Reduce Your Expenses
One of the most common and most basic strategy for applying technology investments is by reducing expenses. Here's what that means, and why it's not a perfect solution for long-term returns. Russell Mickler, computer consultant in Portland, Oregon and Vancouver WA, walks you through the problem.
IT Strategy: Reducing Expenses
Okay, so a couple of days ago, I wrote about the effects automation should have on a business. More investment in technology yielded greater automation, reduced or diminished the impact of labor, increased productivity, systemized the business to transform it from a job and into an asset, and increased profitability.
And in that discussion, I promised you that I'd discuss three strategies that business can use to apply their technology investments. One of the three strategies, Reducing Expenses, is the easiest to understand and the most obvious.
Greater investments in technology automates the business, improves productivity and efficiency, and reduces operating expenses. Tech investments allow you to do more with less. That, in turn, improves profitability.
It's a Great, Basic Strategy ...
Reducing Expenses is the easiest, most basic strategy for applying IT expenditures. It's the first place we look to when trying to measure a Return on Investment (ROI) associated with technology investments.
In calculating an ROI for this kind of strategy, you'd approach it in four steps:
- Measure the cost of doing nothing - add up how much it terms of labor and materials to do the existing business process.
- Measure the time involved for doing the existing business process.
- Apply the technology investment.
- Now compare the new cost of labor and materials, and, the time it takes to get the business process done.
- Divide the dollar amount saved against the amount spent on the technology investment.
Example:
Let's say that a business process took $6,500 and 16 hours in labor and materials and time. In investigating the business process, it's determined that $2,000 in technology spend can help the employees work smarter. After deployment, new measurements are taken. The new process is $3,900 and takes just 11 hours to perform. That's a $2,600 savings from $2,000 worth of investment, or a 130-percent ROI. Plus - and a big bonus here - we're saving five hours. Gosh, more time! What's that worth?
... But You Can't Reduce to Zero
Pretty cool, huh? Well, it's cool for the first couple of go-arounds anyway. Eventually, we'll run up against the limits of what current technology can offer us. We can only reduce expenses so far. We can't make the business process operate at $0.00 dollars and at zero expenses taking zero time. That's impossible!
It's the Law of Diminishing Returns at play - over time, we can only reduce expenses just a little bit more, just a little closer to zero (but not actually reaching zero), until there's a huge shift or change in technology - which means every incremental investment returns less and less time and money.
That makes Reducing Expenses a common, basic strategy but an insufficient play in the long-term. It has to be paired with other techniques to obtain even higher returns from technology spending. Next time, we'll talk about another approach: Containing Expenses.
R
Big Company Encryption Makes Small Business Vulnerable
Information security doesn't have to be a big-dollar, low-return activity. Practical approaches can help the small business implement best practices to reduce their vulnerability and make them less of a target - comparatively - to larger businesses with bigger budgets.
Companies all across the web are responding to a multitude of security threats by encrypting the web. Energy and resources are being expended to do the better thing and make their systems as difficult as possible to compromise. This is a great thing.
However, the small business usually doesn't have the resources or know-how to tackle these kinds of complex technology problems. The little guys don't know about encryption, Open SSL vulnerabilities, two-factor identification, or risk assessment. That makes small business substantially more vulnerable to attack and compromise: their IT systems are easier to hit and exploit by comparison.
I'm spending a great deal of time this quarter talking security with my clients. I'm making a slew of recommendations to improve their defensive posture. It's the right thing to do. It'll help provide a reasonable deterrent and make them less vulnerable as low-hanging fruit. If you have concerns about the state of information security in your small business, give me a call. I'd be happy to talk about practical, low-cost approaches to address these problems.
Thanks!
R
HP Officejet 8600 Falls Off Network
Odd problem with HP OfficeJet 8600 falling off the network. The problem turned out to be the 5ghz radio signal interfering with the 2.4ghz signal, and causing the problem. Here's the solution.
The other day I was helping a client with an HP Officejet 8600. The printer was connecting fine to the wireless network with either a dynamic or static IP assignment. I could ping it, browse to it, and even change settings through the web console. A-okay.
Then, after just two or three minutes, it completely disconnected from the network. I couldn't ping it or browse to it. The system state LED still read that it was connected and nothing had changed in the unit's config.
Crazy-making.
It took me some time to narrow down the possibilities. What it turned out to be is the 5ghz wireless signal coming from the wireless router. The 8600 uses a 2.4ghz wireless frequency. When I disabled the radio on the router for the 5ghz network, and exclusively offered the 2.4ghz network, and cycled the power on the router, the machine stayed on the network.
Of course, this action would prevent the higher-speed network from working. Bummer-drag. But it did get the unit online and satisfy the client. I guess that's what matters.
R