Making Smart IT Investment Decisions

Making Smart IT Investment Decisions

By Rick Koski, Vice President, Operations - Aldrich Technology

The following scenario is all too common. A CEO/CFO is inundated with chronic business problems: on-time delivery, customer service responsiveness, inventory inaccuracies or any of a handful of other afflictions. The management team blames a host of demons, most notorious amongst them, obsolete or dysfunctional systems.

What to do?

Call the IT guru, of course. Have them look at the problems and make recommendations.

What’s the IT guru going to recommend?

Probably a technology and systems solution. That’s what he has in his doctor’s bag. Perhaps a combination of upgraded application software, hardware, servers, data security and, most popular these days, a transition to the Cloud.

What’s Wrong with That Approach?

It’s misguided. It’s overkill and it misses the real issue. The real need is to resolve the core business problem – not simply reinforce the technology. IT systems are accelerators and “automators” of process solutions, not solutions themselves.

Investments in IT betterment must have as their primary purpose making a business process more effective, efficient and robust – not just deploying technology. Solutions, therefore, must always be developing from a fundamental understanding of the root business problem that needs solving. Then, once a repeatable process solution to that problem is found, appropriate technology to automate and lock in the solution can be implemented.

As an example, a client engaged us to solve a troublesome, complex work-in-process inventory management problem. Sub-assemblies kept getting mixed, making it impossible to know at any time how many of each were on the shop floor. The client’s team was confident they had already found a good solution to the problem, i.e. new software and associated hardware.

The best solution turned out to be a simple label applicator (less than $100) that could be used to color code sub-assemblies as they were routed through the manufacturing process. Visually obvious, simple, inexpensive. No confusion. Problem solved.

A technology-based, knee-jerk reaction model for dealing with business process challenges will rarely achieve longer-term ROI, nor adequately and quickly alleviate the short-term pain. Such an approach will only use cash, waste valuable time in implementation, and create frustration about the little real impact it produces in achievement of business objectives.

A more sinister consequence of the “quick tech fix” approach is the hidden threat that a competitor might implement a more efficient and effective fundamental business process than you, while you are distracted with elaborate technology schemes to automate fundamentally inefficient process.

Brash as it may sound, business problems are commonly misdiagnosed as technology problems, when in fact, they are management and process problems that technology will not only not fix, but exacerbate by automating them.

Building the Foundations for Business Success

Why will one company achieve great success with a particular brand of software while another struggles?

The answer is in the implementation.

We once witnessed a business buy flashy and expensive software because their competitors were using it. Unfortunately, they could not achieve the same success because the competitors understood that software was only valuable in the context of sound business and process decisions.

Today we see a similar mindset with the cloud. The cloud is touted to make everything less expensive and better. In software or cloud implementations it is important, first, to understand what the business is trying to achieve. This implies understanding what the business sees as its immediate need in the context of its vision of the future – say 5 to 10 years – and keeping that in mind as the context for any current solution implementation.

“It is not “now” that is key, but rather it’s how “now” fits into our future.”

The Apparently Slower Path Gets You Farther

Let me be more prescriptive in suggesting how to really achieve success with business process issues and any subsequent software and systems implementations.

Step 1: Lock the technology guys out of the room. Achieve consensus on objectives and outcomes first. This provides a benchmark against which to test any solution, namely, does it meaningfully forward the achievement of the business objectives.

Step 2: Identify root causes of the business challenge – based on hard evidence and data.

Step 3: Model and test the solution.

Step 4: Let the technology guys into the room to systematize it.

While it may at first seem too methodical a route to meet urgent challenges, it is universally preferable to begin with some sort of understanding of the objectives and challenges facing the business, instead of focusing on the symptomatic dysfunctions and diagnostic assessment. That’s Step 2.

Savvy IT shops recognize this fundamental principle and are now responding to such CEO/CFO calls for help by sending in business analysts in the first wave, then driving solutions to meet the business challenges and objectives with the appropriate mix of process and technology. Keep in mind, fundamentally innovative processes and business models create breakthrough outcomes – not technology, first.

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