The Technology Tipping Point

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Accounting Software. There is nothing less sexy to a business owner than buying new accounting software. Invoicing, order entry, and accounts payable management simply does not make our hearts go thumpety-thump. I'd rather buy season tickets to the Mets. Unfortunately these things need to be done from time to time. What's the tipping point for new accounting software? First, don't listen to the accounting software vendors. Don't buy into the jazzy screens and pretty colors. There are just two rationales to cut a check. One is when your current system is slow, unsupported, not giving you the information you need, or becoming unreliable. The other is when you can absolutely, positively prove that a new system will reduce your costs by making your people more productive and (most important) you can prove these savings with a high level of confidence.

Green Technology. Will there ever be a tipping point for green technology? "Going Green" alleviates some of the guilt that we feel when we don't separate our paper and plastic at home (and you know you don't). But will it ever make economic sense? Some technology, like servers and cooling equipment, professes to be more environmentally friendly and energy-saving. If that's the case, and the reduction in energy expenses by purchasing a replacement piece of equipment is really significant enough to outweigh the cost of that equipment sometime in the next 47 years then by all means…go for it! My opinion is that we'll be more likely to see Jennifer Aniston and Angelina Jolie take a spa weekend together. For a small business, the only rational tipping point for "going green" is if you're part of an overall corporate effort to show the world how you're saving the world, especially if there are paying customers who buy your products because they think you're trying to save the world.

Software as a Service (SaaS). Oh boy, here we go. I've written before about SaaS, so I'll first say what I said previously: SAAS solutions are great for some companies, but may not be great for all companies. The entire world will not be using SaaS technology anytime soon. However, a big part of the business community will be relying on SaaS technology to help get things done. The guys I know who go for SaaS do so because it makes their people more productive. They can get data to and from their people faster, no matter where they are. They don't have an internal IT infrastructure and find it less expensive to rent the software rather than set it up themselves. They find that maintaining a system in-house is more expensive than the monthly fees they must pay for a rented system. These are tipping points for any potential buyer. Do the math to see if this makes sense.

Web 2.0 Technology. Many times I get asked by clients if they should be investing in "Web 2.0" technology. When I ask them if they know what this means, most give me that blank, vacant look. Web 2.0 stuff is just a set of programming tools that helps geeks bring together data from different places on the web. Social community sites like Facebook and MySpace (NWS) merge all sorts of widgets and gadgets so you can see maps, clocks, instant messages, newsfeeds, and other nonsense all at once. It's best to have suffered with ADD to truly understand how this all works. For the rest of us, there's no such thing as "investing in Web 2.0 technology". What we all want to make sure of is that the latest applications we're buying are capable of supporting this stuff just in case we want to make use of it. Tipping point? There is none.

Buying technology is no tougher than buying that piece of equipment for your shop floor. The tipping point for any major acquisition is to make sure, plainly and clearly, that there's a measurable return on investment. Otherwise, invest somewhere else. I hear there are plenty of cheap stocks on the market right now.

Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsize businesses. Marks is the author of four best-selling small business books and writes the popular "Penny Pincher's Almanac" syndicated column. He frequently speaks to business groups on penny-pinching topics. More penny-pinching advice from Marks can be found at www.quickerbetterwiser.com.