How much should your startup spend on IT Systems? | digad solutions - manufacturing software, erp systems, sap business one

How much should your startup spend on IT Systems?

Everybody knows that startups have a balance of “for now” and “with a vision”, but what does that really mean when it comes to your technical infrastructure? Today’s tech community offers a number of affordable startup tools and eagerly entertain frugal budgets. The eye-opener is when early-stage expansion, typical of organic growth, and realized costs to scale are too much. Also in later stages, disruptive changes to the workforce present undue risk to existing operations. In our assessment, we entertain startup budgets of early business survival stages and navigate the options to expand profitably, while also minimizing disruption to employees, clients and business partners.

We examine the three elements that drive system costs and provide options to scale; Technical Infrastructure, Vendor Services and Application Accessibility can each be managed according to your budget and business needs. Many production and wholesale companies determine their system budgets according to the number of orders and incremental transactions in a given timeframe. Depending on production and distribution processes, the same amount of goods may be transacted three times as much for a manufacturing wholesaler as compared to a finished goods wholesaler. Ideally companies who have more processes maintain a higher margin on their goods however, the world isn’t always a simple equation like this. Setting up a correlated financial structure to support system expansion is unique to every enterprise. In our assessment, we explore process volume and the intrinsic value of your human capital as it relates to system expenditures, company growth and the ability to build an organization that has a competitive edge in today’s marketplace.

Servers. The first synergy that the application world has to offer is in the cloud! Cloud solutions have been a good fit for many however, not all clouds are created equally AND the best of them can be entirely unaffordable, particularly in the long term. We’re talking about really nice applications that pioneered true SaaS – SalesForce and a few named ERP products intended for the “small” businesses. Despite that these products were originally marketed for startup environments, they’re often deemed unaffordable for the emerging, medium-sized business that experience organic growth. Such browser-based (i.e. true SaaS) applications are typically priced at 2.5x of their traditional “install” software competitors and sabotage TCO (Total Cost of Ownership) models in years three, four and five. The case for no-fuss, worry-free infrastructure is worth the money if you can afford it. What you’re paying for is a state-of-the-art database, automated software upgrades and a guaranteed uptime in your SLA (Service Level Agreement). If you’re buying SaaS to save money, then you likely haven’t assessed a very long timeframe.

Increasingly, new brands, distributors and retailers are starting out with purchased licensing models and “hosted” cloud solutions. At a predetermined point of expansion, they’re able to take these applications in-house and maintain their own technical infrastructure.

Services. Systems are never one-and-done. We aim for a successful go-live, some hand-holding and user acceptance so the system before deeming the implementation a success. However, a good case study maintains an environment that’s a continual work in progress for employees, customers and trading partners to interact with ease, access accurate and timely information while contributing to real bottom-line P&L. A system blueprint defines incremental installments of technology and business process to meet plans for growth, unexpected change in regulations and to create additional sales channels for clients and partners to participate.

Although we’ve identified a case for commoditizing server and infrastructure through cloud innovation, your customer service requirements should go the opposite direction. In fact, picking the right service partner is the most critical component of your investment. A technology partner that shares your vision will maintain fresh ideas that enhance the existing system.

Licenses, Portals and Mobile Development. Society has experienced a burst in technology while providing affordable WiFi, smartphones, tablets and laptops to the everyday consumer. Early adaptors of the HTML5 platform (early being ~2011) were often luxury retailers who serve a discriminating 2 – 5% of global consumers. Ritz Carlton, being a good example, rolled out an app that allowed their clients to plan their visit in advance and continue to navigate the property while visiting. That early investment is a known success story, even though it had to have cost 20 or 30 times what it could be developed for today. As a result of HTML5 innovators, B2B systems are mobilizing their workforce to simplify day-to-day operations and provide more information in a format that is easily accessed.

In the apparel and footwear industry alone, we’re seeing a higher quality of eCommerce, in-store mobile POS and wholesale portal interfaces that’re dynamically maintained as a single system of unified operations. After all, if your consumers are transacting on mobile technology why not use it to interact with your employees and global supply chain?


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