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Look before you leap: Investing in technology

  • Douglas Freer, CSP
- Posted: June 1, 2014
In our digital world, manual systems are so yesterday. Mobile applications and software on our ever more capable computers enable us to send and receive vast amounts of data with minimal effort, allowing for real-time decision-making. What’s not to like?

Generically speaking, technology allows us to increase results at a faster pace with less effort. Technological improvements in the snow industry have helped us to produce more work in less time. The efficiency of effort and resources has, in part, contributed to lower contract rates. Efficiencies are being realized, thus providing better service and more value to our clients.

We commonly accept that more technology is better. As business owners and managers, we are always seeking better ways to improve our production and business operations while keeping up with our competitors. There is pressure to be on the cutting edge and to be an early adopter of technology. Implementing the latest technology may give a business street cred and make it seem hip, but it’s wise to check in the mirror and make sure it’s good business rather than ego that’s guiding your decision to invest.

The decision to implement
Let’s assume you’ve identified an issue or challenge in your business and you’ve found the technological solution to remedy your pain. Before investing, how do you know the advertised solution is the right choice for your business? What criteria do you use to determine if you will get the necessary return to justify the expense or investment?

I guarantee that Ron Popeil made more money selling the Veg-0-Matic and Mr. Microphone to people that thought they needed these nifty inventions than he did selling the Pocket Fisherman to people who actually found themselves in need of one. I’m not suggesting that successful marketing is more showmanship than substance, but ask if you’re buying the sizzle or the steak. When you decide to purchase, you’re investing precious resources for an expected return on your investment.

There’s a risk when making an investment in technology, so before my company makes such a sizable financial commitment, we determine if it will meet one of the following criteria:
  • Will it increase sales?
  • Will it increase profit?
  • Will it improve the customer experience?
If the answer to any of the three is no, then we stop looking for a reason to buy. There are so many things that promise improvement, but if we don’t need the kind of improvement being offered, then we must turn our attention and resources elsewhere.

Real value
Even if the three criteria are met, there are a few more considerations to make before we commit. We want to avoid overbuying a solution that is more than we need. Evaluate if the expected return is proportionate to the investment, and whether the return will be realized in a time frame that is acceptable. Technology is a rapidly perishable commodity, and without a specific and sizable return in a short enough period of time you may not actually realize the return that you’re planning to.

Apply the same criteria to the underlying process where the challenge or issue exists that you’re trying to resolve. If the process doesn’t increase sales and profits or improve the customer experience, then why are you doing it in the first place? Sometimes we collect data or do certain things but we don’t ask why. The double-edged sword of technology is that we can track too much data on things that aren’t vital to our operation. If you’re collecting data that isn’t helping to drive your business, then you must ask if it’s necessary. If the answer is no, then stop wasting time and energy and skip the investment in unnecessary solutions to problems that you’ve created for yourself.

Just because you can see something in real time or can generate reports that provide good information doesn’t mean that you’re going to use it. Often technology is so feature rich that we don’t use all of the options available to us. Spend some time discovering the features of the products you already have to see if you can realize the improvement with what you already own.

The solution needs to fit the scale of the problem. Technology affords increased capacity, but do we need the capacity that is being offered? Some solutions are simply too big for the size of the company that you’re running or will be running. Finding the right amount of technology or improvement can be tricky.

More than once I’ve made the mistake of buying technology before we were ready for it or really needed it. I got hooked into a no-win situation that I unnecessarily brought on myself, and by the time we were actually ready to launch the technology, what we had bought was obsolete. A lot of time and money was wasted. Carefully evaluate your options and be realistic about the size of your current company and the expectations you have for growth. The solution that works on a daily basis for a global company may not be the solution for your operation.

Solutions are often sold based on a percentage of savings. But a 2% savings on $100,000 is not the same as saving 2% on $1 million. Evaluate real dollars when determining if your problem is large enough to solve with the solution you’re evaluating.

Time frame on return
My mistake of buying technology too soon was a waste of money — we weren’t ready for it, and we were not going to grow into it fast enough for it to make an impact. The possibility of a return on investment was there, but by the time we would realize it the technology was replaced by new options that did the job better. The longer the wait to realize the return, the riskier the investment. By the time the return is realized you may be paying for upgrades, buying something new or different altogether, or the needs of your business may change to where the technology isn’t even necessary.

On new investments, consider technology a current expense in your accounting (12-month period) and the return or gain should be realized in the same time frame. If you don’t begin to see some quantifiable return after three to four months of implementation, reevaluate your purchase and determine if continued investment is warranted. Your decision to invest may be a sunk cost, but you don’t have to continue to invest time, energy and potentially subscriptions or other related costs if the return isn’t there. You may have options to back out, particularly if you negotiated this up front with the vendor.


Identifying only one possible solution is not a real choice. Feeling compelled to act because you must or believe there is no other option is not free will. Step back from the issue and take a broader look. Can you do the same thing this new technology offers with items you already own or that are available in the market at perhaps a lower cost? Consider competitive products that offer the same or similar technology. Consider the cost of doing nothing.

Sometimes you identify an opportunity for improvement and solve the issue by working through how the investment would benefit your business. Sometimes all you need to nudge you in the right direction is thinking through your operations and how you currently do things, and then looking at how it would change if you made the investment in the new technology. The concept of what the global company does can be achieved through different means, and perhaps in a way that doesn’t require you to break the bank to fund it.

I love to walk the trade show floor and look through magazines for the next bright, shiny object that promises to solve my problems. But I’ve learned to proceed with caution to avoid the emotional impulse purchase and instead focus on determining real return on investment. Develop your own criteria if you like, but I still ask myself whether it will increase sales or profit or improve the customer experience. If the answer is not a clear yes, I continue to window shop. 

Is this a good investment?
Questions to ask before taking the plunge and purchasing technology:
  • What problem are you trying to solve?
  • Is the problem that big of an issue, and does it require the solution that you’re proposing? Are there other (less-expensive) options available? What if you did nothing and implemented changes in your processes, etc.?
  • Are you solving a problem you’re experiencing today or trying to get a jump on a future issue?
  • If all goes according to plan, will the potential savings outweigh the cost of implementation?
  • Is your business/enterprise large enough to benefit from this technology?
  • Who will be responsible for ensuring that the implementation of the technology is effective?
  • How will you measure the return on investment?
  • Is this a justified business investment or just a feel-good purchase?

Doug Freer, CSP, owns Blue Moose Snow Co. in Cleveland.


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