How to Boost Profits Using IT

Is your business' IT up to date? While updating your systems can be expensive, it is also worth the money. According to IT Savvy: What Top Executives Must Know to Go from Pain to Gain, firms with above-average IT spending experience 3% more revenue growth than their industry counterparts with average or below-average IT spending.

Three percentage points may not sound like a lot, but when you also look at IT's ability to improve your business' processes and customer relationships, the importance of quality IT comes through. Here are a few tips for making your IT efforts pay off:

1. Know your budget and your needs. Because most small businesses have a limited IT budget, it's important to allocate resources wisely and only spend money on what you really need. For example, says Richard Hunter, co-author of the new book The Real Business of IT: How CIOs Create and Communicate Value, "For business intelligence, are they going to invest heavily in systems that allow them to gather and analyze market information? Or perhaps they might find that Google does the job very well for them." Knowing exactly what you need from your IT system before investing is imperative, and brings us to our next point. 

2. Figure out the areas in which you want to improve or differentiate your business, and figure out how IT can help you do that. Says Hunter's co-author George Westerman, "Take what you're good at and say, 'What can we do to increase our ability to make critical decisions?' Is that increasing, integrating data, or finding new data?" For example, let's say that your business runs different types of promotions throughout the year, and you want to figure out which promotions appeal to shoppers who live beyond 10 miles of your store in hopes of picking up more out of town business. You would want to purchase customer relationship management (CRM) software with that capability.

3. Bring in an IT expert. Westerman points out that often in a small business, the most critical resource is the owner's time. "Maybe there are some things that the owner's time and attention just should not be dwelling on. Hand IT off to someone who can do it better for you, usually at a cheaper price and more reliably," he says. Unless your business has the means and need for a full-time IT staff, you're better off outsourcing than handling IT in-house.

4. Make sure you're using all of your system's capabilities. Clearly communicate with your IT provider what you want to get from your system, and find out the best way to achieve it. Also, ask your IT provider for recommendations. You may be overlooking some of your system's resources that could benefit your business.

Too often, business owners think of IT as something they purchase that will automatically start working for their businesses. They'd be better off looking at it, as Hunter suggests, like an exercise machine, the value of which can only be measured by how a person uses it.