Why buy?
First, answer that question, buyers and sellers agree
by Beth Ewen Upsize: Technology is expensive. What are some general approaches that you as small-business owners take when you think about making those purchases?
Sheila Ronning, Sharp UpSwing: I would figure out how many applications we can use it for. The Web sites that we have with Webb Lake Software, we have four different ones, and we need to have them all go through one company and one contact person, so it’s one-stop shopping.
Jeremy Sogn, Oakwood Insurance Agency: When I first came into the agency, I wanted to buy all the latest technology, but now I’ve grown more conservative. My father owns the agency, and we need a new phone system, $15,000. My father wants to get it, I want to wait.
With technology, things update and outdate so fast. This cell phone, for example. This was $400 when I got it two years ago. Last week I got this for free, with rebates.
Reyne Branchaud-Linsk, Dakota Woodlands: Nonprofits are usually looking for something for free. I’ve come to realize how valuable time is. Now I look at how we can save time.
It used to be every 286 computer that would be dropped at our door, we’re like, ‘Yay, yay, yay.’ Colleagues would say something is better than nothing. But now we look at it as, what’s going to save us money and time?
For example, everybody would call us about homelessness, for every school project, every research group. Time is money. So we put a page on the Web site with facts about homelessness.
Upsize: What about you sellers, the technology service providers? What do you tell small-business owners when purchasing technology?
Alan Bengtson, Lancet Software: I don’t think you want to live on the bleeding edge of technology.
Tom Niccum, Lancet Software: It’s understanding why you’re getting this. Ask the simple question: Why are we doing this?
When we work with bigger clients, like Best Buy and SuperValu, they have to develop a business case, showing return on investment. They have to do a spreadsheet. Small-business owners should do this, too. Then you also have some definition of success.
Michael Nolette, ShareTech: I come from the infrastructure side. You have viruses, spam. Those are things happening on the bleeding edge from the negative side, and you have to protect against those. Hardware, you don’t buy the latest thing. Software, the first version often has problems.
Niccum: Always wait for service pack one.
Nolette: When it comes to antivirus, antispyware, you want that stuff. We always say, you gotta swap your tape, you gotta swap your tape, and we had two companies this past year who didn’t and had all their data wiped out.
Sogn: One of my office partners had his data wiped out. Fortunately he’s not like me, he has paper copies of everything.
Nolette: At your company, Oakwood, you provided that level of security for your agents. It needs to be centralized, and it needs to be automated.
Upsize: Tami, what’s your advice to customers, about buying technology?
Tami Coalwell, Webb Lake Software: I have clients come and say, ‘I want the latest bells and whistles.’ And I always say why? If you get the latest, then the average customer isn’t able to navigate. I have to talk them out of it.
Like when Flash came out, everybody said, we’ve got to have Flash. But people don’t have the ability to read that.
Niccum: People overestimate how quickly technology will be adopted.
Coalwell: Do a technology plan. People do a marketing plan, a financial plan. They need a technology plan. It can be very simple, on a sheet of paper, but write it down: This is how often I’ll update my applications, this is when I’ll get this equipment.
Niccum: The vast majority of people use less than 1 percent of the features. You look at Microsoft Word. You could do a Ph.D. thesis with that, a novel, a letter, mail merge. Most people use it for the letter. The vast majority of people haven’t needed anything new in Microsoft Word.
Coalwell: The other problem is, if you can’t read attachments because the software versions are different.
Branchaud-Linsk: This happens to us all the time. We’ll get a resume attached and we can’t open it.
Ronning: I like to focus on the things that are time-consuming. Like our confirmation letters for the exhibitors at our trade shows: Why don’t we have that online? It’s painful. We’re finally moving toward that.
Coalwell: Take your technology person to lunch. Make them your partner.
Niccum: As vendors we have customers at various stages. We have the early adopters all the way through. Lancet as a company is extremely frugal. We’re just getting down to getting rid of a couple of servers. We’ll squeeze the last bit of life out of it.
Upsize: The point was made that large companies have to make a business case for making technology purchases, and a couple of people here recommended that for small businesses, too. To the small-business customers here: Do you do that at your companies?
Branchaud-Linsk: There are not a lot of layers of accountability at my business, like there is at a Best Buy. I don’t feel there’s a need for something formal. But when I sit down with Alan at Lancet and talk this through, it’s the same process. It just sounds more troublesome when you think of what the big companies are required to do.
I think it goes to the point of going to your vendor. I don’t have to dig deep for this information. My board isn’t going to challenge me on that. In one way it could be too easy to make a decision.
Ronning: Try to get $15,000 out of my pocket before I’ve analyzed it. It’s not going to happen. I look at how can I decrease labor?
Upsize: Have any of you made any mistakes when buying technology?
Bengtson: In my personal life I wish I would have gotten 80 hours of Tivo instead of 40 [laughs].
Ronning: We bought a business card scanner, and it takes more time correcting that information once it’s scanned.
Branchaud-Linsk: The number of printers for us, when you can buy a copier that prints. You can get a printer for $100 but then how much is the toner?
Upsize: You mentioned pain in your business. Is that a good place to focus your buying of technology, where the pain is?
Bengtson: The first place to look is where the pain is. Then you add things from there.
Niccum: I’d caution against focusing on it too much, because opportunities don’t cause pain. Pain is often about spending money, and you can drive costs down to zero, in the end. But going after opportunities, like reaching new markets, is boundless.
Nolette: Clients will often say, ‘We’re thinking of doing this. How can we do it?’ Their pain is on the side of, just taking care of some necessary things. Some of those pains have to be looked at as risk management. That’s how some technology purchases have to be looked at, too.
Let’s say you have one server. Do you want to back it up? Yes, that’s a no-brainer. Do you want to have a second server? In that case you look at, if one crashed and no one could access e-mail for four hours, how much does that hurt your business? You have to analyze the risk end of it.
Upsize: Michael, and then the other service providers here, tell me about a recent sale you’ve made that has focused on a customer reaching a new opportunity.
Nolette: We had a client who was managing systems themselves. For them they could cut costs by outsourcing that to us. He looks at it as an opportunity to get out of a co-location facility and reduced their costs in half.
Another client is looking at whether or not they should buy their own exchange server, with 15 users, or whether we should do that for them. Those are simple, because you can look at the cost difference.
Coalwell: An existing customer would come back every month for changes to their Web site. I went to them and said, can I incorporate this into our eWebSplash product, so they can do the updates themselves. It ties them to us, as well, because we’re looking out for their bottom line.
Niccum: We did a major Web site for a client, and now they want to build a portal so they could interact with customers. We proposed this portal system, showing them how it could be implemented.
Upsize: How about you buyers. What purchases have you made recently in technology, and how is it working out for you?
Ronning: We just purchased an online service to back up our server every day. I’m embarrassed to say this in front of this group, but I was burning CDs to back up everything.
Coalwell: At least you were doing it, though!
Ronning: I said, I’m going to blow my head off if I have to keep doing this. This online service is something like $10 to $15 a month. There was an employee who spent six hours a month burning CDs before.
Branchaud-Linsk: Our Web site is certainly a purchase that has been fantastic for us. Not only is Macromedia so simple to use, but also we use it! Before if we had a change, like a board member left, I’d wait to update it until I had more to do.
Also, this Lancetcard is the greatest thing I’ve heard of, the prepaid card for Web services that Lancet sells. It goes to Tami’s point of planning for your business. I can decide, what do I think I should put money into, and I can purchase what I think I’ll need and use it a little at a time.
Sogn: We did a memory upgrade a while back. We’re also bouncing between this new phone system and FaxAdvantage, but we’ll probably wait and do them together. When we talk about pain, I don’t feel the pain is great enough.
Our company is 18 years old. Any time our sales go down or our customer service goes down because of technology, we’ll buy something. But the BandAid needed has to be pretty big.
Upsize: Often it’s employees who are pressuring the owners to get the latest and greatest technology. How do you handle that?
Coalwell: I say thank you very much, I’ll take your suggestion under advisement. And it goes into the drawer. It’s like those old suggestion boxes.
Niccum: The suggestion box that you connect right to the shredder [laughs]. We’ve always had a culture of frugality.
Upsize: How do you create a culture of frugality?
Coalwell: The owners have to be frugal. You can’t walk in with the latest thing and expect your employees not to want it.
Ronning: Or at least you have to hide it [laughs].
Niccum: Having survived the year 2001 really helps.
Bengtson: When I joined Lancet I was given a book on how to manage my money.
Niccum: We do give that book, because if people can get control of their own money they’ll be more productive, less hassled.
When we started the company the first four people had to build their own desks. I still use one of those. We haven’t changed. Living it is what creates the culture.
Branchaud-Linsk: At my business it’s about their mission. People don’t come to you and say they want a thousand-dollar phone.
Upsize: What are some common mistakes, or conversely, best practices, when it comes to buying technology?
Sogn: It’s not good to have 15 million different kinds of computers. It’s better to streamline. It keeps coming up for us, because our agents are independent business owners, and some want to reinvent the wheel. Sticking to one thing makes a big difference.
Nolette: Standardization is very important. Enterprise environments do that, and small businesses should do that, too. Don’t buy white boxes, or generic products, but buy from tier one suppliers, or brand names. You want to buy from reputable companies, of course, but also because of the standard parts. In hardware, over three years, something will go wrong.
Coalwell: The warranty will be good if you do that, too.
Nolette: There are three costs behind technology: hardware, which is your smallest expense. Software, which is pretty big. And then support, which is larger than those two put together. I was writing down my recommendations, and I included: do maintenance; buy business-class products; standardize. Why? To keep support costs down, for all three of them.
Niccum: Buy business-class products. We have learned over time the business-class laptops are far more rugged.
Nolette: What we’re talking about is very traditional computing. When we talk about centralized computing, that’s where technology is going. There’s a lot of cost savings to be had. It’s not going to work for everyone, but some can find big savings through this.
Upsize: What about some more common mistakes or best practices you see?
Branchaud-Linsk: Part of the decision-making process is looking at where is the expertise. The source used to be different than it is now, for me. My accounting software, for example. We used to use what the employee used, but now I’ll ask my accountant. I’ve learned that it’s easier to train someone on a new software, but one that integrates with my accountant.
Coalwell: There’s a mistake at this table, which I see all the time, where one business card doesn’t have the company’s Web address on it. People say all the time, why isn’t my Web site successful? Put the Web address everywhere, on your business cards, letterhead, the company door.
Niccum: Another mistake in that realm is people don’t measure. We experimented with postcards, white papers, free things, to drive people to our Web site, and we measure the results. Then we can tell our clients about the results of our experiments.
Branchaud-Linsk: The evaluation happens in lots of different ways. I look forward to getting the report that tells everything about my Web hits.
Niccum: Follow-up is the best practice. Evaluate what you’re buying, and what you’re doing.
Branchaud-Linsk: We were having an interesting conversation. We had our phone system, and if you called you got an automated voice saying to press one for this or two for that. We started discussing, what is it in our phone system that makes it so we can’t answer the phone? And it was the portability, and for $50 we could get a portable handset.
So we went back to the mission. We don’t want someone who is homeless to call and get this automated voice. My point is, it was still about the planning process. It was a bigger issue of back to the mission, not just about the technology itself.
[contact] Alan Bengtson and Tom Niccum, Lancet Software Development Inc: 952.230.7360; t.niccum@lancet-software.com; alan@lancet-software.com; www.lancet-software.com. Reyne Branchaud-Linsk, Dakota Woodlands: 651.456.9110; reyne@dakotawoodlands.org; www.dakotawoodlands.org. Tamara Coalwell, Webb Lake Software & Internet Services: 651.762.3700, ext. 21; tami@webblake.net; www.webblake.net. Michael Nolette, ShareTech: 651.389.4340; mnolette@sharetech.org; www.sharetech.org. Sheila Ronning, Sharp UpSwing: 952.400.0198; sronning@sharpupswing.com; www.sharpupswing.com. Jeremy Sogn, Oakwood Insurance Agency Inc.: 763.862.4800; jsogn@oakwoodinsurance.com; www.oakwoodinsurance.com
