Tech Trap No. 1 – Technology is Always the Answer

Editor’s Note: Following is the first of our ten part series called “Technology Traps and Mishaps,” by Fred Ode, CEO, chairman and founder of Foundation Software. To read part two, click here.

I’m fifty-five, fat and fit. Okay, I lied about the”fit” part. Candidly, this winter I got myself somewhat out of shape, and I really want to do something about it. So, I was thinking I should go out and buy an elliptical something or other exercise machine. You see them advertised on TV all the time at 3 or 4 a.m. when you can’t sleep because of the large pizza you ate just before going to bed. These machines represent the latest in exercise technology and the results are guaranteed-right? However, the solution for me is not exercise technology. My solution has a little more to do with the establishment of some better processes in my life. Exercise more and eat less-and no late night pizza! It’s not all that complicated.

In business, as in life, the temptation is to believe technology will solve your problems for you. Reality shows us that possibility isn’t even close! The only time technology will help is if you already have the processes in place.

Take, for example, the advice Bill Gates once gave:

“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.”I can give two business examples of how Bill’s rules are correct. They go back to 1991 when I was the lone salesperson for my company, and the outcomes are as true today as they were then.

The first business was a union contractor, running eighty people in the field. The company didn’t own a computer. Everything was manual. However, they did their own payroll, union reporting, certified payrolls, job costing and financial reporting. This company was extremely well-organized, and they had a great set of processes in place.   They were a natural fit for our construction accounting software. It literally reduced their workload by 80 percent, allowing them to use their time for more sophisticated job costing and analysis of their business. Clearly, according to our friend Bill, they were able to use technology to magnify their efficiency.

The second company ran about thirty people in the field. They owned a computer, but it sat in the corner and collected dust. They used a payroll service, but had difficulty getting information to them on time. They had no job costing, and the only financial reporting occurred once a year when they handed over their paperwork to their accountant.   Fortunately, the business was small enough and the owner skilled enough that they always managed to somehow make a profit.

Though it would have been easy for me to sell this second company our software, it would have been a disaster. Without a shift in the processes and procedures, the implementation would have failed and, as Bill described, the automation applied to inefficient operations would have magnified their inefficiency.  At best, iIt would have consumed a great deal of their time, effort and focus and would have yielded no results.

Now, to be honest, I didn’t walk away from this sale. It wasn’t in my nature. What I did was put a plan together for them. They invested in our software, and we provided them with an extended training period, covering several more months than normal. We established a simple, but practical job cost structure that they could easily track in the field. We trained their key people, and in general, changed the way they categorized and collected data. As this was occurring, we transitioned these new processes over to our software. It took longer than normal, but in the end it worked.

For both companies, technology always followed efficient operation. The first business already had, these operations in place. As for the second, they needed to  first establish their processes before technology would help.Let’s assume you are having trouble getting accurate information from the field for payroll, job costing and equipment usage. You attend a trade show and become convinced that by implementing PDAs in the field, your problems will be solved. But that’s not necessarily the answer. You need to first “sell” your field people on the benefits of transmitting accurate information.. Once you have their buy in, you will need to establish the processes to make it happen. The establishment of these new processes may involve the implementation of PDAs, or it may not. The processes must first be in place prior to implementing the new technology. In that way you will magnify your efficiency.

In Jim Collins’ now classic book, Good to Great, he described the major difference between successful and mediocre organizations:

“The good-to-great companies used technology as an accelerator of momentum, not a creator of it.”

Clearly, technology is not always the answer. Without planning, preparation or processes, technology can be a great waste of resources that could be better spent elsewhere. The real answer lies in how you use technology. Use it to support your strengths and you will increase your efficiency and perhaps even take your company to a new level. I think Bill and Jim will agree with me when I say, “Technology only helps you do better that which you already do well.”

On that note no more late night pizzas for me. I feel the momentum building!

Construction Business Owner, July 2006