February 1, 2018 Stewart Marshall

Your Spend On IT Is Not What It Costs

If only the true cost of IT was as simple to evaluate as my typical trip to the mall for the weekly shop.

Each of the things I buy, the bread, meat, milk, vegetables and so on has a price listed on the shelf, and when it comes to paying, I swipe/tap/insert my credit card and the appropriate amount of money is charged to my account. Once I’ve paid for the items, the transaction is complete and there are no additional costs to consider.

OK, for the pedants, there are the merchant fees charged for using the credit card, and late payment fees should I be a little lax, but the basic relationship between cost and spend is fairly well defined.

But when it comes to IT, the relationship between monies spent and the true cost is far from clear and it’s something SMEs need to understand, because it’s costing them a lot.

Not so WYSIWYG

I’ve written before about Total Cost of Ownership (TCO), and this is something that business clearly needs to get its head around when assessing its technological commitments. However, annual budgetary requirements aside, there are two other areas that need to be very carefully considered

  • Productivity
  • Customer Service

These may not add to the cost in terms of cold hard cash, but they risk being a significant drag on the operations of a business if the IT is below par.

Happiness

The old adage is that a happy worker is a productive worker, and while the jury is still undecided as to whether that’s an entirely accurate opinion, research certainly suggests that there is no smoke without fire. A study at Warwick University in 2014 concluded that a happy workforce is around 12% more productive.

Now, there are of course a great many factors that affect the health, well-being, motivation and productivity of a team, so it would be unreasonable to suggest that having great IT will in itself generate this gain, but let’s not discount the effect that poor IT practices have on a work force.

Guess Again

Let’s start with training. How often is it that a new product or feature is introduced without adequate training or support? Manuals and online help may be out of date or training sessions may have occurred weeks before the go live date ensuring that just about everything has been forgotten. The result is that employees make mistakes through ignorance, take longer to complete tasks and not surprisingly, often feel utterly unappreciated.

And it’s this last one that’s the real kicker. Unhappy staff leave their jobs and go elsewhere, which is great news for the recruitment industry but an expensive exercise for the employer who has to pay to get a new staff member who then requires training.

Junkers

And then there’s hardware. Why is it so many businesses are slow to update their PCs? They pay their staff hundreds of thousands of dollars over a 3 year period, and then baulk at spending just a little bit more to ensure they have an up to date, fast, efficient tool to use. Similarly, we might point a finger at network performance, server capabilities or even a slow internet connection as factors that ensure that otherwise capable staff are hamstrung by the technology that is supposed to enrich their work life.

Chefs don’t use old blunt knives, so why should computer users be required to tolerate machines that are slow, poorly maintained and unreliable.

If In Doubt, Reboot

The old support adage may still ring true, but how much does it cost in terms of lost productivity. A couple of minutes here or there doesn’t really matter, but what if it’s daily…or hourly?

How much time is lost because something wasn’t saved and has to be reentered?

How much time is spent being productive, and how much is spent fumbling around?

How much time is spent helping other staff members with software and hardware issues?

Believe it or not, employees may be spending as much as 30-45 minutes every week looking over someone’s shoulder. That’s one week a year!

Sell, Sell, Sell

It’s not just staff that suffer as a result of the Information Technology practices of a business. Customers and prospects alike can be unduly affected and the potential costs here stretch far beyond any productivity losses.

If we consider the company website, it’s easy to understand that a business might lose sales if the site is slow, isn’t intuitive, doesn’t work well on a small screen device, or information is hard to find. These all make perfect sense to us.

But what about the software used by staff in customer fronting roles? How off putting is it to hear them apologise for the delay because the computer is slow or they can’t find the information required. American Express suggests that 66% of customers spend around 13% more with a company if it provides excellent service. More importantly, 55% have decided not to complete a transaction because of poor service.

Business would then be well advised to ensure staff are adequately equipped and that systems perform as required.

Big Fish

And what of the information made available to B2B customers?

I heard recently of a manufacturer failing to notify a retailer of an issue. When the electronic order was received, the automated response simply noted the details of the order but gave no indication that 75% had actually been placed on back order for delivery in several weeks’ time.

Suffice to say, the client had to appease many customers for his failure to deliver and not surprisingly, the manufacturer was berated for its failure to provide adequate information, and the account was very nearly lost.

What made this particular episode so disturbing was that the reason for the lack of availability was that the internal systems failed to provide accurate historical sales data resulting in poor forecasting and inappropriate production and stock levels.

But while this one account was saved, how many more have simply stopped ordering because of such poor service?

Customer Lifetime Value

Businesses don’t want to find new customers and make a few dollars from them today. Oh no. They want to keep them for years and make many, many dollars tomorrow as well, so once a new account is acquired, it’s enormously important that it is retained.

Clearly this is not solely the responsibility of IT, but it is a significant contributor to a successful client retention strategy. IT systems should mean that you can communicate efficiently and effectively, and that staff are in a position to focus on providing a superior customer experience.

But if we get it wrong, we risk both a higher rate of staff turnover and increased customer churn, and neither of those make for good business.


Today’s Top Takeaway

Stay on top of your IT. A dollar invested today will make you many, many more tomorrow


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