Software savvy: Why boosting your business's technology can be a smart recession strategy
Grim economic news haunts the headlines week after week. With corporate profits lagging and unemployment rising, my knee-jerk instinct as a business owner is to conserve cash at all costs. My “panic brain” wants to hold off on all spending.
But my other brain — the “strategy brain” — sees ways to gain competitive advantage during the toughest economic downturns. As a business software consultant, I know that not all capital expenditures are the same. Instead of an across-the-board spending freeze, we need to focus on smarter spending — investing in tools that improve financial stability and competitiveness.
This recession hit faster and dropped steeper than recent downturns, so it’s already apparent that some companies will not survive. That’s a wake-up call to the rest of us to get lean, productive and efficient. Companies that do will gain a competitive advantage and be ready to expand market share when other firms fail.
If your company hasn’t updated business management software in a long time, your legacy technology could be sapping productivity and dragging down your bottom line. The right business software, paired appropriately with your company’s needs, can eliminate some expenses and boost productivity. While you may hesitate to plan purchases in a recession, there are numerous reasons why companies who invest now will get more bang for their buck:
Your company may get a better deal on software and services
While your competitors hunker down, you can take advantage of the downturn to negotiate a better deal for the software and services you need. If you will need implementation assistance, your company will enjoy much more attention and responsiveness from consultants than you might in busier times.
You can take advantage of special tax savings
The current stimulus bill contains increased Section 179 limits, as well as bonus depreciation for business capital expenditures, including computer software. Consult your tax advisor to see how these provisions can benefit your organization if you purchase business software in 2009.
As the recession eases, your company is using better technology than competitors
While other companies in your industry struggle to update their systems and take advantage of new technologies, your company will already be a lean, mean, competitive machine when the economy turns around. That’s because you invested in the right technology — and became proficient in it — while you had the proper time to devote to the project.
How to update wisely
During a slow economy, you might be tempted to let technical support and maintenance services for your software lapse. This could be a mistake, especially if it means the usefulness and value of software you already invested in decreases.
A support plan lets you focus more on your business, and less on your software. Your vendor’s support specialists can help you streamline workflow, perfect a report or ensure compliance to regulatory entities.
When you receive automatic updates, you enable your company to quickly take advantage of the newest features. You should install new versions of your software as they are released, so that when economic conditions improve, your IT team is not overwhelmed with software updates.
Likewise, now is the perfect time to attend software training to become more proficient in your company’s technology. If your company has reduced its work force, you will probably need to send some members of your team to cross-training on systems they may not have used before. Advanced features in your current software systems may be able to save additional time and increase personal productivity.
If your software vendor holds an annual customer conference, consider attending. In just a few days, you can network with other companies your size and in your industry, attend product training and get technical support.
Finally, if something is missing from your current software system, consider hiring a consultant to fix it. Consultants may have more time right now to take on smaller projects, such as creating a custom report or customizing a data entry screen.
Your competitors may head for the hills and quit investing in their businesses until the recession is over. They will lose valuable market share. If you exercise strategy and prudence in capital expenditures that improve productivity, efficiency and accuracy in your business, you will emerge from troubled times as a leader of the next business cycle.
Just ask Proctor & Gamble or IBM — both companies were founded during deep recessions.
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