Technology Investment 101
/I have chosen to spend my career forging a bond between business needs and technology solutions, a role I refer to as Business Technologist. Over the last three decades, I’ve seen rich returns from technology initiatives that have truly transformed businesses. I’ve also seen funds wasted on mis-directed, low value, or poorly executed programs.
It always seemed to be unnecessarily challenging to chart the path to success or failure. But then I had an epiphany, developed a simple perspective on Business Technology, and have since honed this while working with a couple hundred organizations.
It all starts with a distinction between three types of technology spend:
Utility technologies are mature and reliable ( they rarely break if well maintained), provide basic services and foundation capabilities. Necessary, but not sufficient - utilities will not differentiate your business. This class covers email, productivity apps (MS-Office, core CRM), and pretty much all hardware and networking. Even smartphones, undoubtedly the technology breakthrough of 21st century, are now commodities. Do not sweat these details. Partner with good suppliers and make reasonable deals, but don’t spend more time than you need here. The wins are small.
Risk covers the tools and measures taken to identify and protect against the business risks associated with technology. Examples include Information Security, Business Continuity and project success. These are not be to ignored. Understand your risk exposure and get comfortable that you are not overlooking anything important. Implement the necessary with efficiency, and maintain high standards.
Investments provide outcomes that materially benefit a business and its customers. Streamlining customer facing and internal processes, delivering new products and services, outstripping the competition. To the extent that these steps provide customer value, they will differentiate our businesses. Focus your attention here - it’s where the game changers lie for your business. Without doubt. Every time you choose and execute well.
Check your portfolio
Take 5-minutes:
With some back of the envelope thinking, estimate how much you spend in each of these areas. Include operating expense, capital expense and staff allocation in your numbers.
If you spend over 90% on Utilities, you are not alone, but nowhere near best in class.
If you are spending under 10% of your budget on Risk, get confident that you understand Security and the risk it poses to your business.
If you are spending less than 50% on Investments, you’re almost certainly leaving money on the table.
PS You can find this exercise and 59 more in 10-Minute Reflections Volume 1 and Volume 2.
PPS Check out my recent interview with Dustin Tysick from People at Work — Technology as a tool in your workplace
Trusting Technology is a book about forming ideas, exploring opportunities with customers and colleagues, and building your future together. Order you copy here.