Should I have a computer system for my business?

To answer this question will require assessing the:
-                       benefits
-                       costs
-                       risks
that a computer will bring to your business.

This article will explore these issues in some detail.  

Benefits 

Benefits accrued will either be tangible where benefits will be able to be objectively estimated and measured; but there will also be intangible benefits accrued, which can be indirectly attributed to computer systems; for instance computer generated documents look more professional than handwritten or typed ones, which may attract additional custom.

-                       tangible benefits?

Reduced costs through say

More efficient processing leading to less human effort needed

Better decision making leading to less stock

Increased income through

less administration errors leading to accruing all monies owed and paying only money owed; satisfying all customers requests correctly and on time

better information leading to better decision making leading to high rate in satisfying orders; less stock, etc

 -             intangible benefits?

 Enhanced and more broadly aware company image

Costs

The costs that will be incurred, include:
-                       hardware
-                       software
-                       installation
-                       training
-                       support
-                       consumerables

Risks

If you computer systems worked first time and never failed their benefits would be immense, but unfortunately this is not true. Computer hardware and software is highly complex and sophisticated, although the price of systems today is relatively cheap. When you consider that the latest operating systems have in access of 35 million lines of code, it is not a surprise that there are software bugs, which can lead to unexpected system failures and data loss; and that the hardware is engineered to such fine precision that hardware failure does occur, but the most business damaging problems can arise where there is a partial failure leading to loss of performance or intermittent service and/or data loss.

Therefore when purchasing a computer system it is advisable to assess the folowing risks, and then take remedial actions to reduce them to the optimum level.

-                       the likelihood that these benefits will not be achieved?
-                       they will not be achieved on schedule?
-                       they will not be able to be sustained without interruption?
-                       if they are interrupted what will be the costs incurred to recover service?

  To answer these questions will require,

1.                  Ensuring that all company procedures and responsibilities are documented.
2.                  Assess the potential benefit of computerisation to each procedure.
This should give some indication of the potential annual savings that may be achieved.
3.                    Assess the potential risk of system failure (e.g what costs would be incurred if you could not produce Sales Invoices for, say, 2 days; or you could not produce pay slips or a payroll for 5 days) and the tangible/intangible costs arising.

The costs of system failure can be reduced by Disaster Prevention and Recovery procedures, but they increase the capital spend.

Many companies benefit from computerisation, some tremendously; but some are bankrupted by either purchasing inappropriate systems or due to unrecoverable catastrophic failures.

 When you have decided a computer system is justified, now which one.