Businesses today are under immense pressure to stay ahead of the competition, remain compliant with regulations, and keep up with the latest technology trends. We all want to operate smarter, faster and cheaper but at what cost? In an effort to stay on top, many organizations make impulsive decisions when it comes to implementing new technology. You already know the strategy; it’s either we used X at my last firm, or I know our industry/competitor uses X so we should too. The real question is what will these impulsive decisions really cost the company, maybe your job?
These strategies often lead to sunk costs that may not be immediately evident. If you are not familiar with the phrase “sunk cost,” I’ll break down the cost of being forced to stick with technology because the investment whether monetary, time or both is too great to start over.
Let’s take a look at how making impulsive decisions can have a negative impact and the real long-term costs associated with these decisions.
The Financial Costs of Impulse Technology Decisions
When making impulse decisions, organizations often overlook the financial costs of implementing new technology, specifically the wrong technology. Organizations must take care to weigh the financial implications of any new technology they choose. Rushing in impulsively can lead not only to wasted effort, but also squandered resources and funds – a costly price for an ill-advised decision. Great thought should always be put into technological decisions so that these investments are both wise and lasting.
Just because the shoe fits, doesn’t necessarily mean it’s right for your business needs, even if you believe those needs are obvious. Purchasing software or hardware without conducting internal due diligence can result in purchasing something that is more expensive than necessary or doesn’t meet the organization’s specific needs.
When we think about the “needs” we’re referring to the whole picture, the shadow IT, antiquated technology, user experience, integrate-ability, data, and the future strategic goals of the business. There is a lot to unpack when it comes to needs from the user, as well as leadership; everyone should be involved in the “needs” conversation. Choosing an off-the-shelf solution can lead to buying licenses, subscriptions or functionality that is never used. Other challenges include outgrowing what you choose too quickly, or not addressing the shadow IT issues.
Another area where cost is associated with impulse technology decisions is operating inefficiencies. When organizations select a technology solution without considering their specific needs, they may quickly find themselves struggling with inefficient workflows, processes and shadow IT. What that really means is you purchased an upgrade for one need and ignored all of the other less obvious needs. The team is still using their manual workarounds and third-party applications to get the work done; your company’s data is still exposed and inauthentic.
Not asking the users is one of the biggest mistakes I see often. Remember users can forget the shadow IT they implemented to help streamline their own processes. They don’t see it as shadow IT, they view those solutions as their own tools. Shadow IT is not usually implemented to be malicious; it’s implemented to help that person do their job more efficiently or organized. It’s on you to understand why, what are your current tools missing, and how can we streamline this so people don’t have to find better ways on their own.
Ignoring the user can lead to lower employee engagement as employees become frustrated with trying to use a tool that isn’t designed for their job function or working environment. Furthermore, if customers interact with your business through its website or mobile app, investing in an unsuitable tool can cause customer experience issues as well as potential security risks.
Lack of Support and Scalability Issues
Finally, making an impulsive decision when it comes to selecting a technology solution can also lead to issues down the line such as lack of support or scalability problems. If you choose a vendor who offers limited support options or isn’t able to provide solutions for your unique requirements as they change over time, this could end up costing you more in terms of time and money down the line as you try to find alternative solutions that better fit your organization’s needs and goals. You don’t want to spend all of this time, money, and resources only to outgrow the software in a few years.
In summary, you will need to understand your current state needs, engaging all users and key stakeholders. Next, you should take the time to thoroughly research all available options before making any impulsive technology decisions is essential for long-term success. Not doing so could result in costly sunk costs which include financial losses from purchasing unnecessary features; operational inefficiencies due to using unsuitable tools; lack of support from vendors; and scalability issues which prevent organizations from growing at their desired rate. Your customers will feel the aftereffects of anything you do internally, even if the software never interacts with customers. Taking the time upfront will ultimately save businesses money and ensure they get the most out of their investments both now and into the future!
If you would like additional information on how to avoid sunk costs, connect with one of our experts today.