Small businesses can use IT to cut costs, stay one step ahead of the competition and avoid breaking the bank. Read our ten top tips on the best IT strategies for SMEs.
Buying products as a service rather than having to make big capital investments can give smaller businesses access...
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to enterprise solutions otherwise only available to larger companies. And there aren't many business applications that can't be run through the cloud these days.
MedicAnimal, an online vet supplier has saved around £10,000 a year by moving its servers into Rackspace's Cloud Servers. "We were growing 40% month-on-month when we first started. Eventually we found that investing in hardware was becoming an exercise in catching up rather than planning for growth," said Ivan Retzignac, founder and MD.
Instead of having to pay a huge amount up front, Retzignac opted for £1,500 a month contract, which also meant he didn't have to worry about additional housing and maintenance costs.
Retzignac doesn't believe expenditure on infrastructure is a good business investment. "It's not an asset worth putting into from a business point of view, as it depreciates so quickly. And you have to replace it regularly anyway. The idea of having to own something is a really primitive way of thinking. For me, having the technology physically there doesn't make me feel secure - it makes me more uneasy."
UC allows employees to send messages on one medium and receive the same communication on another, providing businesses with the flexibility to work remotely.
Robert May, managing director of IT support company Ramsac, said this allowed his company to carry on with business as usual when staff were stranded at home due to heavy snow earlier in the year. "The vast majority couldn't get in but when we logged on I could see that everyone was working. It assigns a number to phone extension system." Although the prices aren't dissimilar, it has meant the company hasn't lost money through staff downtime, he added.
Savings have also been made due to reduced cost of ownership and maintenance charges to the system. "There's also much more scalability, you often find that companies who have bought a phone system find it hard to easily expand. But [with UC] you can start with 20 people using it and easily move up to 200,000," said May.
Open source provides free software available under an open source licence, which gives users access to the source code. It allows companies to develop their own software through access to a shared community of knowledge. And according to a survey from Accenture, development is set to rise over the next 12 months.
Glen Conybeare, commercial director of software firm Cognitive Match, uses Pentaho's BI tool to analyse data for clients. This has saved the company time in having to develop a bespoke product from scratch, and the expense of buying something off the shelf if it had gone for a standard software package instead.
"With open source what you effectively have is a lot of free training from other users. All you need to do is go on to the community pages and ask if anyone has experienced the same problem. If the product has a large user base you will usually find someone. People are prepared to give up their time because they know that when someone has a problem they will help them," he said.
Pentaho's Analyser is part of the Pentaho BI Suite, Conybeare said he has paid less than £20,000 for Pentaho to provide initial service and support, with the equivalent product from a proprietary vendor in the region of a six figure sum, he said. "The key thing for us is that our clients expect a lot and don't want to pay a lot for it. So for us efficiency is important to what we do as we can then pass cost savings on to our customers."
Voice over IP delivers voice communications via the internet in place of a landline. Caroline Whittock, director at security company IdentiDot has cut her phone bills in half by moving to VoIP. Previously, the company had an office phone system that involved dialling '9' for an outside line, but then it moved to Cloud Net's VoIP service. "Before we spent around £280 a month online and making calls now it's something more like £120, which is a massive saving for a small business like us," she said.
Customer relationship management systems store customer information in a centralised database. CRM systems can make sales teams more efficient by speeding up leads and helping to retain customers by identifying spending habits and opportunity for upsell.
Ramsac's May installed Microsoft Dynamics CRM for around £30,000. "We wanted better management information and the ability to ease workflow. Now if we send out a quote the system will automate a follow up reminder to our staff. And if a customer purchases a product, 11 months later it will send a reminder to get in touch," he said.
Business intelligence enables companies to analyse data, such as sales revenue, by breaking it down by products or departments and provides historical, current, and predictive views of business operations.
James Walker, marketing director of underwear company Kiniki, used business intelligence to analyse customer data and cut advertising costs.
"We've been going for about 35 years and have a database of around 600,000 customers. In the past there was no way to find out what the buying patterns were. But now we can drill right down in to the data and even find out who buys blue underwear on Thursday, for example," he said.
Previously the company sent out fliers to its entire mailing list, which made the print runs very expensive. Now it uses the analytics to identify who is buying what and target specific audiences with campaigns. So far the company has saved £35,000 using the Safewire Arx BI system.
Walker said he deliberately took time to learn what they wanted from it when it was originally deployed, otherwise the company would have been drowning in information. "We realised we only needed it to profile customers, so we spent six months getting used to it. So far it's been a great tool," he said.
Cutting down on travel costs and dead time out of the office can be particularly useful if a company has clients spread across multiple locations. Video conferencing does exactly that by allowing companies to stay in touch with clients, while maintaining some of the personal feel of face-to-face encounters.
Chris Rouke, managing director of product testing company User Vision, is able to communicate with customers from all over the world with screen sharing. The costs of this technology are negligible with sites like Mikogo providing a free service, he said. "Rather than dashing around to meet clients we can do it remotely. We were testing a product with a Chinese client and if we weren't using this technology that particular project would have come to around £3,000 in travel costs."
This technology allows businesses to operate multiple servers from one piece of hardware. For companies looking to reduce the running costs of their technology, but not ready to get rid of their servers entirely, virtualisation could be the solution. And with 31% of mid market businesses planning to move to virtualisation, according to a survey from AMI, it's an area of investment that's set to increase.
May's Ramsac said it has allowed his company to slash costs. "Its best practice as it gives us more resilience, has lowered the cost of ownership and is more environmentally friendly as we are using less power and generating less heat," he said.
Printing and storage
Printing overheads can run into thousands of pounds for companies. But small businesses can save money by leasing machines or investing in copiers with double sided printing options and energy-saving functions.
Electronic storage can also result in substantial savings. David Green, managing director of Gowers chartered accountants, saved £25,000 in rental costs by moving his files online. "We bought a Kodak scanner which allowed the company to manage documents through windows," he said.
For Gowers the cost was minimal. "You can buy document management systems where the software is upgraded every year but at a big cost. Our scanner was around £600."
Enterprise resource planning is an integrated system companies use to manage business functions such as finances, materials, and human resources. Although its traditionally been a tool for larger organisations, it is now becoming increasingly popular in mid-sized companies.
There are plenty of packages available, from Sage, Infor, SAP - all of which can be fairly labour intensive to run. However, on-demand platforms such as NetSuite are making ERP more accessible to SMEs, said Bob Tarzey, analyst at Quocirca. "Here you pay a subscription per user for access to enterprise class technology which reduces the cost of entry for small organisations but allows access to all the benefits; inventory control, scheduling, costing," he said.
There are numerous systems and services to help companies save money. These examples show that by thinking differently about IT small businesses can make considerable savings and potentially boost business.