But the single biggest way they hurt themselves is through trying to go it alone, instead of working with a skilled technology advisor.
"The technology advisor should take on the trusted role that puts them in the same class with a CPA or an attorney," said Joshua Feinberg, author of the book What Your Computer Consultant Doesn't Want You to Know, published in 2002 by SmallBizTechTalk Press. "You want to be developing the long-term relationship in order to use that consultant as an extension of your business, as a sort of virtual CIO. The cost of that half-hour or fifteen-minute conversation [before making a technology purchase] is going to save you a lot of money in the long run."
Q: Give us the big picture. How do small businesses spend too much on IT?
A: One of the more obvious places is when they make buying decisions without IT guidance. They may see a scanner in the Sunday circular for $19 and it looks like a great deal. They run down and buy it, they try to install it, and then they are on the phone for half a day with tech support, and eventually they end up rebuilding their entire system.
There also are more basic things where small businesses spend more than they have to. If you buy a new desktop system, for instance, you can usually get a fabulous deal by getting things like the Ethernet card or the internal modem bundled with that system at the time of purchase, whereas if you buy them separately later, you will pay more for the hardware, you will pay for someone to install it, and you will take a risk as to whether it is compatible with your existing components.
Q: Basic hardware advice: How to save money?
A: Don't become your PC vendor's science experiment. Whenever a new processor, motherboard, CD burner comes out, there is always a certain risk that comes with being an early adopter. Small businesses should never be that early adopter. Don't let your PC vendor turn you into a guinea pig. Let the Fortune 1000 be on the bleeding edge, then wait a good three to six months for the bugs to get fixed.
Q: And on the software side?
A: Get a business version of Microsoft Windows bundled with your new PC purchase. Over the past few years Microsoft has had two different versions of Windows: The home and the office versions. Right now there is the choice between Windows XP Home and Windows XP Professional. What we have found over the years is that small businesses that invest in a business-class operating system have dramatically more reliable systems, with dramatically lower support costs in the long run. So it will cost a little bit more up front, but it will dramatically cut down on your support costs over the years.
Q: Microsoft obviously pervades the small business market. Can you offer any other Microsoft-related advice for saving money?
A: Absolutely. It is real important for small businesses to update and maintain their Microsoft Windows and Microsoft Office software, which you can do automatically and for free through various Microsoft Web sites (such as windowsupdate.Microsoft.com). Microsoft is constantly releasing patches to keep software functioning properly and securely. If you don't do it and you start to have data loss and business interruptions, it can get to be a very expensive proposition.
Q: Then there is the software that does not come from the big-name vendors, especially the proprietary, industry-specific packages that are sold to small businesses. Are there particular cost risks associated with these?
A: A lot of small companies wind up with problems when they buy industry specific-software. They may go to a tradeshow and see a piece of software that seems just great. They hear that making a $5,000 or $10,000 investment is going to change their business. But they may not look at the technical underpinnings. So I suggest you subject the proposed purchase of any industry-specific software to a rigorous technical and business evaluation.
Q: How do you do that, as a small business owner?
A: That means going to the software vendor and asking for a complete working copy not a working demo but the real software so that your technical consultant can evaluate that software. You want to get it in the hands of someone who can test it for compatibility with your network. The big picture idea is to have someone pretty technical look at the product to test for obsolete technology and generally do some technical tire-kicking before you make that big investment. We have seen small businesses waste so much money on these industry-specific applications ... it is just very, very painful.
Q: That brings us to the question of IT consultants. Dilbert has taught us that these are expensive operators whose advice is of dubious merit. Yet you advocate strongly that small businesses get their own IT consultants. How do you make the best use of such a consultant, in order to make this a cost-saver instead of just one more expense?
A: Small businesses face a unique technical challenge. They need to find solutions that work for them, but they have no formal IT department and they have a very limited budget. What we have found over the years is that there is almost always some type of informational computer person at most small businesses, the "internal guru," the one everybody instinctively yells for when the fax machine jams or the Internet connection goes down.
I believe you need to nurture this internal guru. They are there every day, they are the first-responder, and it is really important that you find a consultant who is willing to work with that internal guru. Any time the consultant comes into the office, that internal guru should be spending time with that person and most consultants will welcome that opportunity, because they don't want to be doing the grunt work. They don't want to get a call when the tool bar disappears, and if they are the ones who get that call, you are going to spend $50 for something that was relatively trivial and easy. So it is real important to make sure the internal guru has time to meet with the consultant. That will save you money over the long run.
Q: Where does being the guru stop, and being the consultant begin?
A: The internal guru should be working on relatively routine things. But if it is something risky, if we are talking about a one-time project like setting up a firewall or configuring a router, it would not be efficient at all for an internal guru to get highly proficient in this task that they are only going to have to do once.
Q: If consultants are needed, as you say, then how do you pick one?
A: One of the biggest questions you want to ask is whether they are a part-time or full-time consultant. The last thing you want is to have an emergency and then find out that your consultant has a day job 50 miles away.
Most consultants are going to be generalists, so if you really feel that you need an industry-specific expert, you need to be clear about that.
Another question the small business has to answer is Do you want a solo practitioner or a slightly larger firm? Most small businesses want to know that the person who is coming out to them, and that the same person is going to be coming month after month. Otherwise there is too much of a learning curve and you don't want to be paying for that. So that is something to consider.
Also as it is really important that the consultant is tuned into working with a small businesses that are your size, so that they propose things that are appropriate to your needs. A lot of times if you hire someone whose experience is with enterprise-class accounts, so you may ask them for an opinion and they will tell you that your computer is not working because you need a $50,000 eight-processor server. They just are not thinking along the lines of what is best for the small business and what it needs.