The Staying Warm Guide to Choosing Technology Solutions
Since the Great Recession, mid-market companies have come into their own, on average recovering and growing at a much faster clip than big and small businesses. According to research from the National Center for the Middle Market, for the year ended July 2017, mid-market companies grew revenues 6.7 percent on average, versus 4.8 percent for the S&P 500.
These companies have strong bias for reinvesting cash, with 67 percent saying they will invest to add equipment, make acquisitions, and train or hire employees. They also recognize that simply adding more people isn’t scalable, so they’re looking to solve problems with technology.
The problem is, when you’re running that fast, there’s a tendency to be myopic with software choices, often looking to point solutions to fix a specific problem as quickly as possible.
That’s not necessarily scalable either. There are a lot of great solutions designed for the mid-market, but in many areas, companies may be better served by broader software platforms that can expand and grow with them, eventually addressing the entire process the current problem is part of.
It’s kind of like when you’re a litle kid and mom insists on buying your winter coat one size too big. You probably want the cool coat that fits you now, but mom knows you’ll be bigger next year, and that coat isn’t going to fit you anymore and will probably be out of style. That’s the situation mid-markets tend to get into when buying technology.
The moles always win
Why? Because solving problems one at a time with point solutions leads to a game of technology whack a mole that will eventually be won by the moles.
For example, a typical problem that crops up in a fast-growing company is that accounts payable is drowning in paper invoices. So, you go out and buy a paper scanning OCR solution. Now that you’re getting invoices into the system faster, you realize that your invoice approval process is slowing you down. So, you get some workflow software and integrate it to your scanning solution and your accounting system. That starts to reduce some AP team time which shines a light on the enormous amount of time you’re spending processing expense reports. So, you go out and buy an expense management solution for that. And so the cycle goes.
Every core business process—customer relationship management, business spend management, human capital management—can be broken down into set of non-optional activities that will all have to be automated at some point in time. You may not be ready or able to automate all of them at once, but it’s not hard to see the writing on the wall. When you do them one at a time, without thinking about the bigger picture, you eventually end up with a bunch of disconnected processes and data silos. At some point, you’re going to have stop and fix it with new technology that consolidates your systems and fits the business you are today. That’s really going to slow you down. Why not find a solution you can grow into?
Yes, it takes longer to evaluate end to end solutions, and it’s harder to make the case for a solution with capabilities you don’t need at this very moment. What you have to realize though, is that a significant investment of time and money goes into every solution you buy. You still have to divert resources to run a selection process. Depending on what you’re buying, there could many steps in that process, carried out over a period of months. There are people, and politics, to deal with. And that’s just to get to a signed contract.
Implementation and change management are even more disruptive, time consuming and costly to your organization. And, depending on how fast you’re growing, you’ll probably outgrow the technology in a few short years. Then you’re left with a situation where the sleeves of your coat are too short. You can no longer zip it up past the waist, your wrists are cold, and you have to go coat shopping again. As much as you hate to admit it, mom was right.
So, you run the whole process again and redo what you already have, in the next size up. And the cycle continues.
This is a classic mid-market problem, compounded by the explosion of point solutions on the market. In a company devoting a lot of resources to growth, there’s a strong incentive to put a band-aid on problem areas now because it's seems cheaper and faster to implement in the short term, and put off thinking about or dealing with the big problem until you absolutely have to.
However, that big problem is going to be even bigger when you try to solve your problems with a point solution approach.
Making the leap
Eventually there’s a realization that you’ve got to think not just about the immediate problem and how to solve it, but where you want to be in two or three years, and whether that solution is still going to work for you then. The faster you can make that maturity leap, the better.
That doesn't mean that you should try to solve every problem at once. But you should have a plan, and the technology solutions that you bring into your organization should be ones you can grow into, because they are able to address those next problems when you're ready.
Selecting the right solution
Look for cloud-native solutions that both enterprises and mid-markets are using, but avoid solutions that are one-trick ponies, or enterprise solutions that have had been stripped down to create a mid-market version. The latter won’t easily scale up when you need them to.
The right solution should be able to meet your existing needs and get you started quickly while also giving you the flexibility to eventually cover your end to end process, and even related processes. It should integrate easily into your existing infrastructure, and it should be easy to update the integrations as your infrastructure changes.
Picking a solution that can grow and expand with your business leads to much bigger benefits, and with configurable cloud technology, it isn’t necessarily going to be more expensive or have longer implementation times. It will likely end up being less expensive in the long run, because people don’t usually consider the cost of business disruption associated with buying and deploying software, and the rework costs of replacing short-term solutions. In a fast-growing company they absolutely should. They should take mom’s advice and buy the bigger coat.