Scaling Your Business with Technology
By this point in the financial crisis, you've made countless cutbacks, and wrung as much productivity as you can from your organization. But how can you grow without adding large numbers of people? Scaling your business from here requires a significant change, and for many organizations, that means employing new technologies.
Technology can empower your organization, helping you improve efficiencies and even expand operations. But to use that technology well, you must balance your needs with the realities of how you do business. That means understanding not only which technology to invest in, but also how it will affect your operations and how to maximize your returns on that investment.
Ask the right questions
What does it really mean to scale your business? Today, it means much more than simply throughput. When considering a new technology, many organizations focus on the wrong questions. They want to know, "What can I do with this technology?" rather than "What can this technology really do for me?"
Today, businesses and consumers alike expect everything from new technology, namely speed, collaboration, consolidation, accuracy, and greater connections. But it's risky to think that simply plugging in a new box will do the trick. Using new technology to scale your business involves much more, primarily exploring how well it will integrate with your network, your IT components and your users.
Whether the solution you are looking for relates to manufacturing or improving payroll efficiency, a new technology can scale your business through automation.
Consider the example of an auto manufacturing plant utilizing robots. Thanks to that technology, it no longer takes 17 people to build a car -- it may now take three. While people do monitor the technology, there is no one actually driving the screws. In this case, the technology platform improves efficiency and helps the organization meet new "green" business standards. Reducing the number of people makes for a smaller carbon footprint, with fewer resources required.
From a general business perspective, technologies can have a similar impact. Tools like enterprise resource management systems, financial systems, and customer service technologies all have a tendency to improve effectiveness and efficiency without always having to "brute force it" with more people.
Consider scaling your customer interactions, for instance. The Web has made it possible to sell without human interaction. Today, even a multi-million dollar at- home business requires no bricks and mortar. Everything can be automated, from the sales floor and collection of money, even through distribution.
You can even scale your human resource function by converting to a self-service model. Here's an example: A staffing company goes through a large HR payroll implementation, which needed to accommodate the 380 thousand people on payroll. Over a year, they undergo a major conversion that allows them to handle 800 thousand people without adding more than 1-2 percent to headcount.
Clearly, automating functions like employee background searches, enrollment in benefit plans, and payroll can allow you to scale dramatically without adding to your carbon footprint or adding headcount.
Get the most from your investment
A common mistake many organizations make is allowing the technology to choose them, rather than choosing technology to grow their business. Many select technology before they really build out their business case and consider the process re-engineering required to make the company better. Very often they buy software and then convert their processes to support the software, which can actually make things worse.
That is why before you invest in technology, build a thorough business case that looks at the total cost of ownership (including costs of hardware, software, and implementation and maintenance over time). When determining costs, remember that once you invest in a technology, it's fairly well set. Major changes or upgrades are usually not required for some time. But technology does require continual care and feeding.
After implementing the technology, you must then go back and verify that the business case met your company's internal rate of return. For example, if you projected a million dollars in savings, go back and review the business case, compare it to actual performance and show that you did as well as promised or worse. If you did worse, conduct a 360 degree review that explains what lessons were learned, and how you could do better. Such an exercise renders you more thorough, diligent and focused in terms of vetting the business case before proceeding with any kind of project.
When looking to scale your business, remember that scaling through technology means something different to every business and every network. But if you ask the right questions, budget and plan properly, your investment can pay for itself many times over. When you know your business, you'll know how it will respond to change. You'll also be better equipped to meet today's challenges and prepare for growth.
Mike Gorsage is a Partner and Technology Practice Leader for Tatum LLC. Tatum is the nation's largest executive services firm, providing financial and technology leadership nationwide.