Budgeting for technology

Technology is necessary for green industry companies so how can you add technology to your company without taking a big hit?

Technology is absolutely necessary for green industry companies, but it can be expensive to implement in your business. Deciding on a whim to add something new could be extremely disruptive to your bottom line. So how can you add technology to your company without taking a big hit?

Process mapping

The first step to adding new technology is planning, and that should start with process mapping. Process mapping is when you graphically draw out the flow of work so that you can see all of the steps involved. By doing this, you can identify waste in your current system, look for repetitive tasks that can be automated and understand how the new tech you are trying to implement will reduce human labor and increase efficiency.

This is a very important step that most people skip because it is difficult and time-consuming. However, it helps to ensure you don’t try to mash a new technology into your old systems and try to function the same way, which is the cause of many implementation failures.

Process mapping will help you determine ROI by highlighting the current human tasks that will be replaced by your newly implemented technology. This process will also show your company’s true needs. You may think you need a system to communicate with all your staff. But through process mapping, you may find the ROI isn’t going to cover the cost of the new technology, which indicates that is not the best value for your investment. It may show that you have a real bottleneck in your invoicing department and instead should focus on technology that will help solve that issue.


It’s important to understand how long technology will need to operate before reaching the break-even point when budgeting.


Budgeting

Once you have determined what technology you will implement, it is time to start budgeting. The idea behind adding any new technology should be that after a certain time period it will pay for itself. Often, the way technology will pay for itself is by freeing up time for your employees to focus on other tasks. If you had a person who was responding to all potential employee candidates and you added technology to automate those communications, that person should then be able to focus on another value-add task for the company that wasn’t possible when they were constantly communicating with potential new hires.

The other way technology can pay for itself is to allow your people to manage more without affecting their work-life balance. For example, if you can add software that allows your account managers to go from managing $1 million each to $1.5 million each, with three account managers that means your business can handle an additional $1.5 million in work without adding any extra people. Before the software, you would have to add one or two extra people to get the same effect. In this example, let’s say the cost of adding those employees with benefits could be up to $150,000, but the software is only $30,000 a year. In that setup, adding the software would save you $120,000 each year.

It’s important to understand how long technology will need to operate before reaching the break-even point when budgeting. Typically, it takes 1-3 years before a technology starts producing a real return on the investment.

You should almost never add a new technology on a whim. The chances of it being successful and providing value for your company drop significantly if it’s not intentionally and thoughtfully added to your current stack.

Technology spending

Green industry companies have historically not budgeted any significant part of their revenue toward technology, so it is difficult for business owners to consider spending increasingly larger portions of their budget on technology. It is important to consciously increase your budget for technology each year so that the funds are available when you determine a technology is a right fit for your company. Even if you don’t have a specific technology in mind for the coming year, you should still budget to increase your technology spending. Across all industries, the average budget for a small company’s technology is about 7% of revenue. How does your spending compare?

Michael Mayberry is the chief technology officer for Level Green Landscape LLC in Upper Marlboro, Maryland, blending a passion for the outdoors with technology to create a new way for the green industry to conduct business. He can be reached via email.

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