Do You Really Need that Software Tool?

I’ve heard the same story many times, and it goes something like this. “They told us we needed it, so we bought it. We paid an expert to set come in and set it up for us and train us. Here we are six months later, and we’re still not using it. We don’t even really understand what it does, but we were told it would solve our problem.”
Businesses do this with marketing automation tools, accounting software, content curation tools — you name it. Fill in the blank with any type of software you want. It never ceases to amaze me how often business owners will invest time and money on software without understanding what it does, or how it will help the business make more money.

Background

In 1997, when I first launched into my technology career prior to becoming a consultant, I worked in a high-tech manufacturing facility, which quadrupled its size and output during a short four-year period before the tech bubble burst. The aggressive ramp-up was a great opportunity for me to learn about what it takes to scale a business. Month after month, the facility continually transformed as new wings were built, as new robots joined the assembly line and management relentlessly sought to cut cycle times and reduce unneeded steps. When you produce hundreds of thousands of parts per month, finding a way to make a part one second faster has an enormous impact.
Done well, automation can boost profitability tremendously. Done poorly, it can be a disaster. In the last twenty years, I’ve seen the full spectrum in all different sizes of business. In general, I agree with Timothy Ferriss’s comment in The Four-Hour Workweek: “Never automate something that can be eliminated, and never delegate something that can be automated or streamlined.” That’s a good starting place for a business that is considering investing in an automated tool or software package.
There is one key factor that makes automation profitable (or not): bottlenecks. Eli Goldratt, author of The Goal (1984), provides the best definition of a bottleneck that I have seen. According to Goldratt, a bottleneck is “any resource whose capacity is less than the market demand placed upon it.” You can also observe bottlenecks at rush hour in traffic. The busiest street is a bottleneck. Close down the busiest street at rush hour, and traffic will back up for miles. Close down a side street with little or no traffic, and few people will even notice. A bottleneck is not a problem according to Goldratt; it’s an unavoidable phenomenon. Businesses should not try to stop having bottlenecks, but rather be aware of where the bottleneck is.
Before investing time or money in a software package (even a free trial version without a credit card), I recommend asking and discussing the following questions and being brutally honest about the answers.

Where is the bottleneck in the business?

Until you know where the bottleneck is, it is impossible to know if software will help or not. Looking at the question from 30,000 feet, think about it this way: is the bottleneck in sales, in marketing or in operations? Here’s how I break it down. You know that the bottleneck is in marketing if you are not seeing enough of the right prospects. You know that the bottleneck is in sales when you are meeting the right people at the right time, but they aren’t buying. Your bottleneck is in operations if you can’t keep up with the work. From there, it’s necessary to break down the analysis further. For instance, if the bottleneck is in sales, is it because you have one star salesperson who is stretched too thin and spending too much time pursuing small accounts? Are your salespeople spending too much time manually entering data into a computer instead of meeting with prospects?
In my experience, finding the bottleneck is the hardest and most important step of the process. In a small business, the people are usually the bottleneck. It might be the business owner, who is pulled in every direction to put out fires. In some cases, the office manager or operations manager is the bottleneck. In technology companies, developers can become bottlenecks.

Is there anything we can just stop doing (or do less of)?

Before getting trigger-happy with automation, it’s important to explore different ways to solve the problem. Are key staff members stuck in meetings all day instead of doing their most important work? Does the owner deal with interruptions all day, unable to focus on high-level objectives because there are too many fires to put out? Sometimes, the solution is to stop selling an unprofitable product or service, or introduce a price increase. Other times, the solution is to eliminate redundant process steps or reassign tasks to different team members. Automation only makes sense after the team has thoroughly explored these simpler avenues. Otherwise, the business may spend time and money to get better at doing something that doesn’t matter.

What will our workday look like after the software is integrated into the business?

If software truly solves a real problem in a business, it changes the way work is done. Whose time will the software free up, and how will they use the recovered time? What new tasks will be required each day in order for the software to do what the business needs it to do? Who will be responsible for performing those tasks, and what checks and balances will the business put in place to make sure they get done? Think of any automated solution the same way you would think of hiring an employee. The software will have a job to do, and it will need a supervisor.

What is our implementation strategy?

Any software worth implementing is going to require up-front investment. The team will need to learn to use it, and everyone will need to adopt new disciplines. There will be risk involved. Data will need to move into a new system. Resist the temptation to assume that you will be able to “plug it in and go.” Will every team member need to install a new mobile app on their phones? If the software promises to integrate with existing apps, there is a world of potential complications. For instance, does everyone need to remember to check that little check box every time they enter a new client into the system? What happens if someone forgets? The devil’s in the details.

How easily can we back out if we don’t like it?

Most subscription-based services offer a trial period. However, the trial period is only of benefit if a team fully utilizes the software during the free trial and is ready to pull the plug on the last day if needed. How much time will it take to get everything on board with the new software? If it turns out not to work, will that time be a total loss? Will you be able to export your data out of the new system? (That is a non-negotiable for me. I never even consider buying software that will hold my data hostage.)

Finally…are we hiding behind software to avoid conflict?

This reality check is worth doing at every stage. For instance, if there is a suspicion of theft or dishonesty, or an employee with a negative attitude who always has an excuse for refusing to cooperate, this needs to be handled head-on. Conflict avoidance leads to all manner of dysfunction, including the tendency to try comfortable solutions first. Bob is too busy to get his job done? Let’s try automating some tasks to free up his time. Never mind Bob’s two-hour lunch breaks, or the fact that he wastes a lot of time standing around. If a team member is not pulling their weight, people notice, whether they talk about it or not.
All of this thinking and discussion may sound like a lot of work, and it is. But it’s less work and less expense than implementing the wrong software. It’s less than the cost of losing a valuable customer, and the wrong software (or a poor implementation of the right software) can cause that to happen. For instance, the free software that everyone was in a hurry to start using might be full of security holes and result in a preventable data breach.
The connected age and cloud computing have provided us with a virtual candy store filled with distracting shiny objects. Trying out new software is fun. It’s exciting to imagine the possibilities! But will it really make the business more profitable? Only discipline can ultimately do that. Automated tools can amplify the benefits of discipline, but they are not a substitute for it.

2 Replies to “Do You Really Need that Software Tool?”

  1. Great article Dave,

    Buying into a piece of software should always come from a position of understanding the original problem and the software’s fit as a solution. 🙂

    I’d always go for software with a monthly plan option that allows you to minimise risk. I don’t think it’s by chance that big ticket software like many marketing automation systems require a year’s contract.

    To be fair security issues aren’t restricted to free software, they can plague the biggest names in IT. Yahoo! Sony, Dropbox, AOL, Ebay…

    I always make sure I understand the problem I’m solving, and start with a minimum viable solution. 😉

    Matt

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