No False Moves

Small companies waste untold dollars on technology that doesn't begin to solve their problems. Here's how to analyze your business and develop a focused technology plan.

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Strategic Thinking

Why guess what hardware and software you'll need when a technology plan can tell you for sure?

Back in the duck-and-cover days of the Cuban missile crisis, Robert Smith, a chemical engineer and director of new products for Mead Johnson, in Evansville, Ind., invented what he thought was an antidote for atomic fallout. Smith designed his milky-looking cleanser to remove radioactive particles from the skin and stored gallons of it in a 3,000-square-foot underground bomb shelter. To protect his family from starvation in the event of a siege, Smith also stockpiled gallons of another of his inventions--a diet drink called Metrecal, popular with Donna Reed wanna-bes. "We were secure in the knowledge that we'd be the cleanest, slimmest family to survive an atomic attack," recalls Smith's son, Steve.

Fast-forward to 1998. Steve Smith now runs Tec Laboratories Inc., in Albany, Oreg., a 21-year-old company that his father founded after leaving Mead Johnson. Tec Labs' cash cow is Tecnu, a popular over-the-counter prevention and treatment for poison-oak and poison-ivy rashes that is a variant of the fallout remover. Sold at large drugstore chains like Rite Aid and Walgreen, Tecnu last year pulled in $2 million in sales for the 20-employee company.

Tec Labs is doing very well these days. In addition to Tecnu, it manufactures seven other products--including anti-itch gels and insect repellents--whose sales have grown by 85% in five years. Last April the company signed a major sales agreement with Wal-Mart Stores Inc. And CEO Smith, who carefully tracks these things, says Tec Labs has enjoyed a 52% jump in productivity since 1994. (That increase may be a sign of employee contentment. Recently, Oregon Business magazine named Tec Labs one of the state's best places to work.)

Smith credits his company's success, in part, to a detailed technology plan that supports Tec Labs' grand strategies while ensuring that employees have everything they need to do their jobs well. The plan is a constant work in progress both for Tec Labs' information-systems director, who reviews existing computer use and sets standards, and for Smith himself, who has devised an elaborate formula for measuring the return on investment (ROI) from potential technology purchases. Under Smith's scheme every PC, every software package, and every modem and network wire is assigned a monetary value based on its expected contribution to the business.

"When we look at any technology improvement, we look at the people who are using it," says Smith. "You can spend millions on new computers, but if you don't think first about how they are going to improve your employees' work and your customers' lives, then they're just a bunch of boat anchors."

Formal technology plans like the one at Tec Labs are common in large companies but far less so in small operations. That may be the reason small companies often sink thousands--even millions--of dollars into technology that doesn't even begin to solve their problems. "Small companies don't pay attention to what they really need from their systems until it's too late," says Anita Cassidy, CEO of Minneapolis-based Strategic Computing Directions Inc. and author of A Practical Guide to Information Systems Strategic Planning (St. Lucie Press, 1998). "One day they wake up and find out that their technology can't support their business."

Technology plans are, in fact, "a lot like business plans," says Cassidy. They begin with a business destination and then lay out a map for getting there, examining both major and minor thoroughfares as well as roads not taken. For example, if a company's goal is to boost sales, then its technology mission might be to automate the sales force. If automating the sales force means putting in a new network, the technology plan will exhaustively evaluate that project as well. "A technology plan needs to look at all the company's pieces and processes and offer careful recommendations," says Cassidy.

Such plans force companies to ask important questions--How do we work with our customers now? How do we want to work with them in the future? What are our competitors doing? Where is our industry going?--and then to consider both the technical and the nontechnical implications of the answers. In some cases plans also impose much-needed discipline. "A lot of people want to play with the newest technology, even if there's no strategic reason to buy it," Cassidy notes. Technology plans counter those impulses by providing a structured approach to procurement.

Not surprisingly, a technology plan's shape and scope will vary with the company. Three- or five-year plans are fine "if you're dealing with a fixed product and you already have a certain set of known quantities in place," says Bruce Gray, vice-president of business-systems planning and measurement at insurance and financial-services giant Prudential Corp. "But if you're selling candy bars this week and ice cream the next, that changes everything."

For companies in fast-changing industries--high technology comes to mind--plans should be built around six-month or one-year cycles, according to Cheryl Currid, a technology analyst. "Basically, business and technology plans should become living documents that work together to drive the company forward, mapping vision to reality, theories to processes, goals to techniques," she says. "Ideally, the contents of the plans change over time and could look like a corporate diary."

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