VALUE OF “TECH”
Mike Rule – President/CEO CU-Tech, LLC.
I constantly have discussions with company principals who have difficulty in understanding the difference between tech “costs” and tech “value” as it relates to employees and companies. Some tell us that they recognize that technology can be expensive, but they have no guidelines to fully understand its value.
Here’s what we know, as it relates to cost of tech: Based on industry standards, we know that it can cost between $1500 and $2000 per year for basic technology needs per employee.
The value of increased efficiencies can be at least double those numbers. Yet, many companies want to go “on the cheap”, not understanding that they are increasing their actual costs and cutting their own own bottom-line profitability through inefficiency, instability and data loss.
Let’s suppose you have 50 employees, with an actual technology budget of $75,000-$100,000 a year for technology. This is just for basic hardware and software, network support. This does not include any other special technology needs like a CRM, specialty software, etc.
Here’s another example: an accounting firm with about 25 employees can spend upwards of $100,000 per year for technology. That's around $4000.00 per employee. This still does not include Internet costs or software costs. This is just what it takes to provide annual support for their business, the amount of software they use and any infrastructure that is required for support.
Because this type of company is so software intensive and uses a lot of specialty software, it requires substantial server resources and horsepower to do their accounting, the costs are naturally higher.
In our experience, smaller companies 5 to 10 employees tend to run around $1500 per employee while larger companies of between 25 and 100 employees, tend to run closer to 2000.00 per employee.
This makes a lot of sense, because it requires more infrastructure to support a larger network with a company with multiple locations.
We often have customers who elect to buy home user grade equipment. They visit the local mass merchandiser and buy a laptop, or a router to install in their business. They fail to understand why the equipment does not perform well, or why their network and/or Wi-Fi doesn't work well.
IMPORTANT: Home user hardware is NOT designed for all day use. The electronic components inside are cheaper because home use is generally only a small part of the day. Contrast that to business use where equipment runs ALL day, ALL week! Professional grade hardware is DESIGNED AND PRODUCED MADE for constant use, and to handle large amounts of data. The bottom line, if you go cheap on technology, technology will always be a frustration.
Here is the key to changing ‘cost’ to ‘value’…Let’s call it – “e-Valuation”.
e-Valuate the issue. Just tossing good money at a cost issue, in an attempt to remedy an ongoing situation, will not fix it.
Are you spending more than the value you believe you are or or not receiving? Perhaps an evaluation with industry professionals such as CU-Tech will help you and your company to lower costs and increase profitability and efficiencies.
Growing and emerging companies usually have more difficulties grasping a realistic idea of the real costs of technology, and how they can best convert those costs into margins.
Companies of 15 employees have different objectives than those of 50 or even 100 employees. And, it can be a struggle to come to terms with these changing objectives.
Locate a reputable tech firm that understands needs assessments and will work with you as you learn to control unwanted costs and can help you to realize more value, maximizing efficiency and profitability.
Michael J. Rule (b. 1966) earned the BS from Northern Michigan University and has received credit towards a Masters Degree from Spring Arbor University. An active entrepreneur, Mr. Rule is the owner and CEO of CU Tech, a multi-location technology company. His other business ventures include: founder and owner of WayPoint, a personal and business consulting firm; managing partner at CU Data Management, a company specializing in CRM management as well as data management and reporting; and managing partner of Iron Fist LLC. Mr. Rule is a respected community leader in rural Michigan, serving as President of the Cass City Chamber of Commerce (where he heads a subcommittee on business growth and development) and Co-Chair of the Cass City Downtown Development Authority and the Cass City Economic Development Group. He also is chariman of the Advisory Committee for the Computer Technology Management Program at the Tuscola Technology Center. Mr. Rule is the co-lyricist, lead guitarist and vocalist for the American rock band Iron Fist, an undertaking in which he also handles audio engineering and production duties.