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Your IT Can (And Should) Be a Value Center, Not an Expense

Your IT Can (And Should) Be a Value Center, Not an Expense

For many years, IT has been stigmatized as an overhead expense for businesses. The costs have been challenging for organizations of all shapes and sizes. A lot of newer organizations might even be technically savvy and understand the value of technology, but focus on the costs without taking into account the value of properly managing and implementing that technology.

Let’s Take You Back to the Early Days of IT

Fewer and fewer business owners today started their businesses back in the late ‘70s and early ‘80s, so this story might not be totally relatable to everybody. Back then, a typical computer was much more expensive and far less capable. 

Look at the base model of the HP 3000, which in 1972 cost $95,000. In today’s money, with inflation, this computer would have cost you far more than half a million dollars. In 1986, if you were to buy the Compaq Portable II (a chunky 26 lb “portable” computer with a built-in screen), you would have spent $3,499 which translates to over $8k today. Fast forward to 1997, when a basic Dell Dimension XPS would cost $4k (which is around $6500 today). 

When a business invested in one of these ancient relics, it revolutionized their productivity. Computers made simple tasks easier and faster, even if there was a huge learning curve and massive upfront cost. If you are an older business owner who lived through this time, do you remember the excitement involved with implementing the first computers into your business? 

Today, a decent mid-range workstation for your standard office is usually less than a grand. The computers today are exponentially more capable and powerful compared to what they were even a decade ago. Desktop PCs tend to have a longer lifespan than they did back then, and your workforce tends to already know the basics when it comes to using a computer. 

So what happened to the excitement? What happened to feeling the value of IT? Is IT really just an expense? A necessary evil? The cost of doing business?

No. Absolutely not.

IT is Necessary, Because it’s so Valuable

We associate the standard office with computers, printers, and phones. I’m willing to wager that there aren’t any major insurance companies, law offices, manufacturers, logistics firms, or virtually any other businesses that haven’t gone digital. From a one-person plumber who manages their appointments and billing from a phone app, to a farm that uses smart equipment to automate work and optimize their yield, literally any business can compete better through technology.

If your business were to do away with its computers, how much more challenging would it be to get work done? Today, that’s a ridiculous thought experiment—most organizations just wouldn’t be able to compete effectively.

Of course, we know that we need computers to do business effectively. That initial burst of productivity that a business received in the early 80s when investing in their first computer is pretty clear, but now that we’re all collectively using computers, we have to measure that value a little differently.

How to Measure the Value of Your IT

When you look at major corporations like Amazon, Google, and Uber, there is a pretty clear indication that technology is driving the growth of these businesses. Amazon uses an incredibly advanced website, complex machine learning, and logistics software to provide a very simple user experience. Google has strived to build the best way to find information on the web by using vast amounts of information while allowing businesses to compete against one another for advertising. Uber took the traditional taxi service and rewrote the rules by making it easier for virtually anyone to use the service, both as a customer and as a gig worker.

The impact technology has on your businesses doesn’t necessarily have to be that dramatic for it to have value. For instance, you can utilize a CRM tool to streamline and automate your sales and marketing in a way that is exponentially better than using a Rolodex. You can invest in tools that simply make it easier for your employees to collaborate, or communicate with your customers, or reduce the number of steps in a process.

Value isn’t always directly measured with immediate dollars and cents either. It took Amazon years to make a profit, but all the while it was still considered a valuable company. Google launches countless expensive initiatives that don’t make the company a cent, and has continued to sustain free and open source products and services. You need to see the less tangible value in some technology—does it make the work easier? Can your workforce get a little more done in the day? Does it improve the relationship between your business and your customers? Does it make you more competitive?

Technology Isn’t Necessarily a Profit Center

We’ve chosen our words carefully here—we think IT should be a value center of your business. Sometimes the terms “value center” and “profit center” get thrown around in ways that blur the lines between them. If your IT were a profit center then you should be able to assume that most every dollar that goes into your IT results in a certain amount of a return on investment. A profit center is like buying burger patties for 25 cents and selling cheeseburgers for $2. A value center is investing in the training and equipment and secret sauce that makes your cheeseburgers among the best in the game. It’s more of a long-term investment. You still need to spend the money on the grill and the burger patties, but you are investing in constantly improving your processes and tools to fit alongside your organizational goals.

No, upgrading your Wireless Access Points isn’t going to directly result in more revenue, but it will make it easier for your staff to connect and collaborate in the conference room. Investing in a data backup and disaster recovery solution isn’t going to have an ROI, but it will absolutely save your business from massive losses if you need it.

Feeling Burnt Out by Technology that Isn’t Providing Value?

If IT feels like an expense or simply a “cost of doing business” for your organization, it’s likely that it is being implemented poorly, or the wrong solutions are being put in place. Every business is going to have different needs, goals, and pain points, and one size doesn’t fit every company, even within the same industry.

We love working with businesses that see the value in technology, and we hope that we can help you make that connection too. If you want to use IT to increase the value of your organization, start by setting up a simple consultation with Dresner Group. Call us at (410) 531-6727 to get started.

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