Recognizing the Bursting Point

After 25 years, a Cincinnati locksmith hadn't changed much about how he did business. To keep track of the hundreds of keys hanging on his wall, he used a basic Excel spreadsheet. For the extensive inventory of different door handles and locks, he relied on his own memory. Although this system caused some minor inefficiency, it seemed to work until a local school called, wanting to upgrade their entire key system to a more secure model. The locksmith knew he couldn't keep track of the vast hierarchy of the thousands of keys he would have to make. To do the job, he realized he needed more than an Excel spreadsheet.

Many business owners and CEOs make the same mistake: They rely on what's in hand to do jobs that would benefit from more robust technology. A fear of change or a lack of education on what's available causes many businesses to approach adopting new technology warily. Instead, they take a Band-Aid approach, and coast along until problems appear. When problems arise, businesses scramble to find a quick fix and forgo the necessary planning that is needed to make solid IT decisions for their businesses. "If you don't start planning early," explains Kevin Fessenden, president of Web and software consulting firm UnitedWare based in Cincinnati, "you're going to develop some bad habits. Employees will get used to doing things a certain way, and everyone will be more resistant to change."

A common reason for not recognizing the benefits of updating technology is that many CEOs and their employees prefer to spend their time and energy on customers, rather than on internal issues. Mike Canney, founder and CEO of Intelligence Data Systems in Reston, Va., was one of those CEOs. "Our problem was that we were focused exclusively on our customers," admits Canney. "When you're growing the company, you take your best people and put them with the customers. In-house things get tended to in people's spare time." This philosophy is not uncommon for many private businesses that prefer to spend precious, finite funds on seemingly more immediate matters. "You plan for marketing and sales," explains Infoglide Software Corporation CEO Mike Shultz. "You plan for developers because you're developing things. You buy computers because you need to compute stuff. And off you march into battle."

A regular IT audit is vital to growing your company efficiently and effectively because "it is the first step in preparing for growth and the last step in preventing disaster," Fessenden says, adding that an audit can expose potential risks before they materialize a catastrophe. "These things need to be started early in an organization because often it is too late once the need for it has been exposed."

Depending on your business, there can be a variety of ways to conduct your audit, but here are three main themes to consider:

• Business continuity. "If your building burns down, where is your data? Can you jumpstart in a new location?" asks Laurie Orlov, research director at Forrester Research. Unexpected disasters do happen; take a serious look at your backup and disaster recovery plans.
• Internal network capacity. Look at your Internet capabilities and see if you have enough IP addresses for your employees. An ISP that works for a staff of 20 people may not be sufficient as the company grows. Also, check on the limitations your e-mail service may impose in terms of inbox and transfer capacities and filtering.
• Information security. With threats of new viruses and hackers coming out everyday, it's a good idea to re-evaluate how you protect your company's network. Examine your firewalls, spam and virus protection, and user policies. Also consider that in the future, as mobile devices such as PDAs and Blackberries become more prevalent, your system should be able to support these new devices, as well as ensure data security across multiple data platform types.

After you evaluate your current system, you'll need to prioritize a to-do list for re-structuring. Some things to think about are:

• Hardware. Many companies run on a three-year hardware replacement schedule. "The key is to get extended warranties from your vendors," says Milan Patel, CEO of ACS International Resources, a consulting firm in Newark, Delaware. "It may cost more, but it will be a tremendous help, especially if you don't have your own IT department."
• Licensing and other deadlines. "If you're using something without a license, you have a lot of liability," Shultz says. For this reason, he regularly meets with his IT department head and conducts an internal IT audit four times a year to make sure he has paid for all of his licenses. Another helpful tool is a calendar of all licensing deadlines and other important payment dates.
• Data backup. Many small and medium-sized businesses are following their larger counterparts and making multiple copies of their daily data backups and storing them in various off-site facilities. If something happens to your building, this ensures that you will still have records of all of your work and clients.