Investing in Technology: How to Make the Right Choice

Technology is evolving faster than ever. New software products, frameworks, and methodologies emerge all the time, making old platforms and ways of working obsolete. With so many options available that are constantly changing, making the right choice is a challenge. Large, complex organizations usually have procurement processes in place that emphasize due diligence, risk management, and cost-effectiveness. A typical technology selection process looks like this:

  • Needs recognition and validation
  • Requirements gathering
  • Stakeholder interviews
  • Financial analysis and ROI
  • Business case
  • Shortlist
  • RFPs
  • Vendor demonstrations
  • Scoring against the selection criteria
  • Decision making
  • Negotiations and contracts

With all of the steps in the process well-defined, what can possibly go wrong? Why is the success rate of technology investments so poor? Let’s look more closely at some common mistakes.

Common mistakes

Herd instinct —Some organizations are overly influenced by the choices their competitors make. They assume that what worked well for another similar organization will work well for them. This is particularly common in verticals serviced by industry-specific solutions, such as health, ecommerce, and higher education. However, intimate understanding of the sector often comes at the price of slower pace of innovation. Software vendors that tailor their solutions to a specific industry don’t typically offer the most innovative, cutting-edge capabilities.

Overbuying —It’s easy to get carried away by a compelling presentation delivered by an A team of experienced sales professionals. However, if too many product features are above and beyond what’s actually required, it’s worth asking if the organization is ready to adopt the proposed vision at the time of investment.

Death by requirements —Interviewing all stakeholders in a large organization and writing down every single requirement can slow down or even stall the selection process. The more requirements vendors have to consider, the longer their responses are—and the longer it will take to evaluate them. Technology selection must be a pragmatic process, prioritizing vision over completeness.

Often, these pitfalls reflect the personality of the individual assigned internally to lead the selection process, such as:

  • Someone who is outgoing and well-connected with industry professionals is likely to lean on advice from more experienced peers, thus falling into the herd instinct approach.
  • A visionary leading a selection process is likely to be influenced by slick product demonstrations showing true leadership and innovation and may end up overbuying for the organization’s current needs.
  • A loyal, hard-working perfectionist may get stuck at exploring all of the options and all of the requirements at the expense of moving the project forward, which may result in death by requirements.

If people leading the process internally had a chance to do a similar project again, they would no longer need to rely on their instincts as much and would adopt a more balanced approach. Unfortunately, by the time the organization selects similar technology again (usually in 5 years or more), people involved in the previous technology selection move on to other roles. Information captured in lessons-learned materials becomes out-of-date. Hanging on to this obsolete knowledge is not a good idea.

External consultants

The only way to address the issue of knowledge decay is to involve an external industry expert who selects and buys technology day in, day out (rather than once in 5 years). By hiring an external consultant, organizations can achieve a number of benefits.

Current knowledge of the marketplace —The main and most obvious benefit of using an external consultant for technology selections is to acquire current knowledge of the marketplace. This kind of expertise cannot be replicated internally.

Broader perspective —Previous experience of working on similar projects makes it possible for external consultants to either validate or challenge organizations’ own findings. It adds weight to recommendations and gives the organization confidence to proceed in a certain way. Occasionally, it also makes a competitor’s name pop up randomly in the vendor’s proposal when proofreading didn’t quite happen as it should have.

Clarity —Good consultants bring clarity. They are firm and don’t shy away from articulating the problems their clients face. They stick to what’s really important. They surface conflict and disagreement in ways that help the organization to move forward and grow.

Focus —Organizations get caught up in internal politics, whereas external consultants retain a ruthless focus on the timeline and help internal employees concentrate on the most important steps and actions.

A word of warning

While working with external consultants brings many benefits, managing the relationship between the consultants and internal employees requires extra care. Here are some typical challenges.

Lack of trust —Relationships between external consultants and internal teams are often fraught with difficulties. External consultants provide an opportunity to learn and improve. They are hired specifically to change things for the better and address problems that internal teams are unable to solve. However, internal teams may see this intervention as a threat to existing processes, roles, and responsibilities. In the worst-case scenario, implementation of the new technology may even result in layoffs. Clarity around how the changes will be implemented and who will be affected is essential for establishing trust and effective knowledge-sharing between external consultants and internal teams. Shawn Engbrecht dedicates a full chapter (“The Outside Consultant: Learning to Love the One You Hate”) to this issue in his book Invisible Leadership.

Missing the point —Consultants have limited time to collate all of the information required to fully understand the intricacies of how the organization operates. It’s not uncommon for consultants to apply similar scenarios from previous experience to cases where they don’t quite fit, because of some misinterpreted data. Validate a consultant’s understanding of the problem early and often.

Longer-term transformation path —External consultants typically work in short, high-impact engagements. After the final presentation is delivered, there is a risk that the organization isn’t ready or can’t afford to follow the transformation path to move the organization forward in the longer term.

Telling you what you already know —As the saying goes, “A consultant is someone who borrows your watch to tell you the time, and then keeps your watch.” While collating information and reflecting it back can be useful, this activity alone cannot justify expensive consultants’ fees. Recommendations must be substantiated with data and analysis that are based on broader experience across the sector.

Conclusion

In some organizations, selecting and buying technology is a case of the least-qualified people leading the way. It is not uncommon for a staff member in charge of the decision to have no prior experience with conducting technology selections. Lessons learned, which are documented by predecessors, are often past their expiry date.

Organizations looking to achieve competitive advantage as part of their technology investment must engage external consultants and industry analysts in order to acquire the most reliable, up-to-date knowledge of the marketplace. If the relationship between external consultants and internal staff is managed well, the combined effort will ensure that the technology investment meets the needs of the organization and delivers a lasting success.

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