Recently, consulting firm McKinsey wrote about what questions a company board should ask about their company’s technology and IT capabilities.
Beyond the obvious question about the impact of technology on the company, the first question was “What value is the business getting from its most important IT projects?” It’s an obvious question for CEOs, CFOs, and board members, but it’s often neglected by companies in the throes of other day-to-day challenges. Why?
First, McKinsey has the benefit of advising billion-dollar companies who have invested heavily in technology. It’s important to have a reliable enough technology infrastructure that you can step back from the day-to-day of technology preventing you from achieving your goals and focus on how it can improve your results.
For some companies playing catch-up in technology, especially small and mid-sized businesses the focus remains on reducing complaints from staff that technology is preventing them from being successful at their jobs. Printers stop working; computers ‘hang up’; servers crash; phones go down.
Companies which have secured some stability in their technology infrastructure move to the next phase, where technology isn’t the problem, but is the solution to problems. It might solve the issue of important information not moving from one group to the other, for instance, or provide quicker access to data when employees are travelling.
The technology challenges faced by this group can be seen in a recent Appian study.. CEOs report challenges such as the cost of developing the technology, or the time required to develop the technology.
This is a good start, but these companies are still behind the technology curve. Technology should not only help you to address challenges your company faces – it should enable you to provide value to your customer that you couldn’t otherwise offer. A recent PwC survey of CEOs gets closer to this with their question: “What connecting technology do you think generate the greatest return in terms of engagement with wider stakeholders?” Four categories were selected by over half of all survey respondents: data/analytics, CRM systems, R&D, and social media communications. These are the areas where CEOs believe investment will yield new value for their customers.
But do they? As McKinsey correctly points out, company boards (and CEOs) should make sure that technology projects are pursued with specific goals in mind, and companies should measure results to ensure that the technology upgrades are achieving their goals (whether they’re hardware- or software-based). Some recommendations:
- Define specific goals when designing technology projects; ensure these goals reference measurable improvements in business results, not just costs and timelines
- If any changes need to be made to the project while it is being designed or implemented, assess whether the improvements are still projected to be met after the changes
- Once launched, measure results. If they aren’t living up to initial expectations, find out why, and determine if hardware or software changes can get the project back on track.
Technology is expensive when it only represents a cost to operate – when it provides a unique value to customers, it can drive their business to your company. That technology pays for itself many times over!