Over the last several months in my new role as an IT consultant I’ve had the opportunity to see how technology start ups approach the market. In my prior life as the CIO of a large organization I often had to deflect several pitches a week from technology companies large and small. I observed that IT leaders of established non-technical organizations and the leaders of technology organizations have a different view of the world. In many cases the people on either side of the discussion do not understand why they are not able to make a successful connection.
Good CIO’s are always focused on how IT can create value for their organization. Good technologists are focused on creating product that addresses a perceived need. When a technologist’s product addresses a gap that is required for a company to create value, magic should happen. Yet frequently companies purchase products that fail to provide a return, and products that a company needs to improve profitability are not identified much less purchased.
I define a successful relationship between a technology provider, and a legacy IT organization as one where the technology provider is able to realize an ongoing profitable revenue stream, while the legacy organization captures and understand the value the technology solution provides. Following are the three most common technologies and legacy organization disconnects that I have observed, along with my thoughts on how they can be addressed.
Technologist Disconnects
I’ve Got a Hammer, so You Must Have a Nail that Needs Pounding
Technology companies are great at developing brilliant new products. Often these products address more than one use case, so can be used in different ways across multiple industries. The technology companies want to sell their product as broadly and deeply as possible, which often results in trying to pitch the product for any use case a company identifies. As an example, I was once pitched using blockchain for tracking goods movements within my organization. My feedback to the vendor was that if I needed to use blockchain to ensure transparency on internal transactions I had a much bigger problem, and one that blockchain probably would not solve.
Large companies always have more opportunities then they have resources or capital to pursue. A key function of IT Governance is to prioritize those opportunities and focus on those that will deliver the most value. These priorities should be shared broadly to ensure organization alignment, and to focus the company’s ecosystem on success. The really good technology companies focus on understanding a customer’s priorities and matching those priorities to their products primary use case. If there is not a match, they focus on other customers who do have a prioritized need. Realize that selling a product that does not help a company realize its primary objectives is not in the best interest of either party.
The Hard Part of Digital Transformation is the Transformation
Business gets done via a combination of people, processes and tools. To have meaningful positive impact on results all three aspects must be considered. This is obvious when creating and deploying a new product line. Think about a manufacturer who wants to extend her business by using data from her products to introduce a set of product related services. The people building the product don’t necessarily have the skills required to service the product. The process to schedule a service event is different from creating a manufacturing schedule. And the tools required by the new processes and skills are going to be different. Even though improving existing operations may not create as obvious a need to change all three aspects, that need still exists.
Technology companies are often so focused on advancing their product that they fail to understand the business processes and organizational capabilities required to capture its benefit. To address this, they need to ensure their use cases address capabilities and processes as well as the product. They should then develop a business plan that addresses all three elements. If a product requires a specialized skill set, how will it be provided? Should they expect a company to develop the skill itself, or will they offer to partner with someone to offer the skills?
They also need to be prepared to work with their customers to ensure the business processes dictated by the tool’s capability are compatible with a customer’s operations. In a past life example, we had to revise both internal data collection processes and the objective on the level of detail for a new solution to provide marketing data for future product plans. If the required process changes are too great, then the tool investment will never provide a return.
Building a House Without a Foundation is a Losing Proposition
New solutions are built on top of other current technology solutions. When installing a new solution in an environment that is not consistent with the design assumptions the results usually fail to meet expectations. A company I worked for made the decision to migrate from an on-premise collaboration tool to a cloud-based tool. Our network was not consistent with the solution’s network requirements for collaborating effectively around the globe. The gap in the network design resulted in productivity plummeting instead of improving when we turned on the new tool.
During the sales process we explored in detail how the new solutions features would enhance productivity. The solution provider assumed we’d be running their product over a state-of-the-art network. We assumed that since our network was adequate for our legacy tool it would work well for the new solution.
Technologists need to understand that most legacy companies have skimped on investments in one area or another, and in some areas will have solutions that are dated if not obsolete. Part of the sales process needs to include identifying if the customers environment is consistent with the products design assumptions. Where there is a disconnect there should be an evaluation if the product will still realize the customer’s use case. If not, the customer needs to evaluate if updating its underlying systems to meet the minimum requirements still yields a good business case.
Legacy Organization Disconnects
Ready, Fire, Aim
In the business world new problems arise daily, and priorities often seem to be in a constant state of flux. Too many IT departments are in a constant reactive mode, and bounce from one initiative to the next without a long-term plan. This leads to engaging with a vendor, and then losing interest when the next major issue arises. These shifts result in lost time and wasted investment on the part of the company and its solution providers.
Better run IT departments will work across the organization to jointly develop IT roadmaps which support the businesses vision, mission and strategies. These roadmaps will also ensure that the base IT services are maintained in a highly effective manner. It is also imperative that these roadmaps be updated at least twice yearly to reflect changes in the organizations long term focus and to take advantage of emerging technologies.
I have found that the greatest value in having effective IT roadmaps it the ability to focus resources on the areas that are of greatest value to the company. This allows IT to effectively engage with the solutions providers who can support priority initiatives, and not waste the time of providers whose solution will not bear fruit.
Building Your Own Winchester Mystery House
One of the challenges of building an effective IT capability is failing to rationalize the solution portfolio, and deal with technical debt. New solutions are too often added and linked to existing solutions, without an effective long-term architectural plan. Over time these links become intertwined and difficult to support or rationalize. The result is that each new solution become more and more difficult to implement and support, which stifles innovation and responsiveness. An example we unearthed required electronic orders to flow through two legacy systems prior to entry into the order management system of our ERP. We disrupted shipments due to outages in these unsupported legacy systems.
In order to support innovative new solutions IT organizations must execute a plan to simplify their environment as much as reasonably feasible. This means taking a longer-term approach to evaluate the value and total cost of ownership of their entire portfolio. One of the key advantages of doing this is an improvement in the time and effort required to evaluate and implement innovative new solutions. Technology companies who find potential customers who have an overly complicated environment should be warry that the customer will ever really be able to take advantage of their solutions and become a satisfied customer.
Looking for the Silver Bullet
There are still many examples of companies looking for and buying solutions expected to be “plug and play” answers to a pressing issue. Many of these solutions are purchased by business led IT groups, also known as shadow IT. However, I have fallen prey to the turnkey sirens song when purchasing a solution to improve IT productivity. (In my case is was a password reset solution that was by and large rejected by our user community.) While such purchases may help a solution providers short term revenue, when they fail to deliver, the solution provider loses the opportunity to leverage the relationship for long term profitability.
IT departments need effective Architecture and vendor management capabilities to avoid this issue. The Architecture team should develop, publish, and promote standards for established use cases where a capable solution has been identified. For new use cases a process to rapidly evaluate solution options must be in place. This process must include the option for conducting proof of concept, or pilot launches to fully vet solutions.Having an effective vendor management office (VMO) in place can limit rouge purchases, and ensure a company gets the full benefit of whatever leverage it has. An effective VMO will be seen throughout the organization as the place to go to purchase IT enabled solutions. To earn this reputation the VMO processes must lead to timely procurement of solutions for the best possible total cost of ownership. By linking the VMO to the architecture team rogue purchases can be identified and redirected to solutions which fit into the overall company architecture.
Limiting purchasing avenues may seem like an issue for solution providers. However, a streamlined set of contacts and procurement processes should simplify the sales cycle, and result in a better success rate when a company does engage.Common goals, and common understandings are a key to any successful long-term relationship. This requires both sides to invest in understanding the others perspective. If you are involved as a solution creator, or as a solution consumer, know that the more you invest in understanding the person sitting across from you, the better the outcome will be in the long term.
