How I invested my way to profitability

Overview

Deciding how to adapt the business model in the face of recession opens up a massive can of worms - to increase profitability or even stay afloat, why and where should we make strategic changes? We decided that an investment in IT was worthwhile.

The challenge

In this stark economy, you feel that you cannot invest heavily in new hardware or software - yet often these tools can be the differentiators needed to stay ahead of the competition.  It's a frustrating double-bind for many SMEs - and one that challenged us.

The solution

By investing in IT, we found that many systems can be automated.  Last year, for example, we generated over 12,000 invoices, which would normally need a team of four or five admin staff. However, by developing our business thinking about how we could use technology to simplify and automate basic administrative processes, managing our invoices and payments, in fact, takes one person about half an hour a day.

How do we do this?  All invoices are automatically generated for our customers through our website and e-mailed as a PDF document to them.  These are electronically stored against their account. We reckon that we save well over £100,000 a year on this operation alone. In my view it's innovation like this that will determine the survivors and victims of the credit crunch.

Key lesson

IT is all too often seen as a function of business rather than a driving force behind it - a necessary evil, almost.  By taking a long hard look at which business processes are automated, and where you're investing large sums of money in a cumbersome or unreliable IT service, massive savings can be made.  The recession has paved the way for a new generation of business tools: a stable of "as-a-service" products, delivered via the web, that are available by subscription rather than investing a lump sum into off-the-shelf or bespoke software.  This new breed of business tools can be used on systems old and new so it's great for any company.  We're obviously a huge advocate of this kind of service at Postcode Anywhere.

Top tip

It's not all about new models of IT infrastructure.  Many businesses part-automate their transactions but don't roll it out across the whole company or take it to its fullest extent.  The situation is worse across organisations with many departments.  Demand the best from your IT staff, whether they're in-house or external, and make sure you're operating at maximum efficiency.

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