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Is Your IT Investment More Smoke than Substance?

5 Mins read

Completing several hundred IT projects a year, I meet many companies’ leadership teams. In many cases, I’m there because something is wrong in the technology arena, slowing the company’s forward progress.

Sometimes, as was the case with a new prospective client recently, company leadership can get caught up in the details around technology and completely miss the big picture around technology’s role in their organization.

Let’s go back to the basics for a minute and take another look at this thing called information technology.

First things first, what is a company? At its simplest, a group of people working toward a common purpose.

How do we make a company more efficient? We create process. We automate work, simplify work, or empower the people that make up the company to work more strategically.

Okay… so what tools are there to create efficiency? One of the primary tools is information technology.

If a company were a car, the employees would be the tires that move the car. Employees are literally where the rubber meets the road. Company leadership drives the car, and information technology is the engine, enabling the people working for the company to move the car forward faster.

Revenue fuels the car, while investment in information technology determines how much power, as a force multiplier, is there to push the car forward rapidly. Strong, precise, efficient investments can pin you to your seat with an incredible rush while the company accelerates to top speed.

Inefficient investments, no information technology investments, or the building up of a lot of technical debt, where systems and technology are allowed to age out and reach “End of Life” or “End of Support,” slow the car’s forward momentum until it is eventually just running on people power – meaning the car is in neutral and everyone is behind the car using muscle to push the car forward.

These elements come together so that the company, or the car in this analogy, can reach a destination faster, better, quicker than the other cars, or competitors, on the road.

Information technology does not have to be complicated. Just like a car, you don’t have to understand how it all works to be able to drive. To help leadership teams identify technology’s role in the big picture and refocus on what is important, I like to ask a few questions:

  1. Why does this company invest in information technology?
  2. What benefit does this company get from its investments in technology vs. the dozens of available investment options that could theoretically improve how the company does what it does?
  3. If I gave you $X Million for investment in technology, where would you put that money to work to make the most significant positive impact on your business?
  4. Is the problem we are discussing today, if fixed, going to improve your ability to do business meaningfully? Or is there another problem, big or small, that is limiting your ability to translate IT investment into revenue?
  5. Who takes your business if you are not there to fill the customers’ needs?  Is your current IT investment strategy benefitting you or your competitors more?

Information technology should be a positive force multiplier for the company. One dollar invested in information technology should generate some percentage improvement in efficiency or create an opportunity for growth, and that includes dollars that go to annual support and maintenance agreements.

Failing to maintain or retire old IT systems can create a force multiplier that hurts a company’s ability to create revenue. Here are two common examples:

Example 1: An upgrade project that should take two weeks takes nine months because supporting systems and hardware have to undergo their own upgrade to enable the desired application upgrade.

You want to upgrade your bid software to version Y, which you use to find new business. But to do that, you have to upgrade your servers. However, you can’t do that because the physical server itself is too old to support this upgrade. So, you have to buy a new server, wait seven months for it to arrive, spend two weeks getting it racked, only to realize you need to upgrade the switch it will be connected to, which takes a month to get in and in place. With the upgraded switch, now you can rack, stack, and deploy this new server in production so you can do the original two-week accounting application upgrade.

Meanwhile, your primary competitor across town, needing to do the same upgrade to the same state-of-the-art bidding application, having kept up with system maintenance, can complete the upgrade in two weeks, leveraging new capabilities for the large part of a year before your company gets there.

Example 2:  Company A, a retailer with many locations, has had a few rough years and elected not to invest in the connectivity that ties its stores back to the corporate network. A review of logs reveals that the company has lost a combined 75 business days over the last year because systems were down and one retail location or another could not process transactions.

Meanwhile, Company B, the primary competitor to Company A, did not have these issues and realized a bump in revenue in markets shared with Company A because they were open for business.

Look at IT as the engine that should enable employees to turn the wheels of the company faster with the same or less effort. It is not necessary to get caught up in the minutia of IT to realize its benefits. Stay focused on what IT can and should be doing to improve the company. Maintain IT systems so you have the agility to take advantage of technological advances when opportunities present as a potential way to distance your company from the competition.

There will never be a shortage of IT projects that a company can engage in, but they are not all equal in their ability to create value. If you are part of an IT or company leadership team, stay focused on the big picture. Stay focused on the macro and let your IT department, consultants, or wherever you get your insight work out the individual projects and investments necessary to reach the vision. When looking at the strategic and tactical projects that get presented, use this big picture vision as a guide to determine if proposed projects will bring you closer to or further away from the big picture.

Cars have an average of six gauges, telling you how the 30,000 parts that make up the average car are performing. What gauges does your organization have that can tell you how IT is performing in relation to the company as a whole, at a glance?

It is vital that companies find the gauges needed to ensure IT investment is properly turning the wheels and fixing more than a few IT engines along the way. If IT feels disconnected from the rest of the company or if IT looks more like a big hole in the floor that eats every dollar that gets near it with minimal benefit to the company, do whatever needs to be done to find your solution, even if it mean engaging with organizations that specialize in this type of activity.

Happy motoring.

Val King is the CEO of Whitehat Virtual Technologies and responsible for day-to-day-operations, as well as leading the company’s product development and technology strategy. Val has 20 years of experience in technology, compliance, and security in regulated industries, particularly in financial services and healthcare. Currently Val serves in a dual role as CIO for a regional healthcare system.

IT stock image by Gorodenkoff/Shutterstock

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