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IT as an Investment, Not a Cost Center, for Small Businesses

Jun 14, 2022
‎ |‎ Axxys Technologies
‎ |‎ Blog, IT Support

Technology has always been a major part of doing business. In the past, it was largely used for data processing and automating repetitive tasks. But as technology has evolved, so too has its role in business. Today, IT is a critical part of almost every aspect of running a successful business, from marketing and sales to customer service and human resources.

In the past, businesses may have thought of IT as a necessary evil – something that was required to keep the lights on, but not an area that offered much in the way of tangible benefits or ROI. However, this is no longer the case. As more and more businesses have come to rely on technology, those who view IT as a cost center are at a severe disadvantage.

In order to compete in today’s market, businesses need to understand that IT is an investment – one that can offer a real return if managed correctly. When used effectively, IT can help businesses to improve customer satisfaction, speed up product delivery, and increase employee productivity. It can also help to reduce operational costs and improve communications.

Viewing IT as an Investment

When we think of investments, we typically think of stocks, bonds, and real estate. But businesses also invest in their people, processes, and yes – technology. To determine if something is an investment, we must first understand what an investment is. An investment has three key characteristics:

  1. It requires an upfront cost (the price you pay for the stock, the down payment on a rental property, etc.)
  2. It has the potential to generate income or grow in value over time
  3. It involves some level of risk

Viewed through this lens, it’s easy to see how IT can be an investment. Technology investments usually have a large upfront cost and, if done right, can generate revenue or grow in value over time. For example, a business might invest in a new CRM system that has the potential to increase sales and customer loyalty. Or a company might purchase new software that automates manual processes and saves employees time.

Of course, all investments come with some degree of risk. When deciding if an IT investment is right for your business, you should consider the potential downside as well as the upside. For example, if you’re considering a new e-commerce platform, what are the risks of implementing it? Will it be compatible with your existing systems? What happens if it doesn’t work as planned?

Weighing the risks and rewards of an investment is crucial to making a sound decision.

Why IT is so often viewed as a cost

One reason IT is often seen as a cost center instead of an investment is that it’s difficult to measure the return on investment (ROI). With some investments, such as stocks or real estate, the ROI is easy to calculate. But with IT, the benefits are often more indirect and can take longer to materialize. For example, a new CRM system might not result in an immediate increase in sales. It could take months or even years to see the full ROI.

This is the key reason that IT is so often viewed as a cost.  Calculating the true return on investment is more ephemeral than calculating the ROI on a stock or bond, for example.

When used strategically, IT can be a powerful tool for driving business growth. But to realize its full potential, businesses need to change the way they think about IT. Instead of viewing it as a cost center, they should see it as an investment that has the potential to generate new revenue and drive business growth. To do this, business owners need to understand that calculating ROI is materially different.

Measuring Return on IT Investments

There are a number of ways to measure the ROI of IT investments, but one of the most important is to focus on the business benefits that they deliver. For example, if a new piece of software helps your employees to work more efficiently, that’s a direct benefit to your bottom line. If a new CRM system helps you to win more business, that’s an indirect benefit that can be harder to quantify but is no less important.

While a dollar-to-dollar ROI calculation is always desirable, it doesn’t take any math at all to recognize that happier customers, more effective employees, and optimized processes greatly benefit the company.

Ultimately, the goal should be to use IT in a way that directly benefits your business and drives tangible results. With this in mind, here are five ways that small businesses can get a real return on their IT investment:

  1. Use IT to improve customer service
  2. Use IT to speed up product delivery
  3. Use IT to increase employee productivity
  4. Use IT to reduce operational costs
  5. Use IT to improve communications

By understanding the role that IT can play in driving business success, small businesses can unlock a world of potential and accelerate their growth. When used correctly, IT is an investment that can deliver a real return – so it’s time to start viewing it as such.

Examples of technology as a growth driver

To better understand how IT can be a growth driver, let’s look at a few examples.

Happier employees

When employees are happy, they’re more productive. And when they’re more productive, your business is more successful. Great IT can help create a happy and productive workforce in several ways. For example, by providing employees with the tools they need to do their jobs effectively and efficiently. Or by giving them access to training and development resources that help them improve their skills.

Improved customer support

Good customer service is essential for any business. But it can be difficult to provide great customer service without the right IT infrastructure in place. For example, a robust CRM system can help you keep track of customer interactions and resolve issues more quickly. Or a live chat tool can give customers the ability to get answers to their questions in real time.

Faster product delivery

In today’s fast-paced world, businesses need to be able to move quickly. IT can help you do this by automating manual processes and freeing up employees’ time. For example, if you’re selling physical products, you can use an order management system to automate the fulfillment process. Or if you’re delivering a service, you can use project management software to streamline the delivery process.

Great IT can Transform your Business

As you can see, IT is much more than a “necessary evil.” When used strategically, it can be a powerful tool for driving business growth. If you’re not currently viewing IT as an investment, it’s time to change the way you think about it. By doing so, you can unlock new business potential and accelerate your company’s growth.

If you are curious to understand how your IT investments can start paying off in meaningful ways, contact our team at Axxys Technologies. We work with small and midsized businesses from Dallas to Fort Worth and everywhere in between to drive great business outcomes through technology. From a new CRM or ERP system to security assessments and training, we can help optimize your IT investments for maximum return.  It’s time to stop viewing IT as a sunk cost and start viewing it as jet fuel for your business operations. Contact Axxys Technologies today.

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