14 Oct Classifying Technology Spend
In today’s digital world, one can safely assume that technology permeates your business. While some would view that statement as bold without knowing the nuances of your business, it likely isn’t inaccurate. It’s true for the vast majority of companies in today’s society, regardless of industry or specialty.
Since technology is almost guaranteed to permeate your business, you are likely making major investments in the tech arena. And that leaves you with a challenge: how do you classify it, manage it, and, most of all, capitalize on it?
Now, your company may be well-equipped to answer that question in areas critical to your industry. Classifying your spending in areas like product development and enhancement, sales pipeline management, and the magic intersection of operational excellence and efficiency might be fairly straightforward.
But, for the majority of non-tech industry businesses, when it comes to their technology investments, the answer to that question may be a bit cloudy.
Classifying Technology Spend
Whenever we want to classify aspects of a company, we look to our friends in the accounting profession. Their approach and mindset help us to sort and value nearly every segment of our business.
Consider this: do you consider the technology investment of your company to be an asset/income or a liability/expense item?
If you said it’s all asset/income, you are probably a technology firm. In contrast, if you said it’s all liability/expense, technology isn’t likely to be a core part of your operation, and you may be better offer investing in other areas.
However, if you said a little bit of each, you are the majority. You need technology to support your operations and grow, but it isn’t your sole concern and can be a major line item on your budget.
Providing the right technology to your employees and customers comes with a price tag; it’s that simple. But it’s an expense you have to take on to remain competitive. However, determining exactly what is an isn’t appropriate can be challenging, particularly if you haven’t examined the issue closely before.
The precise level of investment that’s appropriate for your business is unique to you, but there are general guidelines that can give you indications regarding whether you are on target.
The Risk of Under-investing in Technology
First, it’s important to understand that ruthlessly minimizing your technology spending typically isn’t ideal. When you maintain that mindset, you might be saving in the short-term, but that can come with long-term consequences.
Pitfalls to this approach include a high probability of failure. You increase your odds of having outdated systems or insufficient resources, hindering productivity and putting you behind the competition. Additionally, you may be more likely to fall victim to malicious attacks from bad actors who are out to compromise your information and that of your customers.
There can be a variety of red flags that suggest your company has fallen into this trap. For example, if your “tech” employees spend 10 percent or less of their time working with technology, you might be under-invested. Similarly, if you have the mentality that hardware or software should only be updated when something is “broken,” or only have the manpower to manage updates when a problem occurs, that is also a sign of under-investing.
Right-Sizing Your Technology Spend
Achieving an appropriate level of technology investment doesn’t inherently mean investing heavily everywhere. Instead, it means committing a significant amount of funds in areas that provide your business with a distinct advantage while ensuring all of your necessary basics are suitably covered.
For example, can you leverage technology that you develop to improve your inventory management or logistics operation to be better than your competition? Can you deploy technology you develop to put valuable real-time information in the hands of your customers directly, providing them what they need when they need it? These are the kinds of questions that can give you insights regarding your tech investments, ensuring you are focusing on areas that provide you with clear competitive benefits.
Additionally, this can lead to other critical questions, including one that has been around technology circles for as long as there have been technology circles: build or buy? When it comes to business-specific applications, that conversation is very meaningful and applies to companies of almost any size and industry. Can you develop or customize a product such that the investment you make will be overshadowed by the revenue the unique aspects of the product will produce? If so, you’ve created value and transformed that technology into an asset.
Finally, to right-size your technology spend, you might need to adjust your mentality when it comes to infrastructure. Typically, unless you are selling technology infrastructure, or have multiple thousands of employees, the value proposition for technology infrastructure isn’t necessarily strong.
Robust Solutions for Optimizing Your Infrastructure Investment
Protection against infrastructure obsolescence caused by age, capacity increases, and updates based on technology evolution are often expensive. Couple that with the need for robust security mechanism to safeguard against the always increasing threat of cyber-attacks, and it’s even more costly.
At TetherView, we understand your need for robust, reliable solutions that are designed to meet your unique needs while offering you cutting-edge security. We make offering such solutions the core of our business, all with flat-rate, transparent pricing that can help you optimize your technology spend without sacrificing on the quality of your systems. With our solutions, you can ensure that your company’s investments in technology are assets instead of liabilities.