Category: Business advice

We’re strange creatures, aren’t we?

However rational we try to be, we make all sorts of illogical financial decisions.

And while you might be nodding your head, thinking of the ‘mental accounting’ you do on a night out, it’s worth pointing that we’re not much better in business mode.

Sure, we have stricter financial rules when we’re running a business, and of course we make more ‘rational’ decisions.

But the very way most businesses conceptualise their finances is often misjudged.

Obsessed with efficiency, keeping costs low and ensuring that every spending decision has a strong, defendable rationale attached to it, we see things in extraordinarily limited terms.

For example, we rarely think about opportunity costs – what making one decision prohibits us from doing.

Equally, we don’t consider the cost of not doing things, partly because we can’t foresee how it will impact the business clearly.

It’s difficult to conceptualise our business spending over long periods because so many hidden variables will come into play.

What we at Elite are sure of, however, is that there are all sorts of hidden costs to cutting corners and maximising ‘ efficiency’ when it comes to your IT spend.

So why do people do it?

The simplest explanation is that businesses don’t see the cost.

But beyond that, it can be hard to justify higher spending to higher-ups.

And the people making these decisions are rarely IT experts, and rarely even have direct access to an expert opinion.

So this is another example of situations where having dedicated IT support is essential.

But what are the costs?

The most obvious cost of cutting IT costs is missing out on potential competitive advantages.

And this often means allowing you competitors take that advantage!

This kind of cost-cutting can be all the more deeply entrenched when you realise that advantages can come from both software and hardware.

For example, new software may be released which could supercharge your business’s performance, but running it on your ‘efficiently costed’ hardware, it may not be able to run properly.

On top of this, there is the potential for systems failures to totally derail whole days of work.

And this isn’t just an economic cost – it also strikes a blow to employee confidence and morale, not to mention disgruntled customers and appearing to the public unprofessional.

Even if you don’t have a full-on systems failure, the costs of maintaining weak, cheap technology will very quickly mount.

Not to mention the fact that technology tends to leave its predecessors behind, so the most rigorous updates and securest systems will simply be unavailable for older, less robust technology soon enough.

Digital transformation has become something of a buzz phrase in the business world. Everybody seems to be in the middle of one. And while there is good reason for this sometimes frantic enthusiasm, anytime a phrase becomes so heavily leaned upon at businesses conferences and in ‘thought leadership’ articles, it’s worth treating it with a healthy dose of scepticism.

So that’s exactly what we’re about to do.

The reasons behind this mania for ‘transformation’ are numerous, but we suspect they come down to a few simple points.

First, digital technology really is changing everything. If we think of the biggest businesses to arrive in recent years, they are almost all digitally native startups with a clear, disruptive plan. Companies like AirBNB and Uber have found radical new business propositions by leveraging technology rather than any more traditional innovations. And this has led to a recent poll taken by Microsoft revealing that 41% of business leaders believe their current business model will cease to exist within five years. This has, quite rightly, led many business leaders to prioritise radically overhauling their operation and infrastructure as soon as possible.

So there is a legitimate cause for the hype.

But a second, slightly less heroic reason, is simply that business leaders have to keep face in front of one another, and once a critical mass breaks, basically everyone has to be ‘transforming’ their business and ‘disrupting’ the norms, simply in order to fit in. This is how we end up with numerous businesses approaching their ‘transformation’ is rather elaborately unimaginative ways, slapping needless technology onto their existing processes and pretending that this equally progress.

So there are also some less legitimate reasons at play.

The third reason, however, is perhaps the most intriguing, which is digital transformation sounds exciting, impressive, and progressive –things we’d all like to think about ourselves, no matter how inaccurate. It is increasingly the case that digital transformation has become – in some quarters – a vanity project wherein leaders can assert themselves and their vision on whatever legacy business they are in charge of. And this brings us to the nub of the issue.

When thinking about this current slate of ‘transformations’, it’s important businesses – particularly small businesses – don’t get carried away with the noise of it all. Many businesses really do need to reimagine their approach, but just as many are not under nearly the same threat, and in the mania of transformation they may well lose track of what really matters to their business.

Instead of thinking radically, businesses right now need a serious dose of sanity. They need to be taking in their competitive environment and working out the real pros and cons of changing their tech component. For many, a traditional IT setup is enough for them thrive, especially if it’s properly setup and well managed.

So next time you hear about digital transformation or the need for radical disruption, just ask: is that really necessary for your business?

Every business is a bit like an organism.

Regardless of the sector and market, a business needs to function in a healthy, unified way in order to have any hope at success.

That means each part of the business needs to talk to the others and share a common understanding of the values and vision they are trying to uphold.

And this is increasingly tricky, as specialism become more and more separate.

IT in particular is often treated as a side-entity, a kind of sub-business filled with people who only really appear when something’s gone wrong.

And this can cause some real issue for the organism.

By having such a central part of a business’s infrastructure either undervalued or unaligned, there is a real risk of miscommunication and misaligned values and vision.

Which many businesses believe is fine.

But this is because they are under the impression that IT either works or it doesn’t.

So IT people are either effective or they aren’t.

And if they aren’t, they can be replaced.

The reality, however, is any IT team worth its salt has at its finger tips a whole host of different software, hardware and structural choices which it can implement and recommend to respond to the specific needs and wants of a business.

And by never having a conversation about visions and values, businesses often miss out on the possibility to have their IT team purposefully construct a bespoke system which would be better suited to their specific needs.

Because a really great leader wants everything in their organism to be in alignment, working in harmony and working as well as they can.

Imagine trying to recommend a task management programme to a business without any understanding of how they operate or what they need it for.

Clearly, the chances of making the best possible choice are limited.

So what we recommend, both for the businesses we work with and any business working with outsourced IT, is to focus early in the relationship on those really important conversations where ideas are shared and visions are aligned.

You might even find you enjoy the chat.