1. Focus on increased productivity and faster decision-making
Before assessing profitability, keep in mind that technology can boost your company's performance in two ways:
- It can increase productivity (e.g., more efficient equipment that is better suited to your needs).
- It can improve the systems you use to manage production, resources and employees.
Real-time access to more accurate, relevant information can have a major impact on your ability to readjust as needed. These management systems also allow you to create service offerings much faster. A realistic breakdown of the costs involved in the investment is essential when it comes to assessing its profitability.
2. First and foremost, understand costs
To calculate the return on investment (ROI), you need to measure the benefit of the investment versus the cost. This may seem simple enough, but it's not always easy to effectively assess the cost of an investment.
Obviously, costs include the purchase of new equipment or software. But you should also consider the following:
- What will it cost your company if you don't make this investment?
- What are the issues involved in adopting the new technology, keeping in mind any necessary culture shift?
- What training costs are involved?
- What losses may stem from the investment (e.g., loss of productivity during installation/implementation)?
A realistic breakdown of the costs involved in the investment is essential when it comes to assessing its profitability. But there are other factors to consider.
3. What's your strategy?
You won't be able to assess your ROI unless you have a clear idea of where you're heading. In other words, you need to consider any IT investment from a long-term perspective. It might be a good strategy to invest in new technology or facilities that are not immediately profitable if they set the scene for future growth or expansion. That is why you need to have a clear vision for your company so you can assess the viability and scale of a potential investment.
A short-sighted approach could cause you to miss out on opportunities or miscalculate your ROI.
4. Seek out the advice of experts to make an informed decision
Investing in technology to increase productivity and management systems is a complex process. To make an informed decision, be sure to consult:
- the managers at your company, especially those who handle finances
- your banker and your accountant
- an expert on the technology you're interested in
It can also be helpful to seek the advice of a business owner who already uses the technology.
5. A powerful springboard for your company
A well-planned long-term investment made at the right time can be a powerful springboard for your company. But remember—investing in technology rarely involves an immediate return on your investment. So, what's your strategy?
