Eliminating Waste in Business: Run Lean, Boost Profitability (2014)
Chapter 6. Technology
Waste by Using Software as a Solution
The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.
This quote from Bill Gates explains partly why technology can be a source of waste. Too often companies rely on technology to solve operational problems. Not only will technology magnify inefficiency, but it will also magnify ineffectiveness and the ability to meet customer needs. How many times have you heard justification for a large technological improvement being a gap in a current process that is causing the company issues? Technology is never a moneymaker; it’s never a profit center. Don’t use technology just because it is fashionable to do so. Technology is a tool to aid other processes. The other processes must be efficient, the right technology must be implemented, and employees must have proper training. With those key pieces of the puzzle, technology can help improve efficiency.
Is There Anything Good About Technology and Marketing
You have to be careful when looking at technology in any area of your businesses, including the marketing areas. Banner ads don’t work. Popups don’t work. Spam e-mail doesn’t work. Unsolicited text advertising doesn’t work either. The trick to using new technology to advertise your products or services is to make the content relevant. This is why we suggested having an effective blog or content marketing source that drives consumer traffic to your website. If you’re using popups, e-mails, or text messages, ensure that the content of these communications provides value to the consumer beyond hearing about your company. Don’t create apps or blogs just because you think you should.
Instead, evaluate your customers and determine what they are doing in these areas. If your current customers or the customers you want are spending a lot of time working in apps, spend some time finding out what they value and consider creating an app. If you can create an app that your customers will use, you will likely get some benefit from it. The key to benefiting from any strategy of utilizing online tools, social media, apps, or e-mail is to ensure that you are offering benefit to your customers. If you keep this in mind, you will have a greater chance of success in your strategy.
When to Jump on the Social Media Bandwagon in Marketing and When to Run
Social media has changed the way many people communicate. While there still is no consistent definition, most researchers agree that social media is a platform for individuals to interact with others with common interests and associations. The interaction between consumers and companies has changed the way that companies create products and services.
Some predict that using social media for marketing in the United States will reach over 30 billion dollars by 2014. This is a five-year increase of over 4,000 percent.1 We thought, given the huge push in our society to be digital, social media should be included in the technology chapter. Like any other technology or marketing media, social media marketing sometimes makes sense and sometimes it doesn’t.
Consider for example an apple farm in our area that we absolutely love visiting. They have a year-round farmer’s market where you can always get the cheapest and freshest produce, in addition to their homegrown apples. They also have events that fluctuate with the season: pick your own strawberries in May/June, homegrown blueberries in July, and peaches and tomatoes by the box-full in August. They used to have one simple website, with a page for contact information and directions, a page for the history of the farm, and a page for current events and which crops are in season. This all changed a few months ago. Now when you go to the home page, it has no information or events page. Instead it states, “See us on Facebook for current events.” Then, you go to the Facebook page and it says that the latest happenings are on Twitter. Then you go to Twitter and you get the one line about what is happening, with very little detail (of course, it’s Twitter).
Many users who have to go through this maze of clicks will be long gone. In fact, the average consumer spends about 10-20 seconds on a webpage.2 If they get frustrated or the page loads slowly, they will spend even less time on the site. If we were not already loyal customers who have an interest in knowing what is going on at the apple farm, we also would not bother going through the extra clicks. (Likewise, we seriously doubt apple farm visitors fit the high social media using profile.) Why would this farm change their online methods? We believe that the apple farm either was likely guided by a well-intentioned, but not analytical marketing consultant and/or they just thought they had to do it because it’s what everyone else is doing.
Social media has changed the way many of us communicate. The interaction between consumers and companies has changed the way that companies create products and services. Seventy-five percent of Internet-using adults in the United States use online social media regularly.3 This shows that there is a definite opportunity for companies to advertise, but only the right products or services can benefit from this kind of advertisement. Likewise, it must be done in the right way.
Before embarking on a social media campaign, companies need to identify the goals of the campaign. Just like with any advertisement strategy, marketers need to understand who the customer is and how this ad strategy is going to reach that customer. Since social media is a two-way communication method the social media strategy has to include a value to the customer in addition to promotion for the company.4 The company must determine how a social media presence can benefit the customers, such as by providing a better understanding of the product or service. Likewise, social media can be used as a tool for the marketer to get information back from the customer. By providing tools such as content marketing, trust can be built between the consumer and the company, leading to future sales. Regardless of what value the consumer finds through social media, the company needs to use social media in a strategic way, rather than the typical “spaghetti-on-the-wall” used by many companies.
Note Regardless of what value the consumer finds through social media, the company needs to make the use of social media in a strategic way, rather than the typical “spaghetti-on-the-wall” method used by many companies.
Social Media Growth
The marketing departments in many consumer industries started using social media to promote their brands or improve the reputation of their products. As these marketers have improved their capabilities, they have developed loyalty programs or transactional marketing efforts. The most sophisticated have also developed big data and analytics. The focus is now on how to capture consumer profiles and data so that, along with gaining new consumers, marketers can take action to retain current customers.5
The profile of the social media market is changing, as shown in Figure 6-1. Although Facebook has the largest share of the population, others like LinkedIn have created a niche in the market. The frequent users of LinkedIn may have different needs to meet than those who stick to Facebook, so your social media strategy should be different for each group. You have to consider what type of product you have and what market you are reaching. Back to the apple farm example. As mentioned, we doubt that the apple farm visitors are regular users of any of the typical social media sites. However, for Procter & Gamble, it likely makes sense for a product such as Cover Girl makeup. Users of this product are teenagers and young adults, many of whom are regular Facebook visitors.
Figure 6-1. Percent of People Using Social Networks. (Source: Pedsicker, Patricia, “Six Marketing Trends to Watch in 2013: New Research,” SocialMediaExaminer.com, Last accessed August 2013, http://www.socialmediaexaminer.com/marketing-trends-2013/.)
Marketers also need to consider how long each social media outlet will be around. It was easy to predict in 1960 that the TV will be a major part of people’s lives for a long time to come. However, think of how rapidly we cycle through social media outlets. In the last 10 years, we have gone from Myspace, to Facebook, to Snapchat, Instagram, and Tumblr. Facebook has even recently admitted to having a huge problem losing the teenage audience. Because no teen wants to hang out the same place their parents do, teens will always be finding new sites as their parents slowly adopt the newer technologies. As the parents adopt, they will kick their kids forward to the next, “cooler” site.
Figure 6-2 shows the breakdown of where companies put their social media efforts. The most noticeable point when comparing this chart to the previous chart is that, although only 17 percent of the population is using LinkedIn, a full 81 percent of companies are utilizing LinkedIn for business purposes. There is extreme disparity between where consumers are and where companies are.
Figure 6-2. Company Use of Social Networks. (Source: Barnes, Nora Gamin and Ava M. Lescault, “2012 Inc 500 Social Media Settles In,” 2012, UMass Dartmouth, http://www.umassd.edu/cmr/socialmedia/2012inc500/.)
Why are so many companies using LinkedIn? This is an example of how companies have identified that they can successfully market to a smaller population that has interests in their products and services. This trend is fueled by the content marketing used on LinkedIn. Banner advertisements like those used on Facebook are horribly ineffective, while content marketing engages the consumer. The trend toward more focused use of social media is an encouraging one. However, the not-so-encouraging point is that 58 percent of companies admitted that there was no ROI mechanism in place to measure the effectiveness of the time and resources they put into social media.6
This brings us to one of our favorite forms of social media: content marketing. The top three types of content marketing are social posts and updates, e-mail newsletters, and news or feature articles: 83 percent of marketers utilize social posts and updates, 78 percent send e-mail newsletters, and 67 percent use news or feature articles. Content marketing is more effective than Internet advertising because companies can track the interaction of the consumers with the content in order to determine what is important to the consumer. The company can then use these insights to target consumer needs.7
On the other hand, consumers are much more likely to come to your site for what is considered more credible information. Let’s pretend you are a consumer looking for new, all-natural beauty products. You might start searching on the Internet for various product ingredients and how bad they are for you. After you type “skin care ingredients that are bad for you” in Google, you stumble across one particular site that is the second hit on Google. When you click on this link, a lengthy article comes up that goes through all of the toxic chemicals:
“Harmful Ingredients in Skincare Products: We want to protect your health.
The FDA requires that all skincare companies list their ingredients in order of highest concentration first. Learn to read your lotion labels. Do your own research as well. Made from Earth skin care products never use these ingredients. Does your skin care contain these harmful ingredients?
This is also known as Methylparaben, Propylparaben, IIsoparaben, Butylparaben. Parabens are a group of chemicals widely used as preservatives in the cosmetic and pharmaceutical industries. …”8
As the consumer reads through this site, they not only gain insight into the relevant topics, but they also see pretty pictures of flowers and the company’s all natural products. The company gains several advantages this way: 1) The customer found the website and came to it. 2) The customer views the website in a positive, credible way. 3) The company has a chance to showcase its products while the customer is fully aware and focused.
Note Content marketing is one of the most credible, informative, and customer-oriented ways to interact with your customers on social media.
Hospitals do very similar forms of content marketing. The Mayo Clinic has an informative page for just about every disease and condition. If you are searching for just about anything, WebMD and the Mayo Clinic are typically your first one or two hits on Google. On the same page where a patient can get information, there are links to click on to make an appointment. Content marketing is one of the most important aspects of a social media strategy.
Waste in Social Media
Social media is obviously here to stay, but it creates a lot of waste. The first waste in social media is having no plan for using the tool. Social media can be a useful tool if the efforts are targeted, but the outcome of the targeted efforts must be measurable. So the second waste in social media comes from lack of measurement. Without effective measurement and the ability to show the ROI tied to that measurement, efforts in social media are ineffective and wasteful. Tools like Google Analytics, Radiant 6, and HubSpot can measure how consumers behave with social media. However, the data provided by these companies does not show the critical link between the activity on the sites and the effect on the sales of the company.9
Past business reactions to technology have taught us about what to expect from the social media wave. Facebook, for example, has seen the loss of the teenaged crowd to “cooler” sites like Tumblr, as the teenagers run away from the parental presence on Facebook. This is much like the past adoption of the Internet, where every company felt that they must have a website whether it was actually needed or not. Take our veterinarian as an example. She has a very healthy practice with a loyal customer base and she does not have a website, a Facebook page, or a Twitter feed. Her business model doesn’t require these things. Companies need to have a real need to have a social media presence. Companies that follow the social media wave without a good purpose are wasting their resources and maybe even frustrating their customers, like the apple farm with the Twitter account. Define your objectives before engaging in any social media strategy; otherwise, you will probably create waste. You must decide if social media can truly help you meet your objectives. Don’t create a Facebook page just because it is what everyone else is doing.
Note Objectives must drive your social media decisions.
Social Media in Sales
To avoid waste in social media in sales, you must know why you are choosing to engage in social media and how your customer behaves and uses social media. You must track, measure, and improve your efforts. You should first perform a “social audit” to determine what your customers want from your company’s social marketing strategies. Some reasons that a customer might want to view social media about your products and services are:
· Are customers simply looking for a forum to better understand a product or service?
· Do they want to interact with experienced customers to read word-of-mouth and product reviews?
· Are they perhaps looking for loyalty rewards for choosing to do business with one company over another?
These are just a few questions that you want to ask yourself to determine the needs of your customers. Some firms may need a simple blog, whereas others may need a Facebook or Twitter presence. Still others may find the most value in educational videos posted on YouTube or similar file-sharing forums such as Flickr. The customer drives this decision. Establishing a social media presence that does not attract customers or deliver additional value is a potential waste of resources and a lost opportunity to connect and collaborate. Once the message is out, make sure that there is collaboration between the sales people and the marketing department. You do not want “vigilante” sales people posting things online that are different from other messages and images the company wants to portray.
From the side of the sales rep, social media can be very beneficial. I am in the middle of a large study investigating how sales reps use social media. Finding respondents has been difficult, because many reps still do not use social media—some because of the technology learning curve, some because they feel it is unprofessional, and some due to legal reasons, like customer privacy.10 Other studies show that fewer than nine percent of sales people use social media as a sales tool.11 For those who have adopted social media, LinkedIn is definitely the tool of choice. In fact, in my study 88 percent of the sales reps (who use social media) have used LinkedIn, 32 percent have used Facebook, and 20 percent have used Twitter for sales processes. There does seem to be performance and productivity benefit in sales, namely in prospecting, research, and follow up. The percentage of sales people using each of these tools for each of the sales processes is shown in Figure 6-3.
Figure 6-3. Sales Reps and the Use of Social Media
During the pre- and post-sales stages, LinkedIn does seem to help sales reps, primarily as a research aid. During the post-sales stages, social media can be used to update customers of new products or services. It must have a message that is integrated with the rest of the company’s communications. Additionally, there needs to be very specific work-related goals. Obviously, you don’t want your reps socializing on Facebook all day.
Note Social media can be a beneficial tool for sales reps, especially in the research and follow-up stages of sales. It can be used as a huge time saver, speeding along the sales process.
Technology in Marketing
Social media is just one example of putting technology to use in marketing. Fifty-seven percent of businesses surveyed by HubSpot were able to attribute a new customer to a company blog.12 There is more technology available in the marketing realm than just social media. Opportunity exists with online presences, mobile applications, big data, and software. Seventy-eight percent of consumers research products online prior to purchasing them.13 This means that whether you are in a business-to-business or business-to-consumer selling relationship, information about your products or services must be available online.
One of the greatest things about the Internet is being able to use it to quickly spread positive word-of-mouth. You should absolutely have a devoted person responsible for tracking positive and negative word-of-mouth on social media. Tools like Google Alerts have been utilized for years by companies that understand the value of the data available to track posts and consumer sentiment. Now the available tools for reputation management have become more sophisticated. This is necessary because, with the increased popularity of social media, companies must know what is being said about their brands. Skweal allows companies to block negative comments and resolve them privately by sending the complaints to the right person. Other tools are being sold to track negative reviews in order to provide data for strategic responses to repeat issues.14 Table 6-1 shows some popular tools used for reputation management.
Table 6-1. Reputation Management Tools (Source: DiSilvestro, Amanda, “Top 10 SEO Reputation Management Tools Online,” February 9, 2013, http://socialmediatoday.com/amanda-disilvestro/1227146/top-10-seo-reputation-management-tools-online.)
Shows what comes up in a Google search or on social networks.
Gives you a RepScore based on how people find your brand and your social influence.
Basics of reputation management and competive analysis tools.
Monitors keywords on social media sites.
Tracks blog posts.
Shows online reviews and monitors competitors.
Looks at how you are viewed in multiple countries and with multiple demographics.
Monitors keywords, sends alerts, and ranks importance of mentions.
Similar to SocialMention.
Sends you e-mail when keywords are mentioned.
Although many reputation-management tools are low-cost or even free, companies that choose to invest in social media due to a customer need for this interaction must also invest in the right tools to measure the effectiveness of their online presence. Table 6-1 shows only some of the available tools. These may not be the right tools for your company, so be sure to find the right measurement method for your strategy. (We talk more about social media metrics at the end of this chapter.)
E-mail is for old people. It’s true. Any online research about communication trends will show you that teenagers are more likely to use instant messaging, text, and social networks to communicate than e-mail. Companies are even endorsing the use of these tools for business use by installing services such as Microsoft’s Lync, which provides an instant message service along with other tools.
The concern with this trend is that many companies still send e-mail as a marketing technique. This is the Internet version of those shiny direct mail cards that come in the mail, only they are much easier to ignore through spam filters and the Delete key. If the younger consumers are ignoring e-mails now, they are likely to continue this trend as they get older. Therefore, businesses must adapt. Even dental and medical offices have adopted the use of text reminders and confirmations as a way to communicate with its clients.
Traditional mobile users outnumber smartphone users 5.6 billion to 835 million,15 so smartphone market is still relatively untapped. This may be largely due to the expense, but as mobile companies like Apple or Samsung continue to look for ways to offer less expensive options or consumers get smart about purchasing smartphones secondhand, the percentage of smartphone users will continue to grow. Even with this trend, this is an underutilized area in marketing. Applications like Pandora or many app games include popup ads similar to what would be used on a website, but as we all know, we pay about as much attention to those ads as we do the car ads on television. They are just noise in the background to be ignored. Marketers are continuing to miss the boat on where money should be spent on advertising. Figure 6-4 shows the result of a study of where companies spend their advertising budgets versus where consumers spend their time.
Figure 6-4. Company Spending versus Consumer Behavior. (Source: Ting, Richard, “Why Mobile Will Dominate the Future of Media and Advertising,” The Atlantic, June 6, 2012, http://www.theatlantic.com/business/archive/2012/06/why-mobile-will-dominate-the-future-of-media-and-advertising/258069/.)
Note Make sure your app has the functionality that your consumers want.
The mobile app advertising market is underutilized by most companies. In fact, advertisers prefer to advertise in a dying media, such as newspapers and magazines, than explore effective ways to advertise through mobile apps. Although most consumers zone out television and radio commercials and even more ignore banner and popup ads when surfing the Internet, spending in these areas is at least appropriate to the volume of use. The waste created by using ineffective technologies is an opportunity for companies to leverage the growth of the mobile apps and secure customers. With mobile users spending over 1.5 hours using mobile applications while Internet usage has declined slightly, it is obvious that this medium deserves attention.16
According to a survey by the Boston Consulting Group that included 550 businesses with fewer than 100 employees, only three percent of advertising expenses were used online. Large companies use over 15 percent of their advertising budgets online.17 It seems that these small businesses focus on the less expensive print advertising or the potentially more expensive direct mail. Figure 6-5 shows that while mobile web surfing activity remained stable between March 2011 and August 2012, mobile app usage more than doubled.
Figure 6-5. Mobile App Usage Growth vs Web Usage Decline (Source: Nielsen, March 2011 – March 2012, Nielsen Smartphone Analytics.)
Note Any consumer-driven company with more than 100 employees should have an app presence.
A custom app will likely cost thousands of dollars or even hundreds of thousands of dollars to create. So, although there are millions of apps available for various smartphone platforms, it is not surprising that not all small businesses have created their own apps. The cost of a mobile app will depend on the hours needed to create the app, which is a function of how complex the app is. Pursuing an app without first identifying a need is wasteful, although not looking to see if there is a need in such a growing media outlet is probably more wasteful. Any consumer-driven company with more than 100 employees should have an app presence.
Technology in Sales
Technology has made the sales process much more efficient, and has also created whole new areas of waste. Customer relationship management (CRM) systems still seem to be a mystery to many companies and many times get purchased without being used. CRM systems can be helpful when they’re implemented correctly, which we talk about in the following section. Likewise, technology has also enabled better use of analytics in sales due to the data storage capacities. However, few marketers understand how to fully utilize these technologies and do not benefit from them. Instead, many companies opt for the more wasteful traditional forms of marketing and sales (like television advertising), as discussed in Chapters 3 and 4.
It has been nearly 30 years since the first CRM program, ACT!, was introduced. Yet, only about 45 percent of sales reps use CRM systems.18 Many sales reps and managers see them as wasteful. Many times they are.
Sales reps have hated (and we do mean hated) their CRM systems for many reasons. Most often, they feel as if CRM systems are ways for their sales managers to spy on them. The independent-minded rep normally hates this thought. Many CRMs are poor designed or at least not designed for their specific company’s needs. They, therefore, become a complete waste. There is waste created by purchasing the software and because the reps are in constant struggle with difficult-to-use software. One of the reps I know, who worked with a very well known, great CRM system once told me:
I hate it! It is so over-engineered for what we need. We have such high-level analytical proposals for each customer so we store those in Excel. All we really need is a place to track customer info. This has made our jobs so much more difficult. They CRM’s sales reps said the dashboards were completely customizable. But the company has been no help.
I’ve also heard another rep say about an even more well-known CRM:
This is such a stupid program. I can get my contacts in Outlook, and that’s all it really does. It gives lead lists, but the lead lists are like those you buy online—untargeted, outdated, and basically worthless.
When this is what you are hearing from your reps, chances are your CRM system is wasteful because it was not purchased with a clear objective and user needs in mind. On the other hand, I have worked with a company that uses the CRM vilified in the second example, and they love it. Their biggest savings came from tracking the sales reps and the sales process and using that information to boost productivity.
Figure 6-6 shows the most touted advantages of CRM systems. The data was gathered from a large study from the consulting group Accenture. Keep in mind that this data may have some bias, as Accenture gains by highlighting a company’s problems, given that they are a consulting firm. However, this data is similar to what we have seen in other companies. The percentages represent how many executives in the survey noticed improvements in each of the areas.
Figure 6-6. Benefits of CRM. (Source: Accenture 2013, “Connecting the Dots on Sales Performance: Leveraging the 2012 Sales Performance Optimization Study to Inform Sales Effectiveness Initiatives,” http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Connecting-Dots-Sales-Performance.pdf.)
If the CRM systems are implemented appropriately, you should see all of these advantages. CRM systems are great tools to record and analyze data, although any high-level analytics will still require a separate program like SPSS. In order to see real advantages of CRMs, you should follow some of the guidelines about technology implementation that we discuss later in this chapter. First, determine what you need the software to do. What do you hope that it can do? What do you need it to do? Ask the people who will use the software the most—the sales reps. Listen to their needs. When purchasing or designing the program, do not over engineer it. Then, provide proper training. Make sure the sales reps actually use the software. The only way to overcome the thought of managerial spying is to build a culture of trust. If your reps are concerned about spying, that means they don’t trust management! Find out why. Be honest and open with yourself about why your reps do not trust management.
Note CRM systems can be wasteful if they’re not implemented correctly. Perform a needs analysis first, then train. Don’t blame spying fears on the CRM software.
Real-Time Buying and Big Data
In Chapter 3, we explained the wasteful, traditional forms of advertising and marketing. It seems that companies are in some ways stuck to those methods and in other ways they jump all over new technology without any purpose for doing so. Take, for example, technology failures such as the QR codes. It is amazing that companies still seem to be placing these little two-dimensional bar codes everywhere, from ads to posters to packaging. Yet, more than 20 years after the invention of the QR code, 93.8 percent of those with a smartphone have never scanned a QR code.19 This figure does not even account for the percent of the population without smartphones. The failure seems very obvious. It is hard enough to get a consumer to passively sit on a couch and view an ad. What makes anyone think we can show a consumer a boring, black-and-white square, and then have the customer download a QR reader, just to get an unknown bit of information? Failures like these will continue to happen as companies try to figure out the best way to use new digital and mobile technologies. We think that real-time buying and big data hold the most promise in the new technologies available.
Over 6.8 billion cell phones are in use around the world, which has led to a change in the way consumers buy their products.20 The smartest companies are using real-time data to offer coupons or product information based on the customer’s location. For example, an interesting partnership between Visa and Gap was formed to take advantage of real-time data. When a Visa card is used in close proximity to a Gap retailer, a message is sent to the mobile phones of opt-in customers. Gap can customize the offer based on time of day, customer history, or other personalization methods. Hopefully, interested consumers will pop over to the Gap during their outing and use their special offer to buy Gap clothing.
The data available today is enormous, but must be considered carefully. For example, the average amount spent during shopping expeditions on tablets and smartphones is higher than during desktop shopping experiences. Likewise, people spend much more online than they do in the store. The latter half of this statistic makes some sense. It is easier to purchase products online; there are fewer distractions and you don’t half to worry about your physical cart being too full or about long check-out lines. However, there is some dishonesty in this metric. The reality is that those with a higher disposable income are purchasing with the smartphones and tablets.
Many consumers will go to a store like Best Buy to research a product in the store and then will buy the product online at a lower price. With this trend, organizations have to be smart about the use of their marketing resources and data. Data silos and inadequate business intelligence infrastructures make it difficult for marketers to effectively leverage app development that targets consumer behavior.
Companies that have identified the need for a custom app or for a series of apps to support customer service and growth must develop internal resources to do this. Part of this resource pool needs to be targeted at using the data collected from customers and apps to improve marketing practices. Data doesn’t belong in a big data center to report high-level metrics with drill down capabilities. Rather, the data must be used to drive marketing decisions that allow your company to react quicker than the competition in a way that builds value for the customer.
Waste from Technology and the IT Department
Technology is purchased for a host of reasons, some of them good and some of them bad. Many times, companies severely overspend on software or spend the right amount, but do not involve the user in the purchase so the software is still wasteful. We know of a company that spent $85,000 on a technology improvement four years ago. The technology was about four times more expensive than the other options available on the market. The reason for the high cost was that special equipment needed to be included so that the technology could be used by someone who refused to change and learn new technology. This equipment was basically obsolete as soon as it was purchased. Therefore, maintenance and repair was not an option.
So then, not even four years later, new technology and equipment needed to be purchased. This time, someone else was responsible for the purchase. They did not use the equipment, nor did they ask the users of the technology how the system was used. This person was very naïve and bought a system based on a flashy sales presentation. Another system was purchased, surprisingly again, for $85,000, still more than two times as much as many other systems on the market.
At the time of writing this book, after $170,000, the new system is not working. The users and IT department were not consulted and certain things were left out, thus making the system nonfunctional. Many of us have heard of disastrous failures such as this. There are a few basic concepts that must be remembered to ensure that technology purchases and implementations are done in a non-wasteful manner.
Software as a Solution
One common area in business is the inventory-management portion. Most of service businesses and all manufacturing businesses have some sort of inventory to manage. I have heard many times that installing a new software package will solve a company’s inventory issues. None of these installations fixed all of the inventory accuracy problems. We know of two companies that, in our experience, are the best at inventory management. They had great accuracy versus the inventory on the books as verified by an audit and they had a relative lack of stock-outs (where you think you have inventory, but don’t when you need it). Neither of these companies have fancy MRP (Material Requirements Planning) or ERP (Enterprise Resource Planning) systems, or a WMS (Warehouse Management System). Instead both companies have sound inventory management practices that utilize manual processes. We are using this example because inventory management is the most common reason we have seen for large information technology installations. But, the theme is the same in any installation. Good technology will not overcome inefficient processes.
EMR (Electronic Medical Records) implementations are the current wave of technology improvements in hospitals, physician practices, and testing facilities. EMR systems promise to have more accurate and retrievable information that can be shared across healthcare providers in order to improve care. The reality is that most EMR systems don’t communicate well with each other. So, it is difficult to identify the same patient in multiple systems. Within the same facility, there are issues with standardized documentation practices or the correct information in the EMR, such as dosage on certain medications. Because of these inconsistencies, popup alerts and signoff processes occur so much that alarm fatigue is created. By this, we mean that the caregiver is bombarded by alarms and begins to ignore them. So, many alarms are overlooked. The benefits are then unrealized. This is another example of information technology implementation where the promised value is difficult to achieve because the former manual process was not adequate and its issues were passed along to the electronic process.
Customer Relationship Management (CRM) software in sales is the same. Sales reps who are great at recording all their information about their customers will do great whether or not they have a fancy system. CRMs are great, if used correctly. The manager should first set up processes to ensure that all sales reps record all customer information. Then, they have to be encouraged to use that information to make decisions, such as how much time to spend with each account and what to do next with each account. Only those reps and managers who have the appropriate strategic mindset and training will benefit from the system
The key here is that software is rarely the solution but is actually a way to automate a process or maintain good records of a process. Any other expectations of a software implementation are likely wishful thinking.
Note Software is a tool, not a solution.
Not the Right Software
Most companies have standard software packages such as Microsoft Office that provide e-mail, word processing, spreadsheets, and presentations features, but other tools beyond these basic ones are not always provided. The tools that are available may not be the right ones. The decision makers who make software purchases might not know which software is best for the job.
Software might include something as simple as the accounting system used by the company. Most accounting systems perform basic functions such as invoicing customer, paying vendors, inventory, and payroll. Many of these systems don’t perform simple functions that are necessary for business. Specifically in the manufacturing sector, only a couple of accounting systems handle revisions to products in the bills of materials (or the recipe for the product being made) while allowing for manufacturing and design changes to be traced. There is also normally not much flexibility in the way that inventory is handled. This is true of both the small software companies and the large ones that market their “solutions” to companies. I have seen and used manual processes and tools such as spreadsheets and Microsoft Access databases to fill in for the shortcomings of these software packages. Every person using the software needs to list their “must haves” prior to the purchase of new software.
Another common problem is with software implementations that cost millions of dollars, but don’t perform the necessary tasks without a third-party application. These tasks may include creation of financial statements, sales forecasting, report writing and distribution, and employee hiring/management. A well-intended software upgrade can lead to additional expenses and uncoordinated work due to shortcomings not identified in the selection process.
On a smaller scale of waste, although it happens more frequently, is when companies don’t supply individuals with the software they need to do their job. Tools such as Microsoft Visio or Microsoft Project are not standard-issue programs even for those job functions that benefit from their use. If employees are not given the right tools to do the job, they end up creating more work by modifying the tools that are available to them. From personal experience, we have seen gross amounts of productivity loss due to inadequate technology resources.
Note Lowest price and popularity are not the best ways to pick software. Do a current and future needs assessment.
Not Utilizing Software Potential
We know of a company that bought a software package to track movements of items through its processes. This software shows where each item is at any point in time and how long it has been at that stage of the process. This information can be seen in real time from any workstation in the company. The only reports that are available were provided by the software vendor. This company spent hundreds of thousands of dollars implementing this system, including software, hardware, and employee training, but did not spend the additional ten thousand dollars to have the custom report writing capability or the ability to create interfaces with other systems without the software vendor support. Why would anyone do this? This decision has led to many users downloading detailed data (hundreds of thousands of records) into spreadsheets and spending hours sorting the data to look for KPIs (key performance indicators) to monitor the business operations, when the software is fully capable of producing a report to do this.
I can’t even count how many times I have asked whether a company-wide software package has a function that should be used and heard the answer of “yes, I think it does, but we never use it” or “we didn’t buy that module, but I hear it works well.” Prior to making decisions not to use standard software functionality, a cross-functional team should evaluate what is not being used and what the company loses by not utilizing the software potential. Even when the company will not immediately need to use a function of a software package but foresees a future use, a plan to revisit the decision on whether or not to use the feature should be put in place. Once the software is purchased, make sure all employees have proper training. Many times, software is not used to its true potential because people do not understand the tools they have at their disposal.
Note Don’t limit the benefits of new software by not fully implementing it.
Report, Reports, and More Reports
While teaching Lean Six Sigma, one example that is frequently used to highlight extreme inefficiency is the overproduction of reports by organizations. I often tell the story of report usage that I used in Chapter 1 of this book, in which the manager took every report off the system to see if anyone would actually notice if they were gone.
Another story I tell is how I get reports pushed to me by one of our large vendors. This vendor does quality analytics, operations analytics, contract negotiation, and consulting for us. As part of their services, I get bombarded with e-mails every two weeks. I got so many reports via e-mail that I set up a rule in Microsoft Outlook to automatically delete anything that came from that vendor. This worked well until I started working with some consultants from the same vendor; I realized I was not getting e-mails that I needed.
In my current role I am often asked to push reports to people rather than providing easy access to the same information that the users of the data can get whenever they want. I always resist these requests because of the story that I just told. The average business user gets over 100 e-mails per day.21 This means that many of these e-mails will likely get ignored. The last thing that any business user needs is to receive too many e-mails with reports that they don’t use. Instead, employees need to be able to access the few reports that they use in an easy and customizable way.
Figure 6-7. E-mails per User Per Day (Source: Radicati, Sara, Quoc Hoang, “Email Statistics Report,” 2011–2015, May 2011, The Radicati Group, Inc.)
For any organization that has multiple computer systems, report management becomes even a bigger deal. Your financial statements may come from one system, cost data comes from a second system, productivity from a third system, and quality from a fourth. And so on and so forth. Even the best-intending IT teams that create a central repository of reports where users can access PDF or RPT versions of reports from multiple systems end up removing the functionality that the reports may have in them.
The most mature organizations set up IT infrastructure where work lists are created in the main IT system rather than a report to be analyzed. Alerts are used to identify performance of a process that is not representative of regular performance. Analyses are completed using business intelligence (BI) tools with self-service data cubes and filters with the ability to drill down to detail information if needed. This is part of the dream of the use of big data and BI tools that many organizations pursue. The process toward this dream starts with looking at the reports that you push to workers and evaluating how you organize your data to make it easy to navigate and produce reports.
For small and midsized organizations, it is often sufficient to have one or two IT systems to do key functions. When selecting these systems, it is best for small and midsized organizations to consider embedded reporting features to see if the self-service data access is available. Larger organizations need to start by having each key system with self-service data access capability in conjunction with a larger BI strategy that is tied to business needs.
Note Reports should add value to key business processes. Users who need reports should have easy access to them.
Data Access and Distribution
Whether your data access strategy is via documents, reports, or data cubes, you must have a data security and distribution strategy. For manufacturing and many service organizations, these strategies are determined through the company role and some regulatory requirements. Data that is secured is often cost, margin, or personnel information. Small and midsized organizations have an easier time determining data access and security requirements because of the smaller workforce and clearer roles. In healthcare, the same information is secure as the information mentioned earlier. But, in addition to those requirements, private health information must be protected in accordance with regulatory requirements.
All of this is obvious, so why have a section on waste regarding data access and distribution? The issue is that the IT personnel with master data access may not understand the data or how it could be used to drive improved performance. Users of the data may manually re-create information that is already stored in a more reliable manner in a current software, due to a lack of knowledge of the availability of the data elsewhere. This is wasteful not only because of the work put into collecting and storing the data, but it is also dangerous. Software managed by IT departments is often built with security to ensure that nobody unintentionally accesses information not meant to be seen by them. In areas like healthcare, this is important due to privacy needs of patients, but in any organization, critical data should be protected.
The answer to the data access and distribution issue is not an easy one. IT departments try to manage this access concern through role-based access, domain groups, and approval processes. The challenges are in making sure that the roles and domain groups are appropriate. In addition, the approval process should be simple enough that potential users are more likely to get appropriate access than to create their own data repository. As the amount of data increases, it becomes more important to make data experts available to users. Making data readily available prevents users from trying to re-create it for their own needs.
This may surprise data security professionals, but security can become so high-level that it puts the data security at risk. The processes may actually drive more potential for leaks. For instance, in my work with consultants, it is sometimes necessary to share data. This is pretty easy for small quantities of data where the byte size limit does not exceed what is allowed by IT, but when the data sizes exceed those limits, other options need to be available. I have seen high-priced encrypted flash drives. This is okay if both parties have security profiles that allow the installation of the encryption software and there is an interpersonal connection. Otherwise, some type of file transfer method is needed.
For example, I worked with a consultant who was trying to get a file to me. We tried e-mail. It didn’t work. We tried my file transfer system and he could not access it through his security. We tried his file transfer system and I could not access it through my security. So, he created a Gmail account for the purpose of transferring the file to me. He e-mailed it from the new Gmail account to the new Gmail account. Then he gave me the login information to get the file from the Gmail account inbox. This was the method that he chose because again, due to security, neither one of us could use a popular method such as Dropbox or Google Drive to transfer the file. None of our internal tools worked.
In this example, we weren’t dealing with private information that would have violated either company’s security policy. It was actually a file to help do complex calculations and create a dashboard. The point is that a company’s attempts to secure data can make it less secure. Companies can disable the ability to access external e-mail accounts and add other more extreme barriers, but I guarantee that a determined person will find a way to do their job regardless of these barriers.
Note Make your data more secure by allowing appropriate access to data and tools.
IT Training and Skills Gaps
We’ve all been there and seen it. Something goes wrong and an employee calls IT. IT’s first question is usually, “Is the computer powered on?” This is an extreme example, but PC support technicians will tell you that power issues or a simple restart of the computer fix many of the computer issues that cause the average user to need help. Unfortunately, many workers are expected to use technology, and they never receive the proper training. If you do not train your workers to use the technology you buy, you’re likely creating waste.
At one of my former employers, we decided to bring in a college professor in IT to teach many of our employees how to use Microsoft Excel. After days of training, the employees still could not perform the duties that we needed them to perform. There is no one-size-fits-all approach to training. With the level of IT implementations that companies put effort into and the wide spread use of Outlook, Word, Excel, and PowerPoint, IT training is a key to many organizations. Why are we so bad at it? We put money into computer labs. We pay employees to learn in these labs. We spend hours developing materials for training. So why is it still so bad? We don’t actively do two steps that are main keys to success.
The first step is determining what the user needs to know. We want to train the user how to do everything. For example, there is very little reason to teach the average Excel user how to do conditional formatting, use a solver, link to external data sources, or edit macros. Most users of Excel probably need to how to use about ten formulas and format cells. Yet, when we train users in Excel, we try to teach them everything. More specialized software is the same. We need to determine what people need to know in order to actually train them well. I have sat through days of software training when probably 80 percent of the material was background information or about functions that I will never use.
The second step is determining what the user already knows. We assume a basic competency level when we train employees and we are not consistent in our assumption. This is not only the case in IT training but pretty much all training makes assumptions like this. When I went through my Lean Six Sigma Black Belt training, at least half of the material was review. I was bored. The teacher was excellent and the material was interesting, but I already knew it. Over-training is a large source of waste in IT. Under-training is also a waste. I have trained people in the use of multiple hardware and software systems. In nearly every class there are people who probably could have learned in 15 minutes what I taught in a few hours. All of that time was waste. There also is normally someone who, after hours of instruction, still cannot do the basic functions. All of that time was waste. Without first knowing the capabilities of those being taught, you run the risk of wasting their time by over- or under-training.
Note Do competency analyses and determine learning requirements prior to training people.
Heads in the Cloud
While more technical definitions exist, at its most basic level, cloud computing involves storing and accessing data and programs over the Internet instead of from your computer’s hard drive. There are many opinions on why businesses should embrace cloud computing. Cost reductions due to paperwork reduction, lower hardware costs, and lower personnel costs to maintain the hardware are one reason. By using the cloud, your IT staff is focused on maintaining your network and handling routine PC support functions. This frees your staff to perform value-added functions like maintaining databases and supporting the technology needs of the workforce. Figures 6-8 shows the average savings per company from a group of companies surveyed in various areas of business. Figure 6-9 shows the total savings ranges for the responding companies.
Figure 6-8. Average Savings in Thousands from Cloud Computing. (Source: Columbus, Louis, “Making Cloud Computing Pay,” Forbes, April 10, 2013, http://www.forbes.com/sites/louiscolumbus/2013/04/10/making-cloud-computing-pay-2/.)
Figure 6-9. Percent of Responders with Ranges of Savings. (Source: Columbus, Louis, “Making Cloud Computing Pay,” Forbes, April 10, 2013, http://www.forbes.com/sites/louiscolumbus/2013/04/10/making-cloud-computing-pay-2/.)
The amount of resources you use on the cloud can change easily, much like your utility usage. Currently, IT resources are more like fixed assets. By making IT a variable cost, it helps companies control expenses. Due to this scalability, smaller companies can access better technology on an a-la-carte basis, which would not be possible without the cloud. Companies can collaborate more easily with cloud services. There are many companies using Google Drive, Dropbox, or other similar applications to manage projects around the world and share documents. The availability of the resources via any Internet connection allows users to access information via any PC or mobile device. This is particularly useful for workers with a mobile office. If you remember from Chapter 5, work-from-home employees are more productive and the cloud can allow this to happen. In teaching, I have been able to make my classes 100 percent paper-free. To do this, I have eliminated all paper expenses and countless hours of my own time sorting through papers that needed to be graded. Students get instant access to feedback and they can complete assignments even on snow days.
There are also some disadvantages to the cloud. The first one is that you must be connected to the Internet to use it. Some applications allow you to work offline, but most do not, so it is difficult to work while traveling or in areas without good data service. The reliability of your connections is also an issue. The cloud computing service providers typically can provide very high levels of reliability, but they cannot provide for a highly reliable connection. The potential savings gained through going from localized software to the cloud could easily be eliminated by lost productivity due to downtime. A strategy that includes cloud computing must also include redundancies in the network connectivity to avoid any downtime.
A responsible collaboration with IT and legal will result in a good contract with your cloud service provider, giving you reliable security and an assurance of getting your data once you decide to discontinue services, but it is more difficult to ensure that you have a way to use your data once it is transferred to you. Since the database structure of your data can be in various forms, you need to have a plan to ensure that you can use your data once you get it. Although you may have good legal contracts ensuring that your data is destroyed on the service provider side, you must have a way to verify this destruction. Both usability of data history and data destruction protocols should be included in your contract with the cloud computing service.
Figure 6-10 shows the top cloud computing benefits from the same survey referenced in the Forbes article. As you can see, the benefits of cloud computing are mostly in the IT area but also improve the ability to grow and invest in the business. This is not surprising given that if you are given more resources, you will use them to improve your business. Over half of those surveyed noted that they were able to compete with larger businesses once on the cloud. This is perhaps the greatest benefit to the cloud. Prior to the cloud, small companies had to rely on manual processes or their own creativity with the basic database and spreadsheet applications available to them. Those more fortunate companies could buy second class software applications and servers to run them and be at a disadvantage to their competitors. Now many of the top-quality software companies offer a cloud application that is scalable and is a good alternative to the onsite application. The number one waste with cloud computing is being a small-to-midsized company and not taking advantage of the cloud.
Figure 6-10. Cloud Computing Benefits. (Source: Columbus, Louis, “Making Cloud Computing Pay,” Forbes, April 10, 2013, http://www.forbes.com/sites/louiscolumbus/2013/04/10/making-cloud-computing-pay-2/.)
Note All companies can benefit from the cloud, but small and midsized companies cannot afford to ignore it.
We have worked with a variety of companies in our careers. We have seen totally paper processes in manufacturing facilities with vegetation growing out of cracks in the floor and water leaks in the ceiling. Conversely, we have also seen space shuttle components being assembled with robots and workers tracking quality checks on laptop computers in real time while the assembly is happening. Various levels of technology are in use across all industries. Commonly, companies who leverage technology are able to produce higher-quality products or services with greater customer satisfaction. So why don’t companies invest in technology? It is likely a combination of limited financial resources and lack of knowledge of what is possible.
One company we know of used 20-year-old computer technology and produced shipping paperwork on carbon paper. Forecasts were printed on a dot matrix printer that crashed frequently. The result of this was lost or late orders that would never be found because the carbon copy of the order was lost in transit. Invoices sometimes weren’t sent to customers who received products due to lack of traceability. Although this is an extreme story, it is not uncommon for companies to get stuck with outdated technology.
Healthcare workers still use pagers and fax machines for many of their business processes. I was asked to page someone one day and had to be taught how to do this because I hadn’t seen a pager since the 1980s. I also think the only time I have used a fax machine in the last 15 years was when I bought a house. But healthcare has deep pockets. That is the predominant belief in government anyway. Why not upgrade? The answer is the same. Resources are wasted on inefficient processes rather than invested in technology. Many healthcare providers did not seriously invest in technology until the government decided to help pay for it with meaningful use dollars.
In order to respond quickly to changes, whether it is variability in a manufacturing process or information related to a patient, companies need to have technology that reports information on close to a real-time basis. I have spent hours in meetings where leaders discuss the results of data that is six to nine months old, all the while pretending that the information is relevant to today’s operations. In a chapter on technology and waste, it is important to note that perhaps the single biggest waste is not using technology to improve processes and to access actionable data. Don’t get us wrong, technology can drive wasteful activity in any organization, but you can almost guarantee that you will not be able to effectively compete over the long term without taking advantage of the benefits of good technology.
Note The greatest technology waste is not using technology.
Centralized or Decentralized IT
Much like the human resource management function, the information technology (IT) function has lost its way in some companies. IT is a support function that helps to maximize the efficiency of the core business operations. But in some organizations, IT sets policies that end up becoming barriers to organizational efficiency. In an effort to reduce expenses, for example, large companies with large IT groups have centralized purchasing of software and hardware. This is a great thing for regular business users such as accountants, sales, nursing, or manufacturing personnel, but it can cause problems for users who need more computing power than the regular user.
Also, IT’s general lack of knowledge of a department’s software needs can lead to decisions not to purchase software that has a good operational return on investment. Who better knows what kind of CRM system they need than the sales manager and sales force? The IT department might understand how a program works and what installation issues will be present, but they won’t understand why the software is being purchased and what functions it needs. If IT is purchasing items on its budget, then why would it care if the department that is using these tools gains operational efficiencies? It is impossible to calculate an accurate ROI if you do not understand the potential gains, which requires a functional understanding. The goal of IT leadership at this point is to reduce IT costs, not to make sales more efficient.
Having the opposite approach can also be detrimental. A certain amount of standardization is necessary in IT. Companies that do not have some oversight of software purchases may end up with dozens or even hundreds of applications that do not communicate with each other or duplicate work. This approach costs money because the software is likely not at the best price because it is purchased in small volume. There is also the support needed to ensure that the hardware and software work properly. Also, there is support needed in the setup and the training for all of this varied hardware and software. Unfortunately, most employees don’t have enough IT knowledge to take care of their own workstations.
What makes the most sense, although it is not common, is a hybrid of the centralized and decentralized approach. Figure 6-11 shows which IT functions should and should not be centralized. The reasoning behind this hybrid model is that there needs to be an appropriate amount of standardization and centralized control of IT policies, but without becoming a hindrance to operations. By allowing operations to make decisions on new software and hardware purchases within reasonable guidelines established by IT, the best of both models is achieved. IT can also ensure that if software is used in one area of the company and a request for similar software is made, that if possible, a single software is used to meet all of the needs for both departments. Of course, like anything, there are situations where this does not make sense, such as when a special set of skills is necessary to use the software and there is little need to collaborate between users.
Figure 6-11. Information Technology Centralization
Another place where centralization fails is when companies decide to save money on software costs by purchasing versions where you need to be connected to the company via a VPN or remote login on a server in order to use the software. This causes a barrier to anyone who may need to work outside of the office and cannot secure a good Internet connection. This of course is easier for IT but not for those users who are affected. If worker productivity is affected, the software savings is likely negated. Again, a proper ROI analysis must include all potential gains and losses.
Note IT is a support function. Core business operations should always take priority over IT efficiencies.
IT departments have lots of metrics about the performance of the systems at their disposal, assuming the systems are designed correctly. These metrics include ways to measure system performance to ensure that the hardware is working properly and metrics about the software performance to identify bugs that need to be fixed. Many other metrics in IT are focused on productivity of personnel or basic project management. There are a few key metrics, discussed next, that all IT groups must keep in focus in order to be successful, but note that not all IT groups monitor these metrics.
Social Media Metrics
Social media is new enough that metrics are still being developed to show the success of its campaigns. Early in their development, the metrics were largely financial. Now, we are starting to see more metrics that capture other data from social media. This goes beyond mere financial measures, but does, of course, ultimately correlate with financial returns. Figure 6-12 shows some common social media metrics that can be used to measure success. As noted earlier, you should pursue social media only if your customers get value from the interaction. If you decide to pursue social media, you must have an effective measurement system in place and have goals associated with your activity.
Figure 6-12. Social Media Metrics. (Source: Moorman, Christine, “Measuring Social Media ROI: Companies Emphasize Voice Metrics,” May 23rd, 2013, http://cmosurvey.org/blog/measuring-social-media-roi-companies-emphasize-voice-metrics/.)
The main challenge with social media metrics is to ensure that you are looking at valuable metrics to drive the performance you need. This is true in all business areas where metrics are used, but in other areas, there is more history on commonly used metrics. As new metrics are created in the social media realm, marketers may be tempted to use metrics that don’t translate to bottom-line success.
To help avoid waste in IT, you should have metrics to determine where bottlenecks lie in your IT infrastructure. You also want to assess the degree of under- or over-utilization of your systems.
Response time is the amount of time it takes the system to respond to users during the highest utilization of the hardware. High response times may indicate that you have inadequate hardware or need to change the times of the day when your process jobs use your current infrastructure.
Infrastructure Utilization Percent
This is the percent of the infrastructure capacity utilized throughout the day. You should look at the peak utilization as well as the variation of the utilization. High utilization should trigger discussions about how to improve the performance of your current hardware or upgrade to new hardware.
All IT departments have downtime on applications due to the need to apply patches and fixes to the software or to upgrade to the latest features. There are also downtimes to perform hardware upgrades or basic maintenance. Although users don’t like any downtime, unplanned downtime is the worst because there are no plans to handle it. Tracking unplanned downtime will help you identify repeat issues. When you track this downtime, you should include a process to identify the root cause and the action taken so you can look for patterns in your data.
As a support function, IT must be customer focused and measure how satisfied the users of the IT systems are. This satisfaction should include the quality of the hardware used, the quality of the network, the quality of the applications, and the quality of service from support personnel. Companies often try to minimize IT expense and in the process of doing this, sacrifice performance, which leads to greater organizational costs. A broad measurement of customer service will lead you to understanding where you should be spending money, whether on upgrades or process improvement.
IT personnel are often big supporters of project-management techniques. Most of the PMP (Project Management Professional) certified people I have known have worked in IT. Project leaders are rewarded for delivery implementations and upgrades that are on time and on budget, so basic project-management metrics need to be in place to ensure that these goals are met.
In addition to these, you cannot forget to measure the scope and quality of your work. What good is a project that’s delivered on time and on budget when the end users are unsatisfied with the result? I have also seen cases when the scope was reduced to the point where the new software did not deliver the improvements that were promised and the users were very unsatisfied, but the project was on time and on budget. For these reasons, all IT projects should have key metrics around all four areas, with a higher focus on quality and scope than on time and budget.
Return on Investment
We include a basic ROI calculation in the Chapter 7. IT capital expenses normally come from needing a new system, either because the old one is inoperable and no longer supported by the developer or to gain some return on investment through new features and more efficient processes. There needs to be ongoing measures of the actual ROI on IT projects to show the credibility of future project ROI calculations. When beginning new projects, part of the ROI discussion needs to include exactly where the ROI will come from and how it will be measured. Ideally, any consultant or software company will agree to these estimates and put some of their fees at risk for meeting these performance objectives.
Technology is still an ever-changing area in business and there is no reason to believe that it will become less important in the future. Your challenge is to make sure that you use technology to improve your businesses at a quicker rate than your competitors. Technology can help you overcome many obstacles, but it is not the solution to fixing poor business processes. Since almost all areas of business can benefit from technology, it is easy to get too many people involved in purchasing and maintaining IT systems. In order to avoid having dozens or even hundreds of disparate systems in use, you must have a good IT governance process that is flexible but effective. Your IT processes need to ensure that you efficiently and effectively select the right software applications and utilize them to their fullest capability to drive performance. Data access must be managed efficiently to avoid data duplication created from frustrating IT processes. The right mix of reports and self-service data cubes need to be available to ensure that all employees have access to the data they need. And of course, there should be a single source for accessing information.
Since lack of skill can curtail any efficiency that comes from technology, you must accurately assess user skill and provide adequate training to get all users to a proficient skill level. Companies need to avoid relying on outdated technology and look for ways to leverage the right level of technology to support business operations. When cloud computing is a better option, you should put the right tools in place to get maximum value from the cloud, with minimal risk of data loss or security breaches.
The greatest waste of technology is not using it. The second greatest waste is not using it correctly. The third greatest waste is letting technology use you. Technology is a set of tools that your company chooses to use. The goal is to make employees more efficient and effective. If at any point you spend more time taking care of your technology than running your business, you should evaluate your technology strategy.
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