Making Your Company Better, Faster, Cheaper (Tech Factor by Steve Hankins)

I often ask business owners and leaders, “What does your computer technology do for you?” The typical answer I’m given is, “I’m not sure.”

My follow-up question is, “How much is it costing you?” The usual answer is, “I’m not sure,” followed quickly by, “too much.”

I’m pretty certain that if I asked a business owner what purpose trucks running around town painted with their logo served their answer would not be, “I’m not sure.” An overall spending estimate on the fleet would probably take less than 60 seconds.

The purchase of a truck, fleet of trucks, piece of manufacturing equipment, or a set of tools for your business is an investment. Investments are made with the idea of generating a return — more commonly stated as, “make money.”

Business leadership should view spending on technology of any type as a business investment. Technology spending should have a definite business purpose along with an anticipated return or improvement in business value. Computer technology should not be an exception.

If the business leadership doesn’t take this view, no one in the business will.

What is it that technology provides that improves business value? Larry Ellison, CEO of Oracle, has a favorite phrase: “faster, better, cheaper.” Before signing off on a technology investment, business owners and leaders should understand how the investment would enable their business to be, “faster, better, cheaper.”

“Faster” can be thought of as work output versus time expended. Technology could enable more volume to pass through a work hour thus improving efficiency and productivity.

Improvements in “cycle time” made possible by technology lead to many opportunities to improve business value. “Just in time” inventory planning and “cross docking” is made possible in scale due to enabling technology. Elapsed time in taking, processing and then shipping an order is substantially less in most businesses than before technology enabled a faster pace.

Today, business is always on. “Faster” communication and transaction execution are the expected norm, not the exception. Cell phones are essentially a carry along office with voice mail and e-mail standard features. “Speed of execution” is no longer a competitive advantage but a competitive necessity.

Is “faster” always “better?” Not necessarily. “Faster” without consideration of “better” might cost a business a lot of unnecessary grief and expense.

“Better” can be thought of as “quality.” Many times businesses are blind to the cost being incurred due to excess cycle times, “rework”, dissatisfied customers, and acquiring replacement customers. Technology that enables your business to improve the quality of its products and services, or to maintain quality at a faster operating pace, has a high probability of providing business value.

While “cheaper” would seem to be the most important and the easiest of the three components to get a handle on, it actually tends to be the most difficult. Business owners and leaders get caught up in expecting the addition of new technology to lead directly to head count reductions and become frustrated when that is not the case.

The reality is that, outside of a pure manufacturing situation, the addition of technology seldom leads directly to staff reductions. Whether growing, shrinking, or stagnant, a business often has current staff struggling to keep up with the pace of work.

Cycle times increase. Quality standards are gradually lowered. “Things that can wait” pile up and eventually become urgent issues that must be dealt with.

“Cheaper” tends to be a by-product of “faster” and “better.” Improved efficiency or productivity can lead directly to a lower cost per unit of work. Cycle time improvements lead to improved cash management and reduced interest costs. Improvements in quality lead to less rework cost and more satisfied customers.

Incremental business growth can be supported with minimal or possibly no head count additions. Head count reductions, if any, tend to blend into normal attrition.

What does your technology do for your business? Is it enabling your business to perform “faster, better, cheaper?”

(Steve Hankins is CEO and co-founder of Accio.US of Springdale, a technology company providing advisory and management services for small to medium-sized businesses. He may be reached at [email protected].)