I have fielded many questions in the past few months by clients, prospects, and the business community in general about cutting costs in their business, specifically IT costs. As a business owner myself I fully understand this. The one thing we must keep in mind is being careful not to cut muscle while in the process of trimming the fat. So how do we know what is fat versus muscle?
The key is “The Line” (thank you Kent Erickson! http://www.pointivity.com)
Draw a line on a piece of paper. Now think of all of the systems, applications, etc you use in your business. If it is strategic to your business write it above the line. If not, put the item below the line.
Once you identify what is below the line do everything you can to drive down costs and focus on efficiencies (within reason and without hurting your business!) Typically items in this category include things such as IT support, hardware costs, routers, switches, etc. While these items are essential to your business they are not strategic (more to come on this topic in a future post).
Once you identify the items that are above the line you know what is strategic to your business. Continue to invest, improve, and expand on these items as they help fuel growth, value, and competitive advantage. Items such as Digital Marketing, CRM Systems, Line of Business Applications, and Data Mining fall into this category.
The final step is to reallocate funds that may be budgeted for items that are not strategic to your business. By taking these funds and investing them into Digital Marketing, for instance, you should see a far greater return than if you had invested them elsewhere. For more information feel free to post a comment or email me at stephen@jngstech.com.
Posted under Save Money
This post was written by Stephen Jennings on January 15, 2009
