How do you quote IT for a start-up business in today’s cloud world?

Today IT underpins many new initiatives, whether they are in online retail, e-health services, the finance world or any other industry. When starting a business or planning the next stage of an existing business, ensuring you know what your business will be doing, and how it will be supported by IT systems and in IT terms, often begs the question, do you really know what you will need?

There is a common belief that we just need a bunch of PCs or mobile devices and we can get going. Right!?

Well, actually, no! As always, we need a business plan.

Let me run a recent scenario past you based on a real conversation with a budding entrepreneur. Let’s call her Judy to protect her real ID. Judy wanted to set up a business in the health sector which, without giving away any detail, is filling a gap with services that will free up GPs in practices and emergency wards in hospitals with huge potential to reduce the cost of health care and create better patient outcomes.

So the simple question came, how much should we budget for IT?

The response was fairly predictable when you sit back and think about it:

What do you need?

“Well, I was hoping you would tell me” said Judy.

What applications do you envisage using for this business?

“Ah…”

Well, how many people will need to use the systems?

“Ah well…”

Will the business start with one PC and slowly scale up or will you be seeking government funding to start on a larger scale?

“Well gee I…”

OK, hang on a sec. Do you have a business plan?

At all levels of small to medium business we seem to keep making the same mistakes around IT by setting the budget for IT before setting up the business plan.

IT is simply a tool to support your business so it can manage information efficiently, whether that information is for communication (as in email), finance (as in MYOB) or information management (which will be very industry specific).

Your IT people can properly help you to design and cost systems to support your business once you know what your business will look like. You need to project your requirements accurately before the systems can be designed and scaled to fit. This applies as much to an existing business planning for growth as it does to a start-up.

Only a business plan leads to the right scale of IT and the right selection of IT solutions. Otherwise you will likely be wasting hours of your time and frustrating IT people after spending hours designing a solution your business was never going to be able to afford.

One way to start the IT plan is to gain an understanding of the functions IT will serve in the business, such as the obvious ones of email and financial management, but then also the line of business applications.

Will it be a database tracking inventory and job costing for manufacture or will it be a document management tool to collate industry specific knowledge or an online booking system for ticket sales.

What will the system need to do or support from a business point of view?

By understanding what your business will do and how it is supported by IT tools you can then progress to address what technology will provide those functions. Sometimes you will need to turn the question around and ask how existing technology will put limits on your business and work within existing capabilities to manage cost.

Certainly cloud is helping lower the expected IT budget in many ways. If your business is likely to grow then an elastic cloud-based solution that lets you keep adding licences on a subscription model is going to suit, especially for the standard tools like email and finance. However, if you need to develop software to support a unique function in the business, knowing whether you have a small budget or a large one will make a difference to the quality of solution you design.

Cloud will make many parts easier, as it will also offer new solutions that make the previously impossible possible. A great example is the ability to run a powerful database on a shoestring budget that would previously have required an investment of thousands of dollars. But it is not changing the fundamental need to plan.

Once you have a starting point you can get to work on a business plan and ask for strategic input at the right time to guide your thinking and ensure your business idea goes in the direction of a plan rather than the direction of a dream. This will help you turn your “entrepreneurial sneeze”, as Michael Gerber calls it, into a business reality.

David Markus is the founder of Combo – the IT services company that ensures IT is never an impediment to growth.