Focus Research Insight: If you're thinking about purchasing a technology, what do you see as the biggest risk in sticking with what you already have?

Change is fundamental in business as it is in technology. Business practices change with the demands of the marketplace, whether from competition or from changes in customer buying patterns. Change is sometimes hard, sometimes easy, depending upon the complexity of the change. The fundamental truth, however is that Businesses MUST change in order to stay in business.

I think Eric hits it on the head, you do not "purchase" technology. You may elect to use technology as a tool, but only if it delivers what you need in order to achieve growth or success in your business.

When you evaluate whether to change your current business or technological practice, there is a single primary objective that you need to use as your guide; "Does the technology I am using today, meet ALL of my business objectives, today, and into the foreseeable future?" If the answer to this questions is an honest, and thoroughly researched "Yes", then maybe you are not in need of new technology. (but I doubt it)

The risk of standing still in an ever changing business and technology market is that you might be left behind. What is your competition doing? Are they embracing new technology? If so are they gaining ground on you? Are you placed at a competitive disadvantage because you are using "old" technology and they are using new?

The litmus test for new technology is "does it provide a solution to a business problem, regardless of whether that problem is financial, or just business process related?

I agree with Eric, I'm kinda big on Retirement plans......avoid new technology at your own risk.

Let's call a spade a spade. Technology is just a tool. True, it can vary in quality, features, costs etc, but in the end, it is the user (and management!!) that determines whether the investment in the tool was wise or not, not the tool itself. This is not to discount the impact of companies that over-hype and under-deliver on the value of their products, or that fail for some other reason, as that unfortunately happens, but there are plenty of good tools that become shelfware due to the previously mentioned "human factor".

In this case, the issue of whether to replace an existing tool with a new one is more complicated than just bringing in a new tool. Previous posts have described in excellent detail the steps that should be taken, and that process is both necessary and critical to success. However, it still comes back to the people involved, and the politics, prejudices and misperceptions they bring to table. The final piece is change management, which requires skill, determination and patience to effect the desired outcome (ie process improvements, cost controls etc).

My take is thus - do your diligence and compare what you have to what is available, realistically value the benefit of making the switch, negotiate a fair price if the decision is to change, build a reward system to entice users to use the new tool (doughnuts are a favorite...) and then management needs to employ my favorite adage "While everyone has a vote, this is not a democracy".

Great question!

In my 28 years of technology usage (starting at age 12), the one thing I have determined is "all technology is interim technology." Companies and individuals get caught up in the in the misconception that because they have bought something in the past, it should last forever... maybe not forever but close to it. I've talked to many people that believe a PC should last 7-8 years, a server for over 10 years, and a phone system for 15 years. While some of these items MAY last for that long, it doesn't mean that they should be used for that long. Because of this, many people will decide to stay put rather than take a risk on moving to a new technology or process.

To me, the biggest risk in staying put is losing a competitive advantage. By breaking down processes into small actions, you can put a cost on each action and then determine if shortening or eliminating that process will offset the price of the technology. To use an example, when computers were first available, an IBM word processing system and terminal could run $200,000. That was prohibitive for most companies because the ROI may have been 8-10 years. Conversely, when the cost of a PC fell to a few thousand dollars, the savings could be realized in a matter of months.

This is not just a problem for large companies. Typically small companies can get a quicker ROI on technology because it doesn't require such a significant outlay of cash and it's easier to re-train a smaller group of employees.

The ROI is up to the vendor to prove... but companies must be open to the opportunities.

One should not be purchasing a "technology". One should be purchasing a solution that will give them a competitive advantage. If this solution requires or leverages a new technology, then so be it. The risk of staying put, is that your competitors will take advantage of a new solution, and leave you wondering what happened to your retirement plans...

This is a great question, since you've addressed not only the technology, but also the fundamentals concerning the overall impact. Most important is the human factor. The biggest risk in sticking with what you already have is reassessing if it's still a good fit. It can be painful to reevaluate your current technology. Eventually, all technologies become worn, obsolete and eventually extinct. There is an art to seeking technologies that could be a better fit for your operating environment. At the same time, many of us are trying to squeeze every bit of productivity from aging systems and processes. Keep in mind that the people that maintain your systems now have a different skill set than those now entering their careers. There is an inherent risk to retain a production system beyond its usefullness.

Consider getting back to the basics and approach the issue with two things in mind. The first is critical thinking; that is, get the facts regarding the pros and cons of your current technology. Weigh the pros and cons accordingly and get a consensus from the business leaders. Management needs to know that you're weighing the risks before considering a new technology. Approach the outcome from the standpoint of a business systems analyst. Is there a new technology that's a better fit for our business? Is there technology that can automate some of our manual processes? Can we consolidate operations onto a larger platform? Will this new technology reduce our operating costs? Once you've answered the questions that are at the heart of your business you can fully address if a new technology is right for you.

Vendors can boost confidence by demonstrating their product. If the vendor has implemented the technolgy, they should be using it themselves. You can also engage them in discussions that are important to you - such as interoperability. Vendors have to convince buyers that their concern is establishing a long-term relationship to help businesses succeed. Obviously, vendors want to sell, but selling the wrong technology can seriously sour the relationship.

Depends on the business. First there is a fear of being on the bleeding edge, and I mean bleeding. For instance you may provide a service for a niche which is common in say a big city, large data center setting but not where you are. Your customers learn of this, see it on tv and have to have it. To get it to your customers you have to turn to an "alternative" for delivering it. Not tried and true, not really tested. Bleeding edge which can literally kill you. Along with that is the difficulty in finding alternatives even with the vast internet and information age. So for those old customers, you need the current, reliable. But for the new or progressive you need the new.
With the rapid rate of change in the tech business, how do you find a proven track record for new tech or services? Difficult given this change rate and you need to take into account the way many now obtain news about the new tech where used to they never would have heard of it. Again pressure on the com[any to make change and keep pace with the joneses as it where.
So how to help? Show the proven track record of past adoption of new processes or technology. Hard for a new company but something that has to be built. Lay it on the line and be honest on what is offered. Nothing is worse than to be in a process of change and find the vendor can't really do what they said. Again the track record is important, even if it is in a different "area". The vendor is expanding, and is able to show in the past they have expanded in a similar manner and was successful. This can apply to startups to an extent. Even though they are new, they did this, did it well and can do it for you. More difficult to make the case but still it is there. Show the guts of it, not some glossed over portfolio. Impress with the can do and we did. And show we will not let you die once we leave. We will help, we speak your language and we will support you.
One of the items I have seen is for a company to sell something, then they leave. Usually that company dies somewhere along the way but unfortunately catches the "customers" up in the mess along the way. If the vendor can show the above suggestions, it will go a long way in making the sale.

tk

Peter makes a great point about the human component of this challenge. At our business, more often than not, we arrive at a no decision because of the human factors associated with running the decision up the chain of command. We recently made a no decision on a new ERP system because our CEO believed we should only implement the new system if it brought efficiencies to our business. The team leading the evaluation had focused almost exclusively on the visibility benefits and the CEO wouldn't hear it. I'm sure we could have presented an efficiency business case to the CEO and made a "go" decision. We just misread what we thought the business case would hinge on. That's a human factor.

The biggest risk is that for most people the pain of change is not worth the benefits of the end result. In an ideal world people would make altruistic decisions that positively affect their company. Personal gain or agendas would be nonexistent. We do not live or work in this utopian environment so people do make decisions based on mitigating personal risk. Change involves risk. Risk is lowered through trust and experience.
The measureable advantages for moving to a new technology are often the ones tied to reducing costs. So, if there is no measureable ROI with hard numbers there is no need to change. Often the real advantages seen with a new technology cannot be adequately measured until after the technology has been in place for awhile. At one time copy machines, FAX machines, voice mail, and PCs in the business world were all unknown technologies that were difficult to sell. Why would a business possibly want something so extreme as a Facsimile Machine when the US Postal service was reliable and you could just mail someone a piece of paper? Those days are long gone, but with each new advancement people generally don’t see the benefit of change until after they have made the change.
The elements of risk and trust are the answer to the question of what can vendors do to boost confidence. When the risk is reduced and trust has been established then people are normally ready to make a change. As a buyer look for opportunities to invest in new technology where the barrier to entry has low risk and there is trust in the provider of that service. As a provider look for ways to lower the risk to your potential customers and develop ways to instill trust.

Great questions. What are we talking here? Change just for the sake of changing is not good. So, we need to look at the why first.

If you are thinking on changing, you must have a reason. It may be your current system (which is not just technology, but processes and people too), has some issues. Think again to verify if those issues are now being worked around. Now think again to find out how much cost does that workaround means. Add the cost of the things you cannot do with the current system that will mean an advantage to competitors. All that will give you some insight of what that Why is.

Now, having a Why does not mean changing all will be the best thing. The next question is then What. What do you need to change? Could a change in processes, people or technology, even partial adjustments, solve the problem? It could be you don't need to replace, but add. What at the costs of integration, the costs of evolution, the costs in adaptation.

Any risk to stay put is almost always to become a reality. So, if there is a need, change is the way. Not any change, but a smart one. Not just a complete replacement, but a smart partial one. Not a big bam change, but an evolutionary one.

So, vendors should know that they must face systems with heterogeneous technologies, legacy subsystems, human resistance, and budget constrains. So, offering a complete replacement and requesting the company to sign off their souls to just one solution is not the way of doing this. Vendors should be adaptable, offer evolutionary, incremental changes, be able to integrate, add value to legacy systems and slowly replace them, and provide just the right solution to the why, instead of a full set of features, 50% of which are not needed, and leaving 50% of why still unsolved.

Jessica, the biggest risk you have is to become obsolete! Let's face it, many multi billion dollar companies of the past are now out of business or losing market share to their competitors today. The biggest risk of not incorporating new technologies (assuming its the right technology for your company) is to lose your competitive advantage. If your competitors are capitalizing on the benefits of new technologies and you are not, you are on the road to bankruptcy.
You approached the question in the way most IT professionals would phrase it. However, it's not the way it should be phrased. You phrased it in a way that is typical of Legacy IT thinking. I've written a Focus Brief on this very subject at the following link. http://www.focus.com/briefs/information-technology/it-crisis-three-priorities...
The question should not be what if we don't implement new technologies, but rather "which technologies will help us increase revenue, increase market share or reduce cost"? Technology spending should be based solely on the business value the technology is expected to produce. Additionally you want to consider the return on your investment and the time it takes to "break even". But to approach the topic on any other basis is what I call "Old IT thinking". It's the mindset that has brought many great companies of the 60's and 70's to ruin.
People will use the analogy of technology being a tool, I view technology as a vehicle. If the technology isn't taking you where you want to go as a business, it's the wrong technology! Let's not get distracted with the risks of not incorporating a new technology. Our focus should be on what technology will drive our revenue, expand our market share and reduce our overhead?

I think the biggest risk in sticking with the existing technology is the ability to support it. The Infrastructure does not remain stagnant. It continually changes to address security issues, new requirements, and your existing technology needs to be updated to work with it. From here it depends on what kind of technology you are addressing. If it is a packaged application, then there is the question of whether the vendor continues to support it. If it is something that was developed internally you run the risk of lack of ability to support it due to turnover in resources.

In addition, new technology means the opportunity to address business issues in new and innovative ways. By staying with the existing technology, you limit your ability to respond creatively and effectively to current business needs.

CEO's are willing to undertake the cost, risk and sheer disruption only when there's a good business reason to. What is so compelling to them that they can't say no? In my view it's leveraging technology for strategic competitive advantage. It's defining a niche in your market and a unique delivery system, and leveraging technology to deliver in a unique manner that no competitor can duplicate. Example: Fed Ex in the early days. They deployed a bar-coding system to track packages, moved all packages through a central station, and operated their own airline fleet for the simple reason that together, these strategies allowed them to guarantee overnight delivery, which is what their brand was all about.