By Tony Friscia, President & CEO
Consider this: top golf equipment makers introduce new technology every year and with every technology enhancement—bigger sweet spots, lighter metals, longer flying balls—players race to their local pro shops to buy a better game.
For the past two decades, many golfers have bought new golf clubs every two to three years. The result? The average golf handicap hasn’t dropped one point. So is new technology a waste of money? For most, it is, but in the hands of a professional, new technology makes a tremendous difference. That’s why some of these technologies are prohibited on the pro tour.
Unfortunately, most of us aren’t Rory McIlroy or Phil Mickelson, who benefit enormously from improved technology. The same can be said about our use of enterprise software and other advanced technologies, and therein lies the problem with our investments in these promising products.
It comes down to a quote I heard at a conference over twenty years ago, “You have to fix your organization and processes before you automate. If you have messed up accounting processes, all computers will give you is an automated mess.” It’s as true today as it was then. I’ve seen too many organizations with automated messes in general operations and how they manage critical information. The logical reaction is to blame the technology or vendor (“Replace vendor A with vendor B and my problems will be resolved.”).
Here’s a revelation: there’s usually nothing wrong with the technology. I guarantee you that many well-run organizations are seeing great ROI with the same technology. The problem with organizations that don’t see the benefits is usually that they don’t have the operating excellence to yield a return from advanced technology investments—they don’t have the skills of a professional golfer. Thus, for most organizations, technology investments are a cost without a return on investment (ROI).
Enterprise Software: What Colleges Can Learn From Industry
As colleges look to increase investments in large enterprise software systems, it’s instructive to look at the experiences of early adopter industries. Industrial companies started making large investments in Enterprise Resource Planning (ERP) systems in the 1990s. Since then, most of these companies have upgraded their ERP software about every three years. For major upgrades (every six to eight years), they’ve had to reimplement the core system, which is costly and time consuming. Studies show that most of these companies never realized an ROI on their investment. With cycles as short as three years, the system cannot be stable long enough to yield results. Also, constantly upgrading for new functionality forever adds cost and pushes ROI further out.
Looking for this ROI elsewhere, companies then made considerable investments in best-of-breed functionality to meet various departmental needs. ERP bolt-on markets like e-procurement/supplier relationship management and CRM flourished. Now, most of these bolt-on apps have been absorbed into the ERP suite and are part of the core investment. In many cases, adding this functionality within the suite became a justification for the next upgrade.
Why wasn’t there an ROI? More often than not, when I talk to operating executives, they cite the lack of accurate data as the reason why they are not benefiting from their application investments. Many are overseeing never-ending initiatives to cleanse it. Ultimately, this is an organizational and operating issue, not a technology problem.
Why CRM investments have largely fallen short of expectations
For all modules of CRM, surveys have consistently shown that a majority of users indicated they have not gotten a return, which is also true of colleges. In most cases, this is driven by a very simple organizational fact: the best performers don’t enter the data, while the worst performers, who are worried about their jobs, do enter it. You end up with accurate data on deals that won’t close and no visibility to the deals that will. When I talk about this scenario to operating executives and CIOs, even with those from some of the best-run organizations, I almost always get a nod and a knowing laugh.
There is an old adage in the IT world that I really dislike: “No one ever got fired for buying from [insert name of very large vendor].” In contrast, according to recruiter statistics, the average CIO is in a job for just more than three years. If most CIOs are making safe decisions to buy from the biggest vendors, why are they losing their jobs?
The companies selling this technology shouldn’t get off so easily. Technology providers, you need to step up and help companies operate at their best so they can more effectively use your products.
I’m a big believer in the power of technology and have confidence in it to make a difference in enhancing performance. Several years ago, the McKinsey Global Institute and The London School of Economics conducted a survey of and analyzed 100 companies in France, Germany, the United Kingdom, and the United States. They found the following:
- Improving management practices increases company productivity by 8%.
- Increasing the intensity of IT deployment increases company productivity by 2%.
- Doing both yields a productivity increase of 20%.
To a well-run organization, technology investments matter. However, these investments can be a waste of money if they’re purchased before an organization is operating efficiently. Just as new golf clubs won’t improve a bad swing, new technology won’t overcome operating inefficiencies. You’ll just end up with an automated mess.
To improve your operations, consider the following:
- If you’re planning a technology investment… Before selecting a vendor, assess your key business processes to ensure that they are efficient and work well manually. If they aren’t, reengineer these processes and achieve efficiency before investing in technology to automate them.
- If you already have technology that is falling short of expectations... Before you replace your solution with a new vendor, do a detailed analysis of the business process behind it to see how it is hampering your ability to leverage the technology. Once this analysis is done, you may just need to reimplement the existing technology and align it with more efficient manual processes. This could be far more cost effective than taking on the full replacement cost of bringing in a new vendor and solution.
- If you’ve decided a new vendor’s solution is your best option… In selecting the vendor, make sure every key stakeholder is part of the selection process and is held accountable for the success of implementation. Leadership needs to own the solution—and not just by assigning it to someone from their team. It can’t just be owned by the IT organization and a scattering of representatives from affected departments, none of whom have ultimate authority for their organization’s overall performance. The department leaders themselves (VP of Development, Student Success, Provost, etc.) must be accountable for its success.
Everyone has a stake in this game, including Eduventures. We are making a considerable investment in technology coverage to complement our research on best practices within higher education. Our research is focused on the entire higher education technology landscape. We recently published Eduventures Deep Dives on the higher education CRM market, online program management vendors, and competency-based education technologies. We will soon publish an in-depth report on learning management systems. This expanded coverage enables us to help you to improve your processes, select the right technologies, and make the best use of these technology investments.