THANK YOU FOR SUBSCRIBING
Generally speaking, it’s not hard to convince people of the value of preemptive action. Most readily understand that it’s better to get your teeth cleaned regularly than to wait until you need dental surgery. Few will dispute you need to give the car a shine once in a while, or periodically change the oil. And certainly, everyone knows you occasionally have to spend some money to maintain your house, rather than wait until it starts to fall down.
But when it comes to investing in sorely needed technology upgrades, many businesses adhere to a different philosophy: “If it’s not broke, don’t fix it.”
Numerous practical concerns inform this approach, including the belief by many decision-makers at these firms that new technology implementations will be complex, expensive, and protracted. Those types of concerns can often be assuaged by a simple fact: in general, cloud-based solutions are making it easier and less expensive to implement new tech and scale up use as needed. But there are other, very human, apprehensions and anxieties that factor into “taking the leap” that are not so easy to overcome.
I am the chief marketer for a Boston-based software subsidiary. Our specific product helps financial companies automate their workflows and integrate their legacy systems, however extensive and far-flung they may be (and, at many financial firms, those workflows and systems have been built up over decades and are a challenging mix of electronic and manual processes).Early this year, we hired a research firm to conduct an extensive series of interviews with top-tier executives at financial firms – banks, insurance companies, wealth managers – to try to get a handle on why many are hesitant to bring their systems up to date, despite the demonstrable workflow challenges that almost all are facing.
“While investing in sorely needed technology upgrades, many businesses adhere to a different philosophy: “If it’s not broke, don’t fix it””
We started with the idea – and research to support it – that the absolute cost of waiting is high. Our internal studies show that the costs of decreased productivity and reduced customer satisfaction from inefficient processes and higher NIGO (i.e. customer forms “not in good order”) rates are considerable. And those are just the day-to-day costs. In any worst case scenario involving possible business interruption or business risk from failure to comply with ever-shifting regulations, the costs can be catastrophic or something close to it.
So what is holding so many companies back? The first three items below lead with direct quotes from our interviews.
1. “I already have too much work right in front of me.”The fact that a lot of organizations are overwhelmed keeping up with the day-to-day workload was one of the top responses we heard as to why firms wait.
2. “No one likes change, right?” The idea of technology as a threat – a force for replacing people, rather than helping them – is one that refuses to go away. While, in the overall scheme of things, financial services are a relatively high-tech industry, many firms both large and small still cling to a lot of archaic workflow processes. As one executive put it, “A large majority [of how work gets done] is still people and paper.”
3. “It’s not my problem, until it’s my problem.” This is the kind of response you only get when you ensure confidentiality for your interviewees! It’s remarkably candid, but perfectly understandable: for senior managers who know they won’t be around in ten years or even five, the status quo often feels like the most comfortable place to be. Until their hand is forced, they prefer to delay.
4. Revenue generation trumps all. Absent hard data and analysis, many senior managers have a tough time viewing productivity and scale as revenue-generating. It comes down to prioritization: given a list of needs and an all-too-finite amount of budget and time, a new technology implementation, particularly if the savings benefits are unclear,does not make the cut.
No matter what business you are in as a marketer, you have likely faced some of these objections, or variations thereof. None of them are necessarily surprising, but they are powerful and pervasive – and they tend to encourage passivity when it comes to investing in and adopting new technology.
Most challenging of all, they are for the most part personal, inward-facing concerns that are difficult to combat. You need to be prepared with hard numbers and facts that help managers truly understand the cost of waiting, and the impact it can have on their bottom lines.
The fact is, the way that commerce (not to mention customer expectations for speed and efficiency) is evolving, the current state of things is unsupportable. There is a ton of band-aiding going on with legacy systems – aka “Frankenstack” systems – that needs to be brought under control. With few exceptions, firms desperately need to invest in technology that will connect their infrastructure and integrate their work.
Doing so can help organizations get a handle on their “tribal knowledge” – the unique know-how for how things get done that exists within specific teams and employees – and keep it from running amok. To be sure, tribal knowledge is a valuable commodity. But the downsides to relying on it include:
1.) that it is undocumented;
2.) that it does not ensure best practices are adhered to; and
3.) that it goes out the door when employees move on (which can prove especially problematic when an auditor shows up just after a tribe member leaves).
As mentioned, my company’s clients are in the financial industry. The regulatory environment is intense and getting more so each year. Accidental non-compliance can be disastrous. Plus, these firms are handling people’s money, a highly personal and high-stakes endeavor. It is uniquely challenging on several fronts.
But every industry has its own unique challenges. For any company, business interruption can have drastic results. For any company, the customer experience is paramount. And every company guards its reputation as a top asset.
In the end, the cost of waiting to bring a company’s technology up to date lies in both the short game (efficient day-to-day workflow) and the long game (protecting and growing the firm). If organizations invest even a small amount of money in systems that automate their business activities, they can save money, increase employee productivity, reduce errors and… cue the drumroll… increase their revenue. The longer they postpone, the higher the cost. It is not always easy to get them to see this forest when they have so many trees in front of them, but those of us who are trying to do so are fighting a good fight.