What Will Doing Nothing Cost Your Family Business?
What Will Doing Nothing Cost Your Family Business?
Against all odds you’ve successfully built a business that has provided for yourself, your family and the families of the many employees you’ve had along the way. You’ve been recognized as a thought leader in your industry. Complacency never used to be a factor but over the years of comfortable success, maybe a little complacency has crept in and when you’re alone with your thoughts you know it’s not a good thing. The inertia of the status quo is one of the most challenging things to overcome but you must consider the risk of delay.
The Risk of Delay
When the budget is constrained, it is easy to pull the plug on pending projects. Many organizations believe that maintaining the status quo doesn’t have a cost. Nothing could be farther from the truth. When is the cost of “doing nothing” greater than the cost of say a new technology itself? Here are a few risks to consider:
Competitive Edge
Technology has come a long way, baby! We all know how rapidly technological advances are occurring these days. Who hasn’t purchased the latest and greatest smart phone or TV, only to find out that one with even more functionality is being released within the next month? Capitalizing on these innovations early can allow family businesses to achieve a strategic advantage and shore up a legacy. For example, the common use of mobile devices has mandated that businesses think and work differently in order to maintain and attract customers. The creation of mobile apps and use of mobile communication methods has catapulted more than a few businesses to the top of the market. Enabling content so those with disabilities can access it is now a common (but not common enough) practice. Failing to meet this standard has potential consequences. Those organizations that defer technology projects could find themselves at a competitive disadvantage that risks a hoped for legacy. Whether the technology is part of the product, service, or business process, delaying these initiatives may give your competition an edge up in the market. And, that could be a cost not worth bearing.
Efficiency and Quality
FACT: Organizations with antiquated systems spend more time on manual processing. New systems and technologies are designed to make processes easier, faster, and more effective. Companies that “make due” with older systems employ more staff per volume than those with newer systems. For example, a strong and flexible business rules engine can more than double the amount of automated processing that is done. Beyond processing times, advanced technologies equate to better quality and completeness. For family businesses that must maintain the delicate balance between growth and lowering costs, efficient processing and advanced technology promotes the ability to meet deadlines and work smarter. An example of this is in the use of cutting-edge satellite imagery when natural disasters occur. The advancements in this technology provide an instant and more complete view of the disaster, which aides in faster and better relief efforts including logistics and security. If this is the competitive environment you operate in, how important would this information be in preparing a profitable but competitive bid? All in all, improvements in productivity and quality may mean that spending on the new technology is the better choice, both financially and operationally.
Maintenance and Security
As a car ages, you spend increasingly more money to keep it running…right? Likewise, as systems age, they require more maintenance. For example, older platforms do not communicate as well with newer platforms. Similarly, data is harder to extract or convert in order to meet changing business needs. At some point, the older platform will not be supported by the vendor anymore. And, it will be more difficult and more costly to find qualified support staff. Older systems are also more vulnerable to data loss, unknown code glitches, and security threats. Lastly, older systems were not built with new compliance rules in mind and, many do not have the capability to meet these requirements. Over time, a significant amount of “band aide” patching is done to keep these older systems working. The cost of maintaining these older systems and the vulnerabilities these systems produce often make the cost of the new technology the more attractive option.
So, the next time your organization considers scrapping a technology project, or any other initiative for that matter, ask if a holistic financial and risk analysis has been performed. When in doubt, an independent, third party consultant can help you determine if the cost of “doing nothing” outweighs the cost of your initiative.