Why technology is an asset?
It all started with a gentleman named Adam Smith. He was a philosopher and economist during 17th century who is today famous for his book ‘The Wealth of Nations’ which forms the building block of modern economics. His great observation, which revolutionized the world of business, was very simple indeed. He stated that “the only real purpose of a fixed asset is to enhance the productive powers of labor.” This fact is simple yet important and this is exactly why technology is such a sought after asset today.
Even though information technology is an intangible asset, it significantly increases the productivity, control and overall performance of an organization. The big companies were quick to learn this and implemented expensive technology solutions which made them more competitive in the marketplace. But with improvements in technology, IT is becoming more and more cost-effective and the smaller firms are following suit too.
To demonstrate why technology is an asset, let’s look at a few simple examples as to how it helps your organization become more competent than its competitors.
- IT systems can help you create business processes intelligently. By explicitly stating down your business process and assigning accountability, you can ensure that the tasks are assigned to the right people at a right time and they have the relevant information to accomplish those tasks. A simple sales order needs to pass through various departments before it is fulfilled. Communication amongst these departments without the use of IT creates error, confusion and lost customers.
- IT systems can keep a track of performance and can report discrepancies immediately. As an old saying goes “Prevention is better than cure”. IT systems that enable real time reporting, help you prevent errors that would be costly to rectify. This adds to the reliability quotient of your enterprise which ultimately reflects in better customer services and spiraling sales figures.
- IT systems also help you offer more variety to your customers with use of models such as drop-shipping which do not require you to stock physical goods before you sell them.
The above mentioned benefits are only indicative. A complete discussion would be out of the scope of this discussion. As a thumb rule, one can expect a 30%-40% productivity increase if a completely manually run system is automated.
Protect Your IT Assets:
Since IT is such a valuable resource, you need to ensure that you pay enough attention to its security. You need to protect it from hackers, computer viruses and unscrupulous employees. Technology itself is a solution to this. All you need to do is to find a vendor who will ensure that employees have access to only the information they need and your system is well protected against external threats. Your computers being hacked is akin to your machines being stolen from your factory with the difference that you won’t even know that the theft has taken place.
Don’t get ripped off:
No matter how much you know about IT, you can never know enough to keep a check on vendors. If you knew enough, you would be an IT vendor yourself. Taking advantage of this information asymmetry, IT vendors often overcharge you.
The whole idea of being billed by the hour is incorrect as it creates a situation where the vendor and the client’s objectives are not aligned. The vendor makes more money by increasing the number of hours. This creates a tendency amongst vendors to willfully take more time to execute the solution. This delay not only brings a big bill but translates into unsatisfied customers and delayed operations magnifying the losses. The best idea, therefore, is to engage the vendors with a flat-fee model. You are paying them to solve a problem, no matter how much time they take. This will ensure the vendor wants to solve the problem faster than you want it solved.
Technology assets may not appear on your balance sheet as investments, but they have the power to make everything else on your balance sheet more valuable by increasing productivity and performance. Hence ensure that you take the steps due to protect it.
This is a guest post written by Alia Haley, an avid blogger who likes updating herself with new software applications and knows a lot about social media. She recently downloaded cool hub spot software. These days she is busy in writing on most expensive cars like cadillac ciel concept car.
