How to choose a technology staffer who will help your business soar
As Lou Hoffman remembers it, the day of reckoning for his public-relations business seemed to arrive overnight. It was early in 1996, and the Hoffman Agency had just come off a watershed year that had seen revenues climb from $1.5 million to $3.2 million and the staff double, from 15 employees to 30. It was the kind of upswing that many small businesses only dream about. So how come Hoffman felt as if he was plunging into a nightmare?
Founded in 1987, Hoffman's PR firm, based in San Jose, Calif., specializes in serving high-tech clients ranging from start-ups to Fortune 500 companies. For its first several years the company was just "plodding along," as Hoffman puts it. All that changed in 1995, though, when demand for PR services for high-tech companies operating in the Asian-Pacific rim began rising, and the agency redirected its focus to that market. It opened several overseas offices to provide clients with localized attention while continuing to serve them from its central headquarters.
It wasn't long before the initiative paid off. Soon after establishing an office in Singapore, in 1996, the Hoffman Agency experienced further increases in its client base and more activity on several existing contracts, boosting revenues to an all-time high. But Hoffman was in for a rude awakening. His company's technology (a Novell NetWare server; DOS; Lotus cc:Mail with no remote access; 30-odd office workstations, all but one without an Internet connection) simply couldn't handle the revved-up business. Unless he acted, his windfall was going to become his downfall.
"Clients were complaining about our inability to share electronic information," Hoffman recalls. "The server was crashing daily. Our account professionals couldn't send out E-mail with a high degree of confidence that our system would deliver the messages. I could see it was hurting our staff morale. In short, our product--the people delivering services to our clients--was being seriously undermined by our poor infrastructure. There was no way we were going to be able to grow and bring on bigger clients unless we got serious about our IT operations."
Looking back, Hoffman now knows exactly where he went wrong. "As you're building a company, you need revenues to grow the business," he says. "So you're particularly sensitive to increasing an expense that does not immediately and directly improve the revenue stream."
That expense included not just the cost of new equipment but also the salary for a full-time IT staffer. "My goal was to delay the hiring of a full-time IT person for as long as I could, with the rationale that keeping technology expenses as low as possible would enhance our profits," Hoffman says. "I definitely did not see the deployment of IT as a strategic part of the company's operation."
For many small-business owners, the decision to hire an in-house technologist is neither easy nor obvious. CEOs who don't consider technology a core business function, who want to keep head count at a bare minimum, and who blanch at the steep salaries commanded by techno-mavens of all stripes may choose to keep outsourcing their technology function and, for their most basic needs, continue relying on the limited services of a staff member who fancies himself or herself "good with computers." But there comes a point at which postponing the inevitable impedes growth and potentially invites disaster.
"I have a general rule of thumb," says Stever Robbins, the principal of Venture Coach, an executive coaching and consulting business in Cambridge, Mass. "If you have more than 15 people using a network and don't think you need a systems administrator on staff, call in an experienced IT person for a day and have him tell you what you're doing wrong."
Greg Netland, president of the IT-staffing company New Boston Systems, in Woburn, Mass., agrees that reaching a critical mass of users on a system is typically what tilts the scales in favor of creating an IT staff position. (His ballpark figure is 20 to 25 users.) But he notes that there are scenarios in which hiring a full-timer can have more to do with market dynamics than with staff size. That point could be reached when a small company begins operating out of more than one location or when a business has only a narrow window in which to launch a product or service.
Dan Tully, executive vice-president of Conduit Systems, a high-tech consulting firm based in Lincoln, R.I., also cautions against a mind-set fixated on head count. "There's no magic number of workstations that signals to you that you must hire an IT staffer," he says. "There are a number of other considerations that have to be factored into the decision. In our experience, it's the complexity of a company's site requirements and the range of its technical applications that often determine whether it makes sense to outsource tech support or invest in an on-site administrator."For some small-business owners, the decision can be as much gut instinct as a judgment call. Chuck Schvaneveldt, president of Upper Valley Utilities Corp., a $9-million utility engineering and construction company based in Salt Lake City, contracts out some of his company's systems administration and attends to some of it himself. He says he doesn't anticipate hiring an IT specialist soon, but he'll know when the time has come. That will be "when I find myself working nights doing systems management," he says with a wry laugh.