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Fixed Costs

Five ways to control spending without sacrificing connectivity or productivity

With such slim margins, containing costs is an important goal for companies in the produce industry. Technology experts, however, stress that when it comes to information technology (IT), cost-cutting should not come at the expense of quality and security. “The produce business operates 24/7, so ensuring adequate IT coverage is a challenge,” confirms Mike Dodson, president and CEO of Fresno, CA-based Lotpath, a software development company and marketer of inspection, quality, and harvest-related apps. “It can drive up costs.”

That said, there are a number of simple tips that small to medium-sized produce companies can take to reduce or manage costs without making business-busting sacrifices.

Analyze your organization’s overall objectives before taking any specific steps to cut costs. “Information technology can be a real strength for a company,” comments Dave Donat, president of Produce Pro, Inc. in Chicago, a software solutions provider. He does, however, caution managers to “make sure the IT department is solving problems and not just doing computer things.”

There are two types of IT according to Donat: the first centers on hooking up computers, implementing firewalls, and upgrading networks, while the other is about business analysis, strategic thinking, and ensuring a company has the right tools. Mismanagement can be costly, especially if no one is accountable for purchases and maintenance. “You need someone in charge,” he asserts. “It doesn’t need to be a full-time job, and it often isn’t, but you need to have someone who is looking at everything from an IT perspective and not just as an afterthought. As an organization, you have to understand what you need.”

And as far as trying to keep costs low, Scott Sax, executive vice president of Travant Solutions, a consulting company and custom software developer observes, “Cutting costs just for the sake of cutting costs can be risky. You need to think through your company objectives and know you will still meet them.”

“Moving file storage and email to a cloud-based system is probably the biggest saver of time and money,” observes Dodson. With cloud-based services—also known as software as a service or SaaS—an organization pays for email and other office functions by the month, rather than investing in a server and maintaining and repairing it along the way. For example, many produce companies have made the transition from the server-based Microsoft Exchange to the cloud-based Microsoft Office 365 or similar solutions such as Google Office.

Microsoft Office costs $99.99 for a one-year subscription and includes usage on five PCs or Macs, five tablets, and five phones; has full versions of Word, Excel, PowerPoint, Outlook, and other software packages installed; has free technical support via phone or chat; and offers one terabyte of online storage each for up to five users. From an economic standpoint, this combination is often a better choice than buying hardware, software licenses for each user, tech support, cloud-based file backup, and other elements required for a server-based system.

“It all comes down to finances,” agrees Donat. “Don’t just look at the upfront costs, look at the total cost of ownership, including the upfront investment and the costs over the reasonable life. If it’s close, which it usually is, then it’s cool to go with the cloud.” He does offer one caveat, however: “You’d be surprised at how often connectivity is still an issue—if you’re going to the cloud, you need to have Internet that is 99.9 percent reliable.”