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Richard Morochove — Small Business Technology Is Changing the Way We Do Business

In part two of our interview with Morochove, we discover emerging trends and new technologies that will undoubtedly influence how we do business.

Last issue we talked to business consultant and broadcaster Richard Morochove about how small businesses can use technology to create business advantage. This issue, the interview continues with insights about how technology for small business is changing the way we do business.

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Q: What are the biggest changes you see happening right now in technology for small businesses?

A: We’ve talked about some of them: the rapid pace of communications, for example. Certainly the growth of the Internet is a big change — the fact that you have to have e-mail, you have to have a Web site. It’s starting to make a difference whether you have your own domain. People are starting to say that if your business e-mail is just joe@aol.com or something, you’re obviously a small-time player. You may have a better image if it’s joe@yourdomain.com. So not only do you now need an e-mail address, it also now helps if you have your own domain.

Q: What about changes to the information within the business? Are people feeling the need to be more integrated rather than having the bookkeeper and the project managers with their information on separate PCs?

A: It’s pretty simple to set up a peer-to-peer network these days, so the technology has gotten easier that way. But I’m still seeing islands of data in small business that are using applications that don’t necessarily talk to each other. You don’t necessarily have to have everything talk to everything else. For example, you don’t necessarily want the sales rep to have access to the payroll database. However, the sales rep probably should have access to at least some of the customer records because what if a customer calls and says, “I still don’t have that order I placed last week. What’s happened to it?” You want the sales rep to have an answer. It’s more efficient for the business and more satisfying for the customer, if, instead of bothering the bookkeeper or the shipping clerk, the sales rep can just look up the status and immediately tell the customer “There was a back-order, but it should ship tomorrow.” So integration isn’t about allowing everybody access to everything, but allowing everyone access to the information they need to do their jobs, whether it’s on their PC or someone else’s PC or on a server somewhere.

There are even some small companies that are becoming quite far-flung. It’s changing from the days where everyone in a small business came every day to one office. There are more of what I call virtual small businesses, sometimes people working independently, maybe from their homes, and who function as one business. Sometimes they may be working thousands of miles away from each other across the country. How do they share information? And you have some companies like, say, NetSuite who supply accounting and CRM software as a service on their Web site. So as long as these far-flung employees have Internet access and a Web browser, they can log into these applications on a central server and communicate that way and have access to all the data that they need.

Q: How about security and security threats to small business on an information level. How is that changing?

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A: Well, malicious software is certainly a threat — everything from viruses to worms to spyware on the computer. You just have to look at this latest worm that was attacking Windows* 2000. Microsoft just announces that it’s a threat and makes a patch available, and a week later the worm is running rampant because companies didn’t take the time to apply the software patch. So it’s a challenge, particularly for small businesses that may not have a formal IT department and may not even have a full-time IT person. It’s often a part-time responsibility for one person whose efforts may be supplemented by a technical expert that the company has on call. You can’t just say, “Well, I’ll update these things once very six months.” To run a secure operation, you have to be far more proactive in updating your operating system.

Fortunately, you can now automate a lot. Microsoft has improved its system for upgrades, so you can set up your computers to get automatic updates. Interestingly, that’s what has finally persuaded a number of my clients that they need to go from dial-up to broadband Internet connections, because that makes it easier to do these automated software updates.

The other thing that you need to run a secure operation are some good internal defense mechanisms: good anti-virus software, good anti-spyware, and a firewall to protect everything on your internal network from the “wild and wooly” world of the Internet. Small businesses without IT staff should invest in some professional help with this. I would have them do a checkup, have an IT professional come in for a day every 3 to 6 months and review their OS patch levels, their security software and everything. Considering the costs of data loss and other security breaches, it’s cheap insurance.

Q: And what changes do you see in computer platforms and how small businesses view them and use them?

A: You have to remember that small businesses don’t buy computer hardware. They buy solutions that the hardware can deliver. Businesses use applications, applications need an operating system such as Windows* or Linux*, and the operating system needs hardware to run on. Small businesses don’t care about computer processor lingo. What they care about is: “Will this solve my problem?” If more powerful hardware means that businesses can run the more powerful business applications that they need, then they will buy. Faster computers by themselves aren’t worth much.

Q: So, with the many changes that we’ve talked about, what words of wisdom do you have for small businesses looking at how to gain advantage through their office technology?

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A: Here’s the bottom line. Lots of my clients already have computer systems. But they call me when they’re not happy with the results they’re getting from those systems. They’re cost-conscious, and the first thing they ask me is whether they can just upgrade what they have or whether they have to buy new. I tell them that if you bought within the last 2 years and the technology was state of the art, you can probably just upgrade. If your systems are 5 years old or older, you’re better off buying something new.

For example, I had a client whose computer hardware was 8 years old, and they didn’t want to buy new stuff. But they couldn’t get upgrades for their old systems. This client is in the property management business, and they said to me, “Say we buy a building and we manage it very efficiently. After 8 or 10 years, things may be looking a bit shabby, but we don’t tear down the building, we renovate the building. If we had to tear down every building after 8 years, we’d be out of business. It would be too costly. Now you’re telling me to tear down my computer system and build something new.”

So I said, “Listen. A computer system is not the same as a building. If you get a good building, it will be there for 50 years or even longer. You can’t expect a computer system to last that long.” I had to show him in terms of dollars and cents that it was more expensive for him to keep his old system than to buy a new one. He was getting quotes for maintenance of the old system, and the yearly cost for maintenance was sky-rocketing as the system got older. So I did a dollars and cents analysis that showed that if he bought a new system, he could pay for the new system in about 24 months, just through the vast reduction in his maintenance costs. When he looked at the dollars and cents savings, he said, “So what you’re telling me is that if I don’t buy a new system, I’m an idiot.” And I said, “Well, you’d be a financial fool. Let’s put it that way.” And he said, “OK, when you put it in hard numbers, it makes financial sense. We’ll go with the new system.” That’s what it took. His intuition was that replacement was wasteful, and I needed to show him that it was not wasteful. It’s like when your car is starting to eat you up in the cost of new parts, you buy a new car. There comes a point when the most cost-effective solution is to buy new hardware.

Q: And at that point, you look for the best solution to do the job that will be the least disruptive?

A: Exactly, and in their case, they liked what their system was doing. It was just running out of capacity. They had bought additional buildings over the 8 years, and there wasn’t sufficient capacity with the hardware to handle these new properties. And it turned out that the most cost-effective way to get that capacity and allow far more headroom for business expansion in the future was to get new hardware.

Q: In looking at the new technologies and systems that are coming along, what are the things that get you the most excited?

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A: I think a lot of the things that are happening in the wireless world are pretty interesting. Certainly what’s happening with cell phones is that they are becoming miniature computer workstations that give you access to a computer network. Besides allowing you to talk to someone on the phone, they’re also designed for e-mail and allowing you to share other data. I’ve seen companies that give a sales rep one of these “smart phones” so that, not only can they reach the rep on the road, but the rep can use the smart phone to access the company server to check on the status of a product, “Do I have enough of this product in stock that I can promise this customer immediate delivery, or do I have to tell them that it will be a couple of weeks before we can send that to them.” I think that whole area is developing very quickly.

Q: So if you are talking to a small business owner and helping them plan for the future, what are the biggest things that they should be thinking about?

A: I would say have a long term plan for where your business is headed and think about how technology can support your business in the future. Too many small businesses react to change rather than planning for change. Then when they have a problem, they’re fighting the fires rather than dealing with the cause of the problem. Instead, I say let’s plan for growth, let’s plan for what’s going to happen so that we make planned upgrades and aren’t faced with a crisis when something changes.

About Richard J. Morochove

Richard J. Morochove is president and founder of the Toronto-based computer consulting firm Morochove & Associates Inc. He is a computer consultant, an award-winning writer, and a popular broadcaster and speaker. Richard is a Fellow Chartered Accountant (Ontario 1977, Fellow 1994) and has a Bachelor of Commerce degree (1975) from the University of Toronto.