Why you need a 10-year technology plan
When Bill was in high school, computers were used in only a handful of businesses. Few companies could afford the enormous capital costs, maintenance, or even real estate to devote an entire room or building. At the time, the business value computers provided was tough to prove. Expenses related to technology were typically segmented to the R&D section of a company's general ledger.
For Bill, this was an opportunity. He saw a world where computers could store more data than the human mind, where logic could be scaled, where mundane tasks could be carried out by machines rather than humans. Fast forward a decade, Bill dropped out of his third year at Harvard to found Microsoft. Bill recognized that the post secondary world was not moving fast enough to capture the value he saw in computers.
Think about the technology in your own life 10 years ago. Every self-respecting business person used a Blackberry, Google had just released Android, the newly minted iPhone was Apple's moon shot, and Radiohead dropped their label to release albums digitally.
Now try to imagine 10 years into the future...
Will cars fly?
Will you be commuting from Denver to New York via Hyperloop One in under an hour?
What percentage of Amazon deliveries will be made by drones or self-driving cars?
Future proofing your technology requires you to entertain these thought experiments.
I get it. Your company is still struggling with Sage or QuickBooks. If you are like many SMEs, your accounting software, customer relationship management, engineering, and inventory are likely kept on completely siloed systems. Maybe you are using a cloud-based software, maybe you are still handling time sheets or data warehousing manually.
The truth is we cannot be certain what technology will look like in 10 years. You cannot be sure what impact this may have on your industry, your market, or even the software you use today.
The only thing we can be certain of today is that within the next 10 years, we will see massive and rapid disruption, and it WILL affect your business.
So what can you do?
Today, the success of future proofing your enterprise software systems comes down to five critical factors, or pillars:
- Total Cost of Ownership
Check out my Facebook Live video covering these factors in more detail.
The discussion of on-premise vs "in the cloud" has long been a matter of contention between incumbent software companies and upstart cloud firms, but this conversation has shifted significantly. It's no longer about pitting one versus the other, but rather learning how to leverage the strengths and weaknesses of both.
What do I mean by weaknesses?
Think back to the last time you were at a checkout counter, and the clerk sheepishly said, "Cash only, our systems are down." Recently, blockchain technology created the opportunity to eliminate this problem from cloud point of sale (POS) systems, but vendors within retail management have yet to adopt it.
Similarly, in the enterprise resource planning (ERP), manufacturer resource planning (MRP), and customer relationship management (CRM) enterprise software markets, many vendors have difficulty adapting to the cloud. Remarkably, this has allowed the small startups, consultants, and boutique software market to capture a whopping 77% market share.
While companies like Infor, Intuit, FIS Global, SAP, Oracle, Salesforce, and others continue to dominate the market, even they are experiencing internal cloud disruption. SAP, for example, saw massive growth and adoption with a new product line hosted as an end-to-end cloud suite for small businesses.
Enterprise Software Selection: Cost vs Benefits
When considering your own company today, it's important to consider the costs (or risks) and benefits that either option provides.
Costs and Benefits of migrating to Enterprise Cloud Systems
- Reduced IT costs
- Reduced capital expenses
- Typically reduced total cost of ownership
- No more software updates
- Repurpose IT resources from maintenance into future-looking innovation
- Enhanced mobility
- Increased security
- Typically more secure backup and disaster mitigation plans
- Unlimited flexibility, depending on the system you choose.
- Typically higher operation expenses (i.e. SaaS fees)
- Unexpected down time (i.e. Amazon Web Services recent outage)
- Potential lack of customization
- Latency (i.e. those pesky timeouts on your debit or credit card transaction)
- Vendor lock in (how easy is it to extract your data and leave when your vendor becomes outdated?)
That last risk is a big one. If your vendor shares a process map of how their software works, you can expect that your business will need to adapt your standard operating procedures to the vendor's product. For many companies, this can be the "make-or-break" between success and failure.
A platform that requires too much customization, however, could lock you into contracts with developers billed at upwards of $250,000 a year. Plus, there is likely no guarantee that their solution will function the way you planned.
So where is the balance?
It comes back to those five pillars. You need to weigh your risk vs reward for each technology improvement journey your company embarks upon.
Our clients experience this first hand as we go through our software selection and technology planning projects. A successful planning project will give your team valuable resources: insight into the problems they are facing today, a visual process map documenting how the company functions day to day, and a detailed list of requirements....before you even begin talking to the vendors.
Whether you are choosing on-premise or cloud-hosted software for your company, this approach will increase stakeholder buy-in, reduce risks of selecting the wrong software or implementation partner, and reduce your spending by protecting you against costly change orders.
Executing the decision of moving to a cloud platform isn't easy and migrating to an unproven cloud platform can wreak havoc. Still, the business case is there for most business functions. The right cloud platforms can offer your business greater flexibility, scalability, Interconnectivity, much higher security, and all at a lower cost. While making the switch might not be right for your business today, it's important to consider: what will it look like in 10 years?