How Much Does That Technology Cost Your Business?

for the Business & Economic Review

The good news is that the new technologies are in the hands of those who can use them most immediately: Your line employees. The bad news is the investment. It is probably larger than you think or ever dreamed possible. How do you get back to that good news? Can you control the cost of technology you do not understand? This article is about how to give the right direction to your people so they do that for you.

What is going on in your company while you are reading this? Someone is buying Pentium class machines. Someone is looking at Internet appliances (they really are called Internet toasters!) Someone is at an Intranet seminar, learning how to build you one to go with your Internet. Someone is choosing a numerical control system. With luck, no one will try to explain it to you later. Someone is buying a copier that has more computer power than your entire school had when you got your degree. Someone is losing at a computer game that might have overloaded the big computer you bought fifteen years ago.

What is costing you is the time your people spend on selecting technology. The hardware is cheap. Software is almost, but not quite cheap. Support is getting expensive. Your people's time and focus are what could be your competitive advantage next year. If your line teams buy only half the things they are looking at, you will spend more in opportunity costs than you want to calculate. That is what has changed.    The change happened because only a few years ago you had an Information Technology (IT) department that had people in white coats who spoke their own language. You could rely on them to design technology investments so that they made sense for your business. They delivered the tools to your people when and where needed, or so you hoped. Using the IT department has a big advantage. It puts the process in the hands of people trained to understand what a SLIP protocol is and who have the time to investigate why a copier might need one.

That meant that your sales managers sold. Your operations managers made things happen and your finance people made sure you were in control.

Now, every department can have their own informal IT function to manage the LANs, support the database application, and make sure that the clients and servers keep their roles straight. Your expense is not in hardware and software. Your risk is in the opportunity cost of your best people doing IT work.

Time is your most critical resource, the one you can never renew. When your best people spend it in the wrong place, your business slows. Your best front line resources are focussing on which Netscape plug in to buy. Suddenly, your company is getting slower. Not because you are getting more bureaucratic, but because you are getting less so. When this happens, you lose a chance to compete.

How do you balance these? You want to leave responsibility and authority at the front line. You need to keep the business moving faster and faster. The answer is not centralization, nor is returning to refrigerator sized computers that require water to cool them. It is not to ask each manager to bring their technology decision to you. Instead, it is time to ask the line to buy effect instead of technology.

What Are You Buying, and For Whom?

Consider your best salespeople as a model. You probably ask your sales teams to sell the sizzle, not the steak. The best sell what the user gets and does. That becomes the compelling reason to buy your features and benefits. A great salesperson focuses on effect before process or tools. This is more customer centered, and it works.

Ask your people to treat investments the same way. Ask them to buy the way you are asking the sales team to sell. They should buy what the device does, not how it does it. They should only buy to get what they need done, not for things they might need later.

Ask your line people looking at the new technologies to define the consumer of that technology. It's the first question to look at, before the processor or the price. Whether this is a copier or an Intranet, is it Herm down the hall who is the person who will benefit? If so, forget the folks on the other floor, focus on Herm and his peers.

Step two: Ask your people to define the effect as their customer sees it. What does Herm need? Will this technology provide it?

Asking about the technology itself is not your role. You have people for that. Your role is to make sure that someone is asking about the effect, and whether it meets the needs.

An effective role for you is to tell your people that you will let them study and buy anything that they think makes sense. All you ask in return is that when you wander down to Herm, he can show that he is more effective than he used to be. That he can say it was worth his time. If he is and can, then you are happy. Tell your advocates that if he is not substantially more effective, no matter how modern the product or technology is, no matter how good the deal, you have an opportunity open in the sub branch in Bangor, Maine.

What You Don't Want to Buy

There are some effects you do not want your people to buy. For instance, using technology to maintain parity with your key competitors. They may be tempting, but competitive parity is not a good enough reason to invest your people's time in new technologies.

For instance, did you wage a Web page war? Did you and your competitor each spend between one and five million dollars on excellent WWW sites, only to discover that your customers could not care less? Do you get plenty of hits (visits to your site) but few sales? Did you save the time of your people, or are they still handling the same load of calls and letters that they used to?

Consider that most of these tools are not just unproven. They are so new that no one really knows what they will do for you. If your own people cannot tell you that, can the other guy figure it out? Your competition may be good, but is it more than the blind leading the blind?

The other effect that you do not need to spend time on is the Field of Dreams. Some products have succeeded with a philosophy of "If we build it, they will come." Many more have languished until someone found a way to make them attractive.

Did you ever hear of LOMAC? The Logical Machine Corporation started in California making a highly rated voice driven desktop computer. Not much later the Osborne Computer Company made portable computers that got great reviews. Ask your people if they would rather be LOMAC or Apple in the '80s? Osborne or Compaq today? If you build it, even if the pundits love it, your customers will not use it for more than a few months unless they get an effect they need.

Lastly, that free excess capacity may cost you more than you ever thought possible. In the old days, when the new tool came with excess capacity that no one knew how to use, your IT department would figure out what to do with it. Now, who will be the person who studies it? Will they be your line staff, taking time away from your core work? Can you afford that?

When buying excess technology, someone is trading present time for future value. It is usually an unconscious decision. Yet, how often do you allow your finance people to trade present value for future value without thinking it through? Here the cost is time away from key tasks. It your line teams are studying some future capacity they got 'free,' what is the real cost to you? Don't let your best people unconsciously spend your most critical resource. Direct them to avoid buying futures that do not have a clear benefit to Herm or his equivalent.

Give the Right Direction

Do the Internet appliances sound suspiciously like the unintelligent terminals that IBM used to sell you and your people told you to get rid of? Don't worry about that. Worry about what your line people are doing with their time. If they are improving the effect of what you deliver, forget the technology.

Keep the decision making at the local level, and encourage more of it. Task the teams with deciding how they are going to enter and dominate a new market. Then they choose the technology they need to make it happen. All you can do is ask them what they are doing with their time to get you competitive advantage instead of creeping elegance.

This piece appeared in similar form in the January 1997 issue of B&ER. It is copyright 1996 by the Meyer Group, all rights reserved.