Do you have up to 200 employees but don’t have a CIO or CTO? Don’t be left behind!
Being up to date on technology requires constant learning from textbooks and from peers.
During my conversations with small business owners I was shocked to discover the staggering number of small to medium size businesses without technical guidance. Studies show that if the company has up to 200 employees, they should be employing a Chief Information Officer (CIO) and a Technical Director and, if the company has over 200 employees, they should have the CIO and a Chief Technology Officer (CTO).
Why should small businesses have both though?
- IT spending is on an exponential rise and if you don’t know where to spend the money (CIO), or how to take advantage of the new technologies available (CTO), you will lose market share to those around you who are investing in this type of guidance.
- You either will not spend the money and have a disadvantage, or you will spend on technology without the guidance of where to spend it in order to get the maximum return on that investment.
And these are not small funds about which we are talking. In 2015, according to Microsoft, SMB increased spending by 50% and in 2017, small to medium size businesses (SMB) spent $568B on technology. The data tells us that IT spending is on the rise.
According to a recent 4Q 2018 survey, the average midsize SMB will invest $10,000 to $50,000 a year on technology. This is not the entire IT budget, but a portion of the budget devoted to new technology or bringing the company current to today’s OnDemand culture.
The average small business spends 6.9% of their revenue on IT. Midsized businesses spend 4.1%. Large companies spend 3.2% of their revenue. Looking at it per employee, SMB spends, on average, $13,100 per employee where large businesses spend $11,580 per employee.
Who leads this effort does matter.
Companies that invest the most in IT are not always the most successful. Recent studies show it is not how much you spend so much as it is where you spend it and how far behind the tech curve you are compared to your competitors.
The most successful companies are the ones with a smart plan for the next couple of years with their investment.
When it comes to SMB, large spending for quick returns is not the successful way to push technological changes for the company. When possible, it is wiser to avoid large costly projects that demand the quick return on investment and instead build toward the future with a plan that has actionable goals throughout.
When deciding on the plan, look to see if your company is lagging the industry on the customer “wants” and “norms”.
- Are you sure you are in tune with your customers to know their unique requirements?
- Are you reading the 8 ball correctly when creating your plan?
Building technology to improve the interaction with the clients is a great way to have high retention.
Looking at trends is another way to know where to invest. The largest portion of the average IT budget goes towards infrastructure. This includes laptops, desktops, servers, etc. The second largest area of focus is industry-specific software. This is the area of highest priority according to SMB owners say they need to improve the most on technology. This area includes integrated applications and platforms, cyber and data security, and modernizing software.
A current focus for IT spending is on customer service. Recently there has been a large investment for SMB owners to improve the technology for the customer service department.
This includes technology to improve the renewal of existing customer accounts, identify new customer segments and markets, and decrease the customer touch points with the customers currently being done by the sales reps and replace the human contact with automated emails, artificial intelligence (AI) chat bots on websites, etc.
Interested to learn more about where to invest? Check out our Disruptive Technology blog!
I am often asked how to plan for the unknown. This question is true for the future too but the unknown is typically referring to what we as executives for the company do not know. Companies without a strategic plan may find a plan that works, but statistically speaking, a strategic outlook for the next one to five years will yield higher returns at lower investment dollars.