The Technology Tipping Point

How to judge when a small business owner needs to buy new tech gear or software

By Gene Marks

Earlier this year I discovered a little sippy cup stuffed under one of the backseats of our family minivan. It had some kind of black cottage cheese in it. My kids stopped using sippy cups at around the age of 6. They're now going into high school. The sippy cup was the final straw. I had hit the Honda (HMC) Odyssey tipping point. It was time for a new car.

We're all faced with moments in our lives where the decision to do something or take action is made crystal-clear. Small business owners face the same decision points when buying technology. Some guys I know can purchase a six-figure piece of equipment for their factory without blinking an eye, but agonize over a $5,000 software purchase for years. When exactly is the right time to spend the money? Is there a tipping point?

There is, and there's a way to anticipate when you'll hit it. Here are a few key technologies that business owners will be faced with buying or replacing during the next few years. We'll be hearing a lot of hype and sales pitches from technology people telling us what to do. Don't be distracted by the yammering. Just pay attention to your tipping point.

That New Server. Do you really need to drop a few grand on another server this year? Can't it wait until next year? Isn't there some "cloud" to put it on or something? Greg, a friend of mine who runs a job shop, has had the same server for seven years. He's had the same box for so long that even Microsoft has given up marketing to him. Why? Because his business has had no major change to its software systems. So if it isn't broke, no need to fix. But even Greg has to bite the bullet at some point. And that point will be when he upgrades his accounting software (see below). New software is a tipping point for a new server. Other tipping points are even more obvious. Like hearing funny noises. That's another tipping point. Finally, if you're the kind of person who doesn't like to deal with things breaking, then avoid Greg's situation. Replacing your server every three years or so will expose you less to IT geeks playing plumber with your most valuable data.

Customer Relationship Management (CRM) Software. What's the tipping point for buying CRM software? This is not a gray issue; it's black and white. It's strictly mathematical. You buy CRM software because you can mathematically prove that it will help you get more sales. How? By making sure that all quotes are being pursued to their very end. By making sure customers who haven't heard from you in the past six months are hearing from you. By making sure prospects who may in the future think about buying something you sell are hearing from you frequently enough to make them come to you first. By making sure you don't look like a dope when customers call because you don't know who communicated with them last and what problems they may be having. Think of all of all these situations you've encountered in the past three years, calculate how much revenue you've lost, and then compare that against the cost of a CRM system—and voilà! You have your answer. Here's another tipping point: You suddenly discover that the airline industry provides better customer service than your company. That's enough to make anyone take action.

Virtualization. We hear this term, and many of us still aren't getting our arms around what it all means. It's actually pretty simple. With virtualization, a business owner can take all of the stuff running on 10 servers and make it run on just one or two servers. Less space. Less energy. Less management time. Now we get it! Except that virtualization is still slow catching on in the small business universe (I mean those of us with less than a few servers in our offices). So here's how to know you're at the tipping point. By consolidating your servers down to just one or two, will the savings mentioned above outweigh the cost of the new servers and the propeller-head guy you'll need to set all of this up, including migrating all of your existing systems? If yes, then great. If no, then ignore virtualization for now, and spend your money somewhere else.