How Can I Tell if My Small Business Is Getting Real Value From IT?

For a small business, the question “Am I getting value from IT?” is really about business outcomes, not how much technology features you get per dollar spent. The most reliable way to answer this question is to evaluate IT across a small set of measurable dimensions that tie directly to company operations such as revenue, risk, productivity, and room to grow.

Then the question turns into, “Is IT supporting my most important business outcomes?” Asking how your IT is helping to achieve your goals makes it easier to evaluate what your IT is doing for your business based on your objectives. Common business objectives could include risk, productivity or growth; or any set of important, top-level goals. Below is a sort of “playbook” for understanding how to build your understanding of what the IT contribution is for your business. This assessment is in five sections that are succinct and to the point. Just follow this outline and at the end you will have an idea of what areas of your IT service contribute to your business objectives and where the weaknesses are.

1. Business Objectives

Make a list of your business objectives. Examples might be:

• Grow revenue with minimal new hires
• Improve customer response time
• 100% uptime goal
• Enable remote work
• Meet security requirements

Then ask for each objective; “What IT capabilities are required to make this function easier, faster, or safer?” If you can’t clearly map IT spending directly to a business objective, then it may be hiding an unnecessary expense. Dig deeper into those budget items until you’re satisfied.

2. Productivity

Productivity is usually measured at the top level as revenue per employee. It is an easy top-level measure that can be used to measure the efficiency of your business. The higher that number the more efficient the business. It can also be used to compare your business against other similar businesses.

A business with high productivity usually will have:

• Reduced manual tasks
• Faster on boarding
• High reliability and uptime
• Low security risk
• Rapid recovery
• Straightforward scalability, such as adding more users and software

Talk with your IT person, group or service provider about their ability to perform to these standards.

Some red flags to be on the lookout for are references to “workaround” spreadsheets. Acknowledge that back-up capability exists, however it is not regularly tested to know that it works. You are looking for a preventative security mind-set instead of a reactive one.

3. Cost – A Verbal Audit

Not all business leaders know the ins and outs of IT and so it makes it difficult to value. Make sure that you are clear about how IT functions affect the business. You should be comfortable with the answer to these questions.

• Do you understand what you’re paying for and why
• IT Costs should align with usage or headcount
• Very few surprise expenses
• Be wary of “automatic” flat monthly fees with vague scope
• Look out for repeated “emergency” charges
• Make sure you are not paying for licenses or services no one uses

IT costs should be boring and predictable—surprises indicate poor governance.

4. Team Meeting

To effectively understand the value of IT for your business, set up a meeting with your IT service and make sure you understand the answers to these questions. A value-focused IT partner should be able to answer these clearly:

• What business risks are we currently mitigating, and which are we accepting?
• What would fail first if we cut IT spending by 20%?
• Which systems directly support revenue, and which are overhead?
• What metrics do you track to demonstrate performance to standards?
• What should we stop paying for?

If answers are vague then either the value is weak or the IT provider needs to better understand the role of the IT function in providing value.

5. Benchmarks

Sometimes it is useful to benchmark similar businesses. To that end, here is the typical small business expenditure for the IT function:

• 2–4% of revenue in low-tech industries
• 4–7% of revenue in information-intensive or regulated industries

No two businesses are the same so use these numbers carefully. Spending outside these ranges is not automatically bad—but to make sense, they should correlate with measurable advantages (speed, resilience, compliance).

Taken as a whole, these five areas to explore should give you a good sense of where, in your business, IT brings value. A few hours to educate yourself and you should know where more and/or fewer IT services should be employed. This should give you guidance on what changes need to be addressed in order to have a more optimized use of your IT resources.

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