“Let’s do it” you exclaim to your IT person; but are you fully aware of the costs and benefits for this project? For those difficult decisions I have a four-question approach for non-IT business owners I use with clients to make sure they are spending their money wisely:

The Four P’s for IT Projects:

Does it improve Protection?

Before you invest a penny in any technology project, make sure that your protection will be up to date and scaled up to the new IT infrastructure you will have. Not only should you protect from the external world with antivirus, firewalls, encryption technology etc but from within your own company. Can an insider cause harm to your information? Intentionally or unintentionally, in a high number of cases damages to the integrity of data, technology systems and the overall ability to continue operations have its roots inside your own company. Be sure to adapt your IT security to the needs of your business.

Are we going to have an increase in Productivity?

My personal experience with this question is one where the IT guys were great at explaining how everything would be easier and faster and how I would have more information at my fingertips whenever I wanted it; but they could not explain to me how the company was going to be more productive. To be fair, we must disclose that not all IT professionals are like that. For a business owner I define productivity as doing more relevant operations with less money, reducing operational cost or having the ability to sell more. If none of those questions are positive then why would you incur in such investment?

Are we going to have more Profitability?

Profitability should be a consequence of productivity improvements but it is not always the case. A simple test is to ask the proponents of an IT investment to prove it in a simple way: What are the profits today and what will be the profits after the investment is made? You just have to make sure the profitability analysis uses the right assumptions and the right data; hint: Enlist your accounting department to help the IT team prepare the Business case. This way they will all work with the same numbers.

Will it improve systems Performance?

Performance is not the same as productivity. A system or database could improve your productivity and have a poor performance. It is important because of its potential for collateral damages to clients, vendors, employees or a domino effect where one piece of technology failure causes others to fail too. In most cases, issues with performance will be discovered during the productivity or profitability analysis however they are not mutually exclusive, so do not overlook this question.

Finally, you should know at the very least “why” or “why not” to invest in an IT project. Most of the time, if the four questions are answered then you will have more than good reason to give the project the green light.

-- Canales is a business growth consultant for small and midsize service and distribution businesses, with finance and crisis management experience for midsize businesses in Texas and the Midwest. Read his bio

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