Written by Larry Hack.
It strikes me every year how the IT budget, capital and services, is either ignored by companies, or underestimated. Further, the successful operation of an ERP/Accounting system on an up to date IT infrastructure will add hugely to the value of your company, however, this too is underestimated. Why is this?
If one Googles “IT Budget for companies” there are many tools to be had to assist in planning your budget. There are also sites which recommend how much spending there should be on IT. It is suggested that an average of 5.2% of annual revenue should be spent in this area. Some say between 4% and 6%. I read a white paper put out by American STRUCTUREPOINT Inc. which states:
“Deciding on a budget requires more than just flinging numbers onto a spreadsheet. Today, businesses are confused and uncertain as to what an appropriate IT budget is, and they don’t have a clear vision for how these funds should be spent”
In my experience many clients wait to the last minute to replace hardware. Then the upgrade ERP decision often rests on the hardware decision as old ERP is usually not supported on current technology.
Some of the driving factors to stay current with your ERP and update your servers/IT infrastructure every 3 to 4 years include the following:
ERP: Annual license fees are paid which ensures access to continuously improving software not only in new functionality but also in the areas of performance and optimization. The old saying “If it ain’t broke let’s not touch it” is less true these days as I would suggest that there is more benefit to be gained by upgrading your software. Take advantage of reviewing your business processes and retraining you staff. Usually with staff turnover it is common to find that newer staff has had minimal exposure to how to use the software properly nor have any understanding of its capabilities, never having been shown properly. Often there is frustration and lack of adoption of the software purely because of lack of knowledge. This leads to staff using “side systems” such as Excel and others and this in itself creates inefficiency and reporting is done outside of the ERP system with resulting duplication of effort and various “versions of the truth”.
IT side: Security, Security, Security. (Internet threats, access by which members of staff to which data, remote access by offices in other locations local or worldwide. Working from home? A huge topic these days! This requires careful setup and maintenance. What about backups? More disk space is needed as so much data is collected. We do not want to purge history as we want to be able to analyze this more and more. Then we need multiple servers because we want TEST companies, upgrade companies and so on. Server virtualizations, dual processors, SQL databases and Microsoft operating systems upgrades. This is a lot to comprehend! Then we have new “Cloud” and “Mobility” solutions to factor in together with needs you may have for bar-coding solutions from an IT standpoint.
American STRUCTUREPOINT urges one to consider IT as an investment into the operations and flow of communications, rather than a cost of doing business. With proper budgeting, your company’s systems can be deployed in a way that enhances your ability to respond to varying changes in the competitive business environment. At least pause and re-consider your approach to this topic as we move forward into 2016. We at Phoenix Systems are of the same view and would like to help you with this process, if you would allow us.