We are not sure if IT is creating value in our business. How do we know?

In any business, there are essentially three perceptions of IT expenditure:
1. A necessary evil that we spend money on when we have to.
2. A business tool that we spend money on to stay in the game.
3. A tool that provides competitive advantage that we invest heavily in.

The category you're in is a big part of deciding whether IT is creating value. Often, businesses that do not perceive value in IT are either:

• Not investing enough to get any value; or
• Fundamentally lack a plan for the investment they're making, so spend inefficiently and do and re-do work on IT, without deriving the available benefit.

So, which category are you in?

If you don't need IT in your business, then please excuse yourself at this point. Clearly this article does not apply to you, as you either have no staff or have outsourced all your financial management, BAS statement generation, payroll, stock management, time management, communications, and so on. Well done, but move along.

If IT is a necessary evil for your business, and if you're not getting value from it, what does it do for you, and why are you investing in it at all? What other areas of your business could it manage for you, and how could you use it better to help your business grow? Have you mastered eMarketing, social media, the web? Could you manage your resources of stock or time better? Could you track clients, or complaints, or project delivery better?

I've seen a company that assembles machines used for commercial cleaning employ multiple staff in an assembly process. They don't use inventory management on a computer, but they tell me they really don't have much need for fancy IT systems. Unfortunately, they couldn't see that keeping track of their parts electronically, and scanning new deliveries into location bins with the number of items, would speed up the tracking of parts available for assembling units – and improve the just-in-time delivery of additional components, before stock was exhausted. Now, if carrying $2 million in parts is your way of ensuring your labour force is never idle, don't sweat the IT system. But, if you want to cut the investment in stock by 50% to 75%, you will get a very snappy return on your investment in software and a barcode reader.

You need to look closely at your business, and determine what value IT delivers to your business. If you turned off your computers, what would go wrong and how much would it cost you? Why? What are the greatest costs in your business or the greatest losses?

In my business, one of the greatest sources of loss occurs when my technicians fail to account for an hour of work done. When they don't account for it, the client gets a gift and we lose the opportunity to bill for the effort – while we still have to pay the salary. So, it's in our best interests to invest and make it easy for our technicians to account for their time. For a construction company, the investment needs to be able to manage contractors and employees, and communicate quickly and effectively when changes are required.

If you don't know where the value of IT is for your business, and you fail to invest, chances are your competitors will be able to do things at a better rate, or with a better outcome than you can. Today, as every business globally becomes more competitive, this just isn't viable. As technology is more pervasive than ever before and more easily accessed from mobile tools, the gap between those who use technology to get ahead and those who don't, is increasing.

If you're not sure about the value IT is creating for your business, find a trusted advisor who really sees where you could benefit and get them to work with you to develop a cost benefit analysis that helps you justify the expense. Then, ensure the IT strategy is in-line with your business plans, and build a budget to meet the needs of your business.

Most importantly:

• Avoid spending on IT until you know what the return will be, and why you need to spend.
• BUT, don't make the mistake of avoiding spending on IT. It may leave you behind your competitors – and cost you your business.

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