From the July 1996 issue of Entrepreneur

It's virtually a rule in the computer business. Nearly every year (or more often, it seems), computer vendors come out with ever more powerful versions of their hardware and software-X386, 486, Pentium, P6; DOS, Windows 3.X, and Windows 95 . . . the list goes on.

The continual stream of upgrades is quite deliberate. After all, it's one of the most reliable ways for vendors to maintain their bottom lines. And it's easy for you, the end user, to get sucked in by the hype. Who hasn't seen a demo of the hottest new processor and felt the sudden need for speed? But determining what's a truly appropriate technology purchase should be based on more than the "I gotta have it" emotion.

What's at stake can be thousands of dollars for the new hardware and software, not to mention the time required to learn the system and retrain your employees. The latter can add a significant amount to the cost of the new system. So it's vital to ensure that any computer equipment you purchase is the right stuff for your business.

To keep your technology purchases on track-and keep yourself from being led astray by slick marketing-you need to formulate a technology plan that takes your business objectives and requirements into account. Chances are, when you started your business, you didn't even think about creating a technology plan-so few entrepreneurs do-so now's the time to do it. Here are the steps you'll need to take as you continue to upgrade your equipment:

1. Develop a technology mission statement. Before you start, you need to know what you want technology to help you accomplish from a business standpoint. For most companies, your business objectives will be something along the lines of "Make our company more efficient," "Improve customer service" or "Increase our competitive advantage."

In the grocery industry, for example, profit margins are razor-thin, and stores must improve profits by increasing volume. To boost sales, it helps to have a very clear picture of what your customers buy. The bar-code scanners used in most supermarkets today are an example of technology that's highly effective in giving stores the information they need to achieve their mission. Supermarkets can study exactly how product placement on the shelves affects sales, track the success of aisle displays, and even determine what products sell best in a particular store.

Because technology can provide a company with advantages that were never before possible, developing your business objectives is an ongoing process: New technology may give you ideas for new business objectives. For example, a medical claims processing company might want to reduce the time required for filing claims. New technologies, such as work-flow software which allows businesses to route documents electronically, would allow them to do so.

2. Decide which software you'll need. Once you determine your objectives, the software applications you plan to use should drive all your other technology decisions. Depending on your objectives, you may want to buy vertical market software, which is designed for your industry; hire a contract programmer to write a custom-made program; or simply use commercial, off-the-shelf software. Some factors to consider in making this decision:

Vertical market software is usually developed by people who know your industry well, and if the package has been around for awhile, it's likely to have benefited from the suggestions of previous users in your industry.

If you feel your software is what will give you a competitive advantage, you'll want to develop custom programs so you can get the jump on the competition.

Another option is to modify an existing commercial or vertical market package to meet your needs. This allows semicustomization at a lower price, especially if you only need a few changes.

3. Determine the type of hardware and operating system you'll need. Your choice of software applications will help narrow your selection of hardware and an operating system. Most software has quite specific hardware requirements-for example, it may run only on a Macintosh or a PC.

The software also determines the amount of memory you need. If you plan to run several Windows 95 applications, for instance, you'll need at least 16MB RAM.

In addition, some applications need more hard drive space than others. For example, presentation graphics, multimedia, sound, video and so on gobble up a lot of hard drive space. A single color photograph might require several megabytes of storage.

Make sure you take all your software requirements into account when choosing an operating system. While some packages run on more than one platform, if you're running several applications, you'll want to choose a system that runs them all.

In some cases, you might also need to consider the most common operating system used by your clients or vendors. The Macintosh, for instance, is still generally the system of choice for running desktop publishing programs. And if you're a consultant, you may want to use the same operating system as your clients so you can run the same applications and exchange files with them.

4. Decide whether you need a networking strategy. A multiuser application, such as a database or accounting program, might require an operating system that includes networking, such as UNIX or Windows NT. Or you might need to transfer files through a network operating system such as Novell's Netware.

5. Take stock of your current hardware and software. Before you purchase any hardware or software, it's important to know what you've got. You may need to make new investments, or you may be able to upgrade some of your existing systems.

For example, you might want to plug some more RAM and a larger hard drive into your 486 to run Windows 95. Or you might have to junk some of your equipment; your 386 will probably have to go if you really want to run Windows 95. Analyze your existing equipment carefully-some of your hardware, such as your laser printer, may be just fine.

6. Plan for disaster before it strikes. All sorts of things can go wrong with your system, and it's important to plan for these possibilities. You'll need a backup system-such as tape backup or optical storage-in case your system crashes.

A power protection strip is important in case there's a problem with the power to your system. Such problems include electrical spikes caused by old or faulty wiring, an electrical storm or a power blackout.

You should have a plan for natural disasters as well, such as fires, floods or earthquakes. To prevent problems, you should make a backup copy of your data and store it off site-ideally, every night.

Virus protection is another good idea. Now that so many people are cruising the Web and downloading files and programs, this protection is becoming increasingly important. The only way viruses get introduced is when you run infected files and programs on your machine-and these can easily come from unknown infected sources on the Web.

By taking all these factors into consideration, you can develop a comprehensive technology plan that will give you the greatest advantages from your computer technology-at the lowest cost.

Inside Job?

Hiring a consultant who is an expert in your industry is an excellent way to get help designing the best possible technology plan. And once your plan is in place, you need to decide whether you want someone to take care of your system in-house or whether to hire an outside consultant.

In most small businesses, an in-house person would need to be able to perform several jobs because there probably won't be enough work for a full-time computer trouble-shooter. A small company may want to hire a consultant if it's not lucky enough to have someone in-house who is already knowledgeable. Be aware, however, that computer trouble-shooting can become a real time-waster. Even if the head of your accounting department is also a technical whiz, you may not want her to spend four hours installing a new hard drive on the receptionist's computer.

As part of your technology plan, you may want to consider the type of computer skills administrative and managerial personnel already have so you can avoid unnecessary training expenses when hiring.

Contact Source

Cheryl J. Goldberg is a former editor of PC Magazine and has reported on the computer industryfor more than 13 years.Write to her in care of Entrepreneur, 2392 Morse Ave., Irvine, CA 92614. You can also reach her via CompuServe at 70641,3632 or via MCI Mail at 367-2295.