The seventh of a ten part guide series on how to tackle the often complex challenges companies face when they are growing

The seventh of a ten part guide series on how to tackle the often complex challenges companies face when they are growing
Part seven - The Reality of Growth - Technology - driving tomorrow’s vision

By Stephen Nicholas and Chris Herbert*

We’ve all heard them - gut wrenching stories of technology projects that have gone horribly wrong - sometimes to the point of bringing a business to its knees.

But there are early signs that tell you when technology is like an express train and heading off the rails.

In fact you know you’re in serious trouble if your company:

• is the first to use the technology

• has opted for the big bang approach

• hasn’t fully engaged the CEO in the project

• plans to get the technology in place without changing critical processes and procedures

• doesn’t think it needs external resources, or a project manager

• believes this is a “no brainer” and doesn’t need a business case

• claims the people you put in the project can be re-deployed, or better still recommends using “someone I met the other day...”

If your answer to any or all of the above is “yes”, the alarm bells should be ringing loud and clear.

Don’t become a victim, but learn how to ride the technology express.

Can technology be kept on track?

Of course it can.

Technology is one of the most potent channels of communication, so you’ve got no option but to get it under control.

Nurtured and groomed, it lets you get the right information to the right people at the right time. However, deciding what technology and how much can be a risky business.

Many companies heading down the growth path tend to lose focus on networks, information sharing and the need for collaboration. Just when the business needs to leverage technology to grow faster, more reliably and at a lower cost, ‘technology’ is unleashed on an unsuspecting team. While the worst case scenario is the undesirable effect bad technology decisions can have on your business, a lack of long term commitment nurturing and upgrading technology will invariably result in missed opportunities.

For growing companies, the beauty is that smart technology provides scalability.

Small and medium sized businesses can operate at the capacity of much larger companies and do more business, with less resources and yet with greater efficiency.

Used effectively, technology can be one of the most powerful growth engines available.

Whose idea is it anyway?

Introducing technology is not just a decision for the IT Manager. The buck stops with the CEO, who has to be fully engaged, understand the role, potential implications of new technology and actively participate in the planning process to determine how it will drive the business forward.

Whatever you do, resist the temptation to simply layer new technologies over old business problems.

You need to either start from scratch, or look for ways of utilising existing technologiesmore effectively to add value to your business.

There are three critical steps for keeping control:

1. working out precisely what you need;

2. shopping around until you find it;

3. putting it in place bit by bit, road testing as you go.

Why do technology projects fail?

The vast majority happen because businesses don’t go through a robust process of analysis, scoping, selection and implementation.

Remember, it’s the people, not the technology, that usually undo technology projects.

When it comes to technology, size matters. It may be a high risk strategy to go with that nice man from that new little place down the road. These companies can be at the cutting edge certainly, but sometimes lack experience and longevity. Exercise caution and check them out as rigorously as the mainstream players, so that things don’t get ugly down the track.

Assessing the potential

When you think technology, think the art of the possible.

Ask yourself; do you really understand what the leaders in your line of business are thinking?

You need a clear picture of your business now and a vision of what it will be in the future. Only then can you adopt a technology solution that will act as an enabler to give you a strategic advantage.

The reality is that fast growing companies tend to focus on the here and now, with insufficient thought as to what might happen in the future. Frequently, they end up applying yesterday’s solutions to today’s goals without reference to tomorrow’s vision.

There’s no substitute for a proper makeover: planning, assessing how current processes are performing against company goals, and identifying how the technology can improve your business (see Figure 1).

This will help you develop a technology road map that defines:

1. what future solutions are to be introduced;

2. when, by whom, why;

3. likely return on investment (see Figure 2).

Most importantly, you have to take your stakeholders and end users with you. You can have the best systems and support in the world, but if people don’t know how to use them or choose not to use them, you’re doomed.

Best in a supporting role is?

You’ve done your technology homework, worked out what should and shouldn’t be done and made somebody responsible for connecting business and technology more effectively. Everything is now in place to ensure technology will be used to enhance your performance, rather than simply brushing over yesterday’s mistakes.

The next challenge is to define the technology perimeter fences and keep it under control to prevent costs escalating. That’s why picking the right vendor is crucial (see Figure 3).

You need to invest sufficient time, energy and resources in selecting the right technology vendor and putting in place a contractual agreement that will avoid costly misunderstandings further down the track. You can do this yourself or outsource it to a credible service provider.

Ideally you will start with a Request for Proposal (RFP). A good RFP that clearly articulates and prioritises your requirements is critically important. It will give you greater clarity around what is required. Conversely, a flawed RFP inevitably results in uncertainty, ambiguity and price hikes.

When sizing up technology partners, consider their implementation experience, applicability of methodologies, timeframes and costs.

Furthermore, since success or failure of your chosen technology will depend to a large degree on the service provider’s culture, working style and key people, make sure you have the right fit (see Figure 4). Ask yourself, do they know their stuff? Explore their track record in your field and double check that they have successfully completed projects similar to yours. Also, check out their references thoroughly. You’ve got to be absolutely sure your preferred provider can deliver. Remember, the people who dig you into a hole won’t be able to dig you out. Warning bells should ring if:

• you don’t understand a word the vendor is saying

• they’re more interested in flogging their products than in solving your problems

• you don’t like them.

After all, you’re going to spend a lot of time working together.

It’s all about commitment

When you’re satisfied you’ve picked the best partner, put in place a contract that meets your current and future needs.

You need to specify exact requirements including Service Level Agreements (SLA) recognising the unique power of your company’s culture and that demand your provider’s commitment.

Your contract needs to enable both parties to nurture the relationship, stay close, build in incremental improvements and be firm but flexible with each other.

As a general rule, there are four types of contracts you can consider:

• time and materials

• fixed price

• shared risk/shared reward

• benefit based.

Better vendors chunk the process into manageable stages. For example:

• strategy

• design

• build

• deployment.

Ideally, each stage will be completed for a fixed price. For example if Stage 1 is completed for a fixed price this will provide sufficient information and scope to ensure a fixed price for the next stage. The vaguer your brief is, the more contingency the supplier will factor into the price to cover the unexpected.

Crunch time

Now comes the hard part – implementation. Take it slow and steady because this is crunch time.

Aligning technology with the strategic goals can be a very delicate process.

Start out with a pilot that is tightly defined, scoped and focused on specific operations so you can evaluate meaningful and measurable results. This will give you sound insights into what has to be fine tuned to ensure that this particular solution meets the needs and expectations of the entire business.

At this time you need a detailed implementation plan and a project team with representatives from all stakeholders – your company, the service provider and the technology vendor.

The team needs to define who is to do what and when and report on their progress.

As a general rule the service provider will deliver a set of methodologies that have been tailored to your needs. They should also deliver a work plan which you can use to fine-tune activities.

Catch the tiger by the tail

With the pilot completed, it’s time to roll out, adjust or abandon the whole thing. If you decide to roll out, the business will become increasingly reliant on the solution, the new processes, the vendor and service provider. This means that a thorough assessment of the pilot’s strengths, weaknesses and overall level of success is vital. Assessing the pilot should include reviewing the solution itself, the vendors, service providers, the team, costs and any business impacts. First signs that the technology is going wild are cost overruns, missed deadlines, disenfranchised staff or unmet performance criteria. Any sign of these should put you on full alert. If the pilot is deemed a success, you’ll be ready to roll out the enterprise-wide solutions. This should be done carefully and selectively, essentially as a sequence of phased pilots. If the outcome of the pilot is to abandon or defer, cut your losses and just do it. This might be hard given the momentum that has built up within the business, but it has to be done. Also, manage your risk potential in case your supplier is unable to complete the contract.

Know when to stop digging

Monitor the pilot, the plan, service provider and team closely and ask yourself regularly:

• is the project being managed well?

• what do the status reports say?

• is the project on time?

• are they after more money?

Prepare for the worst if:

• people start leaving

• the team constantly changes

• there are major scope changes

• other competing initiatives begin to emerge, successfully.

If you’re in a hole:

Refocus …

Rebuild …

Recover or retire

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Stephen Nicholas and Chris Herbert are a partners at Deloitte NZ in Wellington. You can contact Stephen here » and Chris here »

This Guide is part seven of a series. It is used here with permission.

Part one is about Strategic Planning and is here »
Part two is about Alliances and is here »
Part three is about Managing Risk and is here »
Part four is about Raising capital in New Zealand and is here »
Part five is about Marketing and is here »
Part six is about Outsourcing and is here »

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