continues to grow, Benton is getting prepared. "We are always upgrading our staff workstations (memory, hard drives, and monitors) to meet the demands of the software, in addition to adding more servers to meet our in-house storage and information-retrieval needs," she says. "We have several products in development, which have necessitated our recently purchasing [digital] cameras." Bottom line: "Our business is technology, so our investment in technology has a direct relationship with our business and revenue growth. Our business is completely dependent upon our capability to deliver."

The company's growth, however, is not without the occasional pain. At the outset, it was difficult to accommodate anticipated increases in staff. "One day we sat down and decided that we would purchase workstations for 10 staff members at a time when we only had four. However, this enabled us to incorporate new hires and contract staff much easier, in addition to saving us money on each workstation," he says.

WebCTel uses both outsourced and in-house staff, allowing it to respond quickly to short-term projects. Additionally, WebCTel has relationships with several community technology-training centers that identify the best and the brightest, and provide internship and job opportunities for those who show initiative. The company plans to expand its program into New York City and Chicago within the next two years, while continuing its tenet of frugality. "We believe that our current success in this economy is due to our focus on our customers needs and our flexibility in working within our clients budgets," Benton says.

THE BOTTOM LINE

Before upgrading your technology, it's important to keep in mind that the equipment you purchase will likely become obsolete or have a poor market value before the end of its life. Sometimes equipment is needed for a short time, and capital resources often need to be preserved. If borrowing to purchase is necessary, beware of high interest rates that must be paid back. It is also important to remember that the tax benefits resulting from equipment ownership are not applicable when leasing.

It's always a good idea to acquire only the necessary equipment. By nature, technological expenses represent long-term investments of capital. In most cases, recovering money spent acquiring tech equipment will span several years. So, unless you have unlimited financial resources, avoid tech purchases that will not bring a significant increase in profits, efficiency, or productivity.

For a major purchase, however, commit to performing a thorough cost-benefit analysis to determine whether operational costs will be fully recovered through expected increases in earnings or savings. Depending on your profit margin, a $1 savings in purchasing costs could have the same effect on your profitability as a $5 increase in sales. In other words, that $1 savings may give you an additional $1 to spend on promoting your business or developing your products and services.