Is Your IT Investment Strategy ‘Penny wise, pound foolish’?
Nguyen Van Thien, Country General Manager, Lenovo Vietnam
Global economic uncertainty has caused consumer and business spending to be pulled back all over the world, with conservatism continuing to prevail, even in the face of indications of an upturn. In the current economic climate, few companies, and especially small and medium businesses (SMBs) have the luxury of not worrying about IT costs. With IT spending coming under closer scrutiny, most CIOs face the dilemma of presenting strategies for improving bottomlines through IT implementation but which don’t drain already limited budgets. Lenovo expects Return On Investment (ROI) and Total Cost of Ownership (TCO) to be top priorities heading into 2010.
IT spending across the region is predicted to slow down this year tracking the cautious sentiment of businesses across the board. In Malaysia, IDC predicts a contraction of between 1.8 and 3 per cent this year. This poses challenges particularly to the SMB sector, which is already operating with lean budgets but for whom, IT investments are critical to helping them achieve their business objectives. IT is acknowledged as a great enabler not only for helping businesses scale their operations but also, for enabling small businesses to extend their reach with limited resources. While Southeast Asian SMBs face similar challenges of limited budgets, not all are equal in how they face the downturn.
According to a recent Lenovo survey of SMBs across the ASEAN region, Indonesian, Thai and Vietnamese SMBs tend to rank upfront hardware cost as the most important factor when purchasing new IT equipment. Reliability, security and performance appear to take the back seat.
This means that many companies are turning a blind eye to the fact that two thirds of the actual hardware cost comes not from upfront purchasing costs, but from maintenance, services, downtime, and the number of IT staff it costs to maintain it.
Another key finding from this survey is that Vietnamese SMBs are price-conscious, with price and warranty being the top ranked factors to consider when purchasing a new PC (20% and 18% respectively). Like most of the ASEAN countries, SMBs in Vietnam prefer to spend USD 1,001-1,500 for a PC purchase, according to the survey.
One of the fastest-growing segments worldwide, the needs of SMBs are unique. Specifically, we expect that SMBs will be increasingly looking at services, such as extended warranties and notebook protection, to help extend the life of their existing fleet of hardware, as well as value-added software.
SMBs should adopt a proactive approach to managing their PCs and other IT assets. Small businesses in particular should adopt proactive PC management tools and utilities, which nearly every major PC manufacturer offers. Convenient software tools for backup and recovery, built-in services like online data backup and additional protection against crippling events that arise from the ordinary use of a notebook, for example, can help companies – SMBs and large enterprises alike – keep their IT maintenance costs to a minimum.
A unique challenge for SMBs is the lack of dedicated IT staff to set up and manage their IT needs. SMBs need out-of-the-box solutions that are specially designed for them, and solutions that make the computing experience productive and simple. Services are available that give SMB customers similar functionality that IT departments in larger companies enjoy, and SMBs would do well to look into these when shopping around for the best technology solutions. For example our notebooks come with combined software that helps with everything from data recovery to simplifying Internet connection, with a new optional service package featuring on-site warranty repair.
Also, as the first few days are important in getting a new technology up and running the way a business needs it to be, SMBs should consider a vendor with proven IT and warranty support to help you adapt to your new environment.
Another area that has substantial potential for cost-savings is energy efficiency. While going green may seem like a luxury when you’re worrying about keeping a balance sheet in the black, companies that adopt a more holistic approach to implementation see cost savings from making energy efficient choices in their technology.
Green IT makes business sense. Power consumption is invariably a major factor in post-purchase PC cost areas, such deployment and maintenance.
When purchasing a PC, look for the Energy Star 4.0 rating to identify energy efficient equipment which incorporates “green” PC criteria into the design. If left inactive, Energy Star qualified computers enter a low-power mode that only uses 5 watts.
Even simple steps like switching off monitors at night or using Windows power management or built-in software to adjust your energy settings can dramatically affect your bottom line. A survey has shown that adjusting energy settings during an 8.5 hour workday for 5 days a week can translate into 81% dollar savings.
Technology remains critical for companies as it is the engine for innovation and driving efficiency. History has shown that during such challenging times companies who are bold and courageous enough to take quick and decisive action are rewarded.
Marketing consulting company, Blugrapes, understands the importance of achieving ROI for their clients as well as their own business expenditure. Being cost-savvy, the company looks for premium IT solutions that are an investment and not merely an expense.
As a marketing consultancy, they needed a solution to generate consumer responses, track live responses, provide sophisticated analyses, manage consumer databases, develop improved strategies, and drive business growth for their clients.
Like most small businesses, Blugrapes was looking for a cost-effective technology capable of growing with the business. Above all, they needed a solution that provided mobility and flexibility. Their employees would be counting on their PCs to create appealing presentations, manage and collate volumes of data, and telecommute using mobile networking features.
Blugrapes chose Lenovo as their personal computer service provider for our PCs’ reliability and value for money. Business benefits can be hard to quantify but can have a positive impact on the company’s bottom line, such as reduced downtime for revenue-generating salespeople and improved end-user productivity. The switch to Lenovo Think products in fact led to at least a 50 per cent increase in productivity for Blugrapes.
In the face of harsh economic conditions, it’s easy to retreat to behaviour that includes adopting a conservative approach to spending, but this can sometimes mean strategies end up being penny wise, pound foolish. Prepare for a return to growth in the upcoming year and ensure your business is ready for the upturn. Do this by making investments now that helps you realize a healthy return on investment by lowering your total cost of ownership. After all, your IT implementation is there to help support a long-term business strategy, so why adopt a short-term approach to your technology investment?