Historically, most small and medium businesses have treated technology the same way they treat office furniture – you buy it when you must and use it until it breaks – a necessary cost that you try to minimize as much as possible. This kind of mindset has been prevalent, and in many cases, is still the standard operating procedure for a lot of companies. In a way it makes sense – the first and most fundamental rule of business is to make more money than you spend. Unless you are the Federal Government or a venture capital funded startup, controlling costs is vital to continuing operations. IT reports to the CFO who works to make sure that the technology spend stays under control, and when budgets get tight the first thing to be sacrificed is typically IT.
The problem with this utilitarian, break/fix view of technology is that it has led to a very significant disconnect between business leaders and the people responsible for their technology environments and very little correlation between business plans and technology plans. Technology resources are brought in after strategies have been settled upon and decisions have been made. They are then expected to make the technology plan fit, often with assumptions about costs and capabilities that are completely unrealistic. While this has always been frustrating for both sides, it’s beginning to put the future of many companies in real peril.
Digital disruption is leaving more businesses behind than ever. The Fortune 500 has had more than 50% turnover since 2000, and a nearly 10% turnover in just the last 2 years. Upstart companies are finding ways to transform the business model by reaching new audiences, engaging with customers in new and more meaningful ways, streamlining supply chains, or innovating around accepted but stale business practices. This disruption is leaving a lot of traditional businesses scrambling to keep up, and forcing them into a reactive ‘me too’ mode. That old tried and true method of cutting the IT budget to invest in other areas of the company has hobbled them and, in many cases, accelerated their eventual demise.
Smart companies recognize the need for digital transformation and are responding by changing their approach. More IT leaders are reporting directly to the CEO and are being brought into strategic business discussions early in the process instead of after the fact. Technology plans are being crafted in conjunction with business plans, and savvy business owners are working with technology professionals that understand their business well enough to provide true thought leadership.
Companies that embrace digital disruption and position themselves to be the disruptor instead of the disruptee by investing in technologies that have real, measurable business value will grow and thrive in the new economy. Those that don’t will find it harder and harder to avoid breaking that first rule of business, and the only cost savings measure left to them will be to close their doors. Yes, costs must be controlled and budgets must be realistic, but when you approach technology planning in a strategic manner you can often achieve that elusive goal of doing more with less.
At Symplexity, we focus on understanding a business first – how they make money, what their total served and total available market looks like, what the competition is doing, and what their current technology footprint is. By starting with this understanding, we can provide insight and direction to companies that are interested in leveraging technology and using it as a change agent to drive growth, improve profitability, and secure a place in the market. Developing a technology plan that complements and works in conjunction with the overall goals of the business is no longer a luxury, it’s an absolute necessity.