How to trim tech costs

Some advice for small businesses on how to cut costs.
Written by Gregg Keizer, Contributor
Tech costs can chew up a small business budget faster than a great white shark chomps through seals and sea lions. One minute you're okay, the next you're a bloody mess.

According to a recent survey by Arthur Anderson, nearly 60 percent of small businesses say that "affording the cost" is their biggest challenge in dealing with information technology (IT).

Managing the price of staying connected, of handling technology in and outside the business, is a huge headache for small businesses. We need tech -- 88 percent of small business surveyed by Anderson have computers, nearly 40 percent have a network, and 85 percent use the Internet -- but we must often skimp on IT spending. How can a small business stay wired without wiping out its profits?

I have six savings strategies that may help. To keep the IT version of "Jaws" from biting a chunk out of your behind, read on.

Plan, and plan to spend
Whatever you think you'll spend on technology for your small business, plan to spend more. The fact is, costs almost always exceed expectations. That goes for Web design, network installation, training, and especially e-commerce construction. According to BtoB, an advertising newspaper that specializes in e-commerce, the median cost to produce a small business-style site has climbed over 46% since the fall of 1999.

Create an annual technology spending plan to account for both year-long maintenance and expected additions, such as a new Web site or new systems to replace aged computers. Make sure you line-item a contingency fund so that there's bucks in the budget for the inevitable crisis. And be generous in your numbers for the plan; although hardware and software costs continue to decline, most technology-related service providers -- Web designers, network consultants, and the like -- will charge more next year.

Planning means more than creating a budget. You also need to plan ahead. One way: start growing your own IT person, the next strategy in my lineup.

Create home-grown IT
One way to bring part of your technology support in-house without breaking the bank is to train an already-in-place employee to handle the basics. Someone in the company may already be the designated technology trouble-shooter, but only on a casual basis. Or you can poll your employees to find someone interested in the position.

Once you've identified someone, provide him or her technology training through outlets such as online education. SmartPlanet.com, formerly ZD University, has an extensive selection of online courses, from basic PC technologies to Windows 2000 support. Don't overlook local training opportunities, either. A nearby community college, for instance, probably has computer-related courses on its calendar. And if your business runs Windows, check out Microsoft's Training & Services page and the Microsoft Certified Professional Magazine Online site for resources and leads to upcoming training sessions in advanced topics such as Windows NT and Windows 2000.

Don't have any in-house candidates? Then head to the next section for some tips on looking outside the box (and business) for tech expertise.

Move 'em out
Outsourcing IT chores is not just smart economics: in today's tight labor market, finding technology expertise for a small business, and at a small business salary, is nearly impossible.

You can outsource the traditional way of course, by picking up the phone and calling a local firm. But the Internet, with its always-available access and its competitive prices, is a better place for many small businesses. Among smart outsourcing strategies, count:

Web hosting. Why exhaust your limited IT skills keeping a Web server up and running? You can host a site, even an e-commerce store, for dollars a day with your ISP, or if you're looking at big fat zero on the budget line, for free through a hosting portal such as Bigstep.com.

Document management and collaboration. Implementing a full-blown collaborative system so that far-flung employees and independent contractors can work together costs a pretty penny. If you need more than free intranet sites on the Web offer (see "Experiment for Free"), outsource the setup and maintenance with a company like NetDocuments.com.

Data backup. Running regular backups to tape or cartridge can be cumbersome and time-consuming. Online backup lets you literally outsource the job over the Net by scheduling automatic backups which transfer data to secure servers off-site. A slew of companies sell such services, but small businesses should check out Connected Online Backup and eVault.com. The former prices its unlimited backup at $15/month per machine, suitable for sole proprietors and small-small shops with just a computer or two. If your biz operates a network, you'll want a service like eVault that lets you backup your server to its system.

Flat out of money, but still want to try outsourcing? Then move to the next tip.

Experiment for free
Dabbling with technology before you know whether it'll work for your business, or is even necessary, can cost thousands. That's a lesson you can't afford.

Instead, use the Internet and the free tools now available there, to experiment in small ways with unfamiliar technology. This doesn't work in all cases, of course, but many tech solutions for small business appear in limited form on the Web. For instance:

Collaboration. Will your business benefit from collaboration tools that let groups work together, even if they're not all in the same place? You can try out this concept at sites such as Visto.com without laying down a dime.

Internet telephony. Although audio quality's still as poor as a Dustbowl family, phone calls over the Internet are going to put a dent in telecom companies' profits. Small business, which don't have the clout to negotiate the super-low rates from phone providers, will be one of the biggest beneficiaries. But will the process of Net telephony -- headsets for every computer, switching between Web phone and the real phone -- really work? You can test it out for yourself with free calling services like the one embedded in the new MSN Messenger 3.0 instant messenger program.

Intranets. A company-only network based on Web pages can boost productivity without a lot of worker training, since documents and information are retrieved with the already-familiar browser, not new software. The best way to test the waters is to use one of the free online intranets, like Intranets.com. The data's not held on a server you own, but you'll get a good idea of what an intranet can do for your business.

But rather than bring in more technology, how about bringing in less? That's the concept behind the next tech money-saving idea: selectively upgrading your hardware and software.

Avoid upgrades
Jumping on upgrades simply because they're the latest (nd allegedly the greatest thing to come along is a lose-lose idea. You lose the investment you've made (and probably amortized) in the older technology, and you lose time and financial resources implementing the upgrade. No wonder the Arthur Anderson survey shows that almost half of small businesses worry about managing upgrades and changes to software.

I'm not advocating sticking with over-the-hill hardware and ancient software, like that primordial 286 PC you buried in a back room or the dinosaur of WordPerfect for DOS you dumped on an employee, just to save a few dollars, but you must carefully analyze the value which any upgrade brings your business. Unless the new technology will pay off in significant improvements in your ability to deliver services (or products), or substantially boost uptime and productivity, steer clear.

This goes for everything from PCs and office applications, to e-mail and operating systems. But that last is particularly iffy, since an OS change generally has the greatest impact, whether greater hardware requirements or potential for compatibility problems with existing software.

Sometimes you just can't pass up an upgrade, or a new chunk of technology. That's why you need to sniff out the hidden costs of every change. Check out my last strategy for the scoop.

Sniff for hidden costs
You know the drill: you pay for the hardware and software, and think you're through dropping money on technology. Then reality hits:. You quickly discover that the actual physical goods are just the tip of the expense iceberg.

Recognize where hidden costs are likely, and teach yourself how to sniff them out. Web site design, for instance, can easily go over-budget if you plan one style of site, then months later discover that you really need an entirely different kind of site to stay competitive, or deliver on promises you've made to employees and customers. Implementing new software is another cash bleeder: training costs can easily outstrip the price of the program, as can reduced productivity as your workers learn how to handle their new tools.

Cutting-edge technology is in a hidden-cost world all its own, so enter cautiously. If you're breaking ground by, say, adding wireless Web access to your company, you'll spend more for the hardware and help getting it up and running now than if you wait a year or more.

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