All posts by John Beauford

Small Business Growth, Technical Debt, Workplace Automation

Five simple steps to approach workplace automation

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The impact of workplace automation can be dramatic. Small business owners can improve their bottom line, improve employee morale and increase competativeness by implementing automation projects.

The real question is how do you start?

Here are 5 steps to approach implementation of automation projects in your business.

1. Look for pain points

To find good candidates for automation in your business, look for the pain points in your business processes and systems. Look for bottlenecks, repetition, manual tasks, data that doesn’t flow or reports that are manual in nature. Analyze your systems, find those that don’t integrate, where data has to be re-entered. These pain points are opportunities to automate.

On one project we had employees manually re-entering shipping information because two systems didn’t communicate the data. We were able to spend a little software development time and automate the whole process saving hours each day and improving quality.

Ask the employees for their input. You will be surprised at the insight they have to where the candidates for automation are.

2. Start small

Rome wasn’t built in a day. Analyze your business and pick small, tactical implementations you can afford. Choose projects that give your organization easy wins to build implementation skill and momentum. Projects as simple as the automation of a simple excel report, or a web site plugin to eliminate redundant data entry are excellent candidates to start with.

As the organization improves their skill at automation projects you can plan to tackle future larger, more impactful situations.

3. Involve employees

Automation projects can worry employees. It can cause fear and doubt about their future. They need to know the plan beyond what they do now. They need to see the future purpose of their position and the types for work that they will migrate to.

No one likes change when it removes tasks they measure their value to the company with. Owners and project managers need to navigate automation implementations with open and consistent communication to re-assure employees.

When I  discuss automation changes with employees,  I  stress that we should be continually trying to elevate our tasks to the highest value possible. This means delegating menial, repetitive  automate-able tasks to the machines. Automating those tasks frees up the employee to provide  higher value to the business.

One additional way to help  employees is to  provide  strengths finders, how to fascinate or similar assessments.  Assessments like these help identify strengths and latent skills. This self-knowledge  can help motivate a transition to higher value proposition tasks and assignments that align with their profiles.

4. Iterate

Many types of automation changes, especially with software based processes, can be incrementally implemented. Iteration allows organizations to try, learn and improve their processes and systems in small engagements.

Incremental implementations lessen the  organization disruption and allow employees time to learn and adapt to new processes, tools and responsibilities. When the employees see the benefit of small iterations they are motivated to continue the automation improvements.

5. Track results

Keep track of the savings your organization gains from the changes you make. Calculate the ROI. Communicate the results to the employees. Discuss ways the process of automation can be improved. Feedback this newly gained information to the next interactions of improvements. This helps  gain momentum and provides input for future decisions.

Follow these five steps and your business efficiency can improve substantially over time.

 

General IT, Small Business Purchase, Technical Debt

9 key areas of technical due diligence for a small business purchase

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If you are considering the purchase of a small business, a key to evaluating the business, and its potential risk, is to understand the condition of its IT related systems and equipment.

As small businesses use more IT software, equipment and services it is more crucial than ever to thoroughly investigate the IT environment to help make a prudent decision and to help ensure a successful outcome.

The IT environment for a small business can be a competitive advantage or a complete disaster. The buyer needs to do appropriate discovery and due diligence to understand just what type of IT setup they are getting with a potential purchase.

Here are 9 areas of a small business IT setup that should be well understood as part of valuation and due diligence.

1. IT Vendors and 3rd Party suppliers

You need to know what vendors are providing what services in the IT arena. This could include things like cloud services such as salesforce.com, Hubspot, Mailchimp, Atlassian, Office360 or even Google apps or similar. Some software providers have yearly license fees that would also be included in this list. A well documented list of service providers, what service or package they provide, the department using the service  and the current rate/package and term of agreement will help you see what things are pending and what your expected spend will be each year.

2. Employee Computer Environment Inventory

Most employees of a business have some type of computer for their work. A good due diligence practice is to get an inventory of what types computers are used, what operating systems are used (like MAC or Windows) and what other programs are installed in this environment. Are the computers leased our purchased? When does the lease expire? How old are the employee office computers? Will they have to be replaced soon? Are they reliable and have been maintained? Are they sized appropriate to the work being done? Are basic safeguards such as virus scanning and operating system updates in place? These are all questions that need to be answered to get a better idea regarding what you may have to invest  (or discount on sale price).

3. Internal Computer Servers and network setup

What internal computer servers does the company use, if any? Who maintains them? How old are they and what applications and operating systems do they use? Where are they located and what type of environment are they in? Does the company run windows servers or MACs? Are there other servers running internal software like accounting programs, databases, legacy applications or other types of software?

You will need to have a network diagram and understand how the office computers network together. Are there network switches or routers used? Are there multiple locations that share network capability? What about internet firewalls and wireless access? What are the security procedures regarding access to these machines and resources? All of these are required discussion points in order to make an informed purchase decision.

4. Office Equipment

Things like printers, copiers/scanners and phone systems, though seemingly old school, are still used in most offices. Your due diligence needs to investigate these items as well. Many times copiers/printers are leased from a third party and lease transfer or termination may need to be arranged depending on what you do with them after the purchase. Additionally many copiers also have document scanning capability which could be integrated with the server computers. This dependency would need to be understood and planned for if change is warranted.  Similarly regarding phones. Is the a local PBX or is the system hosted? What type of plan does the phone provider agreement specify? Is the phone system  integrated with a Customer Relationship Management systems to track calls? What about off-premises call answer and follow-me forwarding?  If the acquirer wants to terminate these and roll the use to their existing systems there may be early termination fees that need to be accounted for.

5. Employee BYOD Policies

BYOD is an acronym that stands for Bring Your Own Device. It is a practice where employees can use their personal electronic devices like mobile phones or tablets to access company resources like wireless networks, email, shared databases and other company services and software applications. You will need to understand current company practice regarding BYOD and what risks this brings to the transaction. A liberal BYOD policy could allow employees to have copies of databases and other proprietary information on their devices. The extent of this, and potential impact to the acquirers polices needs to be clearly understood.

6. System Administration Practices

Every IT system has a special administrative account and password. And usually each cloud software service you subscribe to has special account owners and passwords. You need to understand who manages these, how they are secured and how they are changed and monitored. In transition planning, this account information would need to be documented, validated and all transferred to the new new owner. Password updates would then need to be made in accordance with new guidelines. Also, you need to understand how company data is backed up. Where is it stored? Is it off-site? How are restore requests handled? How and who sets up new user accounts? There are many areas of investigation that need to be reviewed in this area to insure a smooth transition.

7. Email and Web Site

In some cases small businesses host their email and web services together. Companies such as 1&1, GoDaddy and others provide packages bundling these services together. You will need to investigate where email (and spam filtering and virus scanning) are done as well as web hosting. Other companies use email hosting providers like outlook.com or google gmail. The setup and documentation of where these critical services are hosted, how they are maintained and who handles the work is critical. Email and website are key links in the chain of customer interaction and must be thoroughly reviewed and the migration to the acquirer accounted for.

8. Point of Sale, Payment Processing and eCommerce

If the business is retail or has online shopping capability  you will also need to understand what systems are in place for these capabilities. Are they on-premise, hosted or leased? What systems and communications capabilities are needed? What providers are used for payment processing and how are they integrated into the customer sales cycle? Does the system use tables driven sales tax, or an online tax nexus service like Avalara? Are credit card numbers or other personally identifiable information stored anywhere and if so what are the security procedures and practices regarding that data? How are the services configured to operate, including API keys, passwords and other key operational parameters? These are absolutely crucial to the new owner to understand and have accurately and thoroughly documented.

9. Custom or Proprietary Software

If the business uses custom programming or has proprietary software applications you need to know more about it. What does it do? Who maintains it, where it is located, how is it managed and updated? What languages, tools or environments are required to use it? Are there large updates planned or needed? Are there security risks? These are just a few of a number of questions that need to be answered regarding customer software. If the business has employees that develop and maintain the software then additional questions regarding the development environment, source code control, testing and release management need to be investigated and understood as well. The answers to these questions will help you understand pending needed investment, risk and potential additional opportunities for synergy and integration gains.

 

These are some of the standard areas of technical due diligence when investigating a potential small business purchase. An appropriate technical due diligence checklist and process can reveal technical debt which will impact the decision making and negotiation process.

Depending on the type of business there may be many other areas to consider. High tech businesses, manufacturing and other types of businesses requiring specialty equipment or software applications will also need additional due diligence in other areas besides those mentioned. Further, mid market businesses due to their size and additional complexity will also require much more effort to fully investigate and understand all aspect of the IT related impact to the transaction.

If you are unsure of these areas it is best to enlist the services of an IT professional to help with a technical assessment. In this way you can get a 3rd party opinion on these areas.

Improving your knowledge in this key area can give you leverage in price and terms negotiation as well as making you better informed of areas that may need to be addressed post sale. And the knowledge can save you lots of headaches later after the purchase.

Disruption, Product Management, Small Business Growth

10X thinking and your products

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Is your industry beseiged by new startups and aggressive offerings from other competitors that leverage out of the box thinking?

Have you gotten into a rut of incrementalism when it comes to your product development?

Are your primary customers being wooed by next generation experiences while you deliver previous generation products?

Recently at the “Mind the Product” conference Ken Norton, Product Partner of Google Ventures, gave a talk entitled “10x Not 10%, Product Management by Orders of Magnitude” that will help.

The video presents ideas that can help break your product thinking out of the a rut and should be considered for your planning and strategy discussions.

In the presentation, Ken provides a framework of thinking to shift and broaden your mindset when it comes to future products and services. He makes a great case that incrementalism will get you totally disrupted. Using a rich tapestry of historical examples that many in the U.S. are familiar with, Ken makes a compelling case for integrating 10x thinking into our product development and management processes. I believe the framework can benefit companies that embrace these ideas. It can be one weapon in your aresenal to help deal with the rapid pace of innovation and change in your market. And, it may help your company be a disruptor, instead of a disruptee.

Martin Eriksson, over at MindtheProduct.com has a nice summary post of the presentation.

Ken’s own blog post is here if you prefer his written version.

The video is worth the 37 minutes.

 

Small Business Growth, Workplace Automation

Just how much can workplace automation impact your small business?

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Recently McKinsey and Co. released a research article on the impact of workplace automation. In the article the authors, Michael Chui, James Manyika, and Mehdi Miremadi discuss re-framing the discussion on workplace automation from one oriented around occupations to one oriented around workplace tasks.

When we argue automation of occupations we are essentially saying that “We won’t need mortgage brokers, or bank tellers” or “Lawyers will be obsolete by use of technology”.  McKinsey’s insight allows a more nuanced discussion and application which focuses on what automation is available and how to best leverage it at a task level. Essentially it is asking what do people do best and what can automation do best and re-assigning tasks based on that mindset.

This is an approach that we have taken at my current job, looking at what tasks can be automated that were manual, repetitive, tedious or error prone. Tasks such as manual order entry, shipping data entry, video encoding and the like. By using automation to remove these tasks from the occupations they were associated with, we were able to allow those employees to spend more time focusing on exception cases, other improvements or new initiatives.

This concept isn’t something that is relying on far future technology either. McKinsey estimates that:

“…as many as 45 percent of the activities individuals are paid to perform can be automated by adapting currently demonstrated technologies.”

And this estimate doesn’t just cover the front line, lowest level employees, it goes all the way to the CEO.

In terms of economic value they further estimate that these tasks which could be automated represent

“about $2 trillion in annual wages.”

This suggests that there is tremendous latent improvement available to businesses willing to analyze and invest in appropriate automation. In fact the authors further report that:

“…the benefits (ranging from increased output to higher quality and improved reliability, as well as the potential to perform some tasks at superhuman levels) typically are between three and ten times the cost.”

Yes, that is a reported 300% – 1,000% ROI for these types of automation initiatives. That is an enormous impact on the bottom line of a small business. In my own experience I have not seen ROI that high yet, but we have definitely seen ROI levels that were very nice and justified continued investment in appropriate automation.

The authors go into much more detail about the impacts to business processes and the impact these changes have on traditionally high-wage occupations. They also hint at migrating the displaced employee time to more meaningful work and what that may look like.

The ability to automate and manage that process will become a key competitive differentiator. As the authors state:

“The magnitude of those benefits suggests that the ability to staff, manage, and lead increasingly automated organizations will become an important competitive differentiator.”

Workplace automation should be a part of every small business’ strategy discussion and planning. With objective analysis and appropriate implementation, automation can bring about significant bottom line improvements to most every business.

What is your business doing to take advantage of automation?

 

 

General IT, Technical Debt

3 Ways Small Businesses Can Begin to Eliminate Technical Debt

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We all see the update reminders. We know they are one sign of technical debt.

Microsoft has updates for Windows or Word.

Apple has updates for OSx.

Our mobile phones show those little indicators telling us how many apps need to be updated.

Your business may have servers that need replacing and software that needs refactoring. You may have  entire systems that need to be replaced due to end of like for functionality issues.

How do you get to all of that and still do the new work?

Here are three methods that, I have found that can help eliminate some of the burden.

Method 1: Schedule regular time  for the easy updates

For simple updates, like app updates, browser updates and vetted updates say from Apple or Microsoft  I recommend scheduling time each week to spend a few minuets applying the updates. Make it part of your routine. This makes it such that it usually only takes a few minutes and the changes between versions in the updates are minor. Some phones and tables allow for auto app update. So that can be a help as well. For me, I do this each Monday morning. I apply any security patches that windows says are needed. I also update browsers and key apps I use on my computers and phones.  Because I do this every week, it usually only takes a few minutes. So while my updates are applying  I can get a cup of coffee and then I am usually ready to roll.

Note: For real migrations, like moving from Windows 8.1 to Windows 10 on your laptop, or from Yosemite to El Capitan on your Macbook, you will need more time. I usually do these on weekends or on days when I have a lot more time available for my devices to be down.

Method 2: Migrate to hosted versions of server apps you run in-house

If you have your own hardware servers that run your accounting application or exchange server or other key software for your business check into moving those to the cloud. Many software vendors such as Quicken, Microsoft and others  who sell installable software are now also offering cloud versions of the same applications. By migrating to cloud versions you lose the headache, cost, space and risk of having to deal with hardware in your location or co-location facility. And you can usually benefit from the cloud versions of software being updated very regularly and always having the most recent security patches. This method can take a decent amount of effort depending on the system but there is a nice long term payoff.

Method 2a: If you have physical servers running that you cannot migrate to the cloud, consider extending warranties on them.

Many vendors like Dell or HP will extend onsite-parts replacement warranties for not too much money. Of course this assumes that your situation can be without a server for a day while you wait on the tech to arrive and make the repairs. Note: If you sign up for these with a vendor, make sure they have parts they keep in stock for your server or computer model. We had a warrantied system at one job I had where they didn’t immediately know if they had a replacement for our model when we needed it. If your server has been classified as “end of life” then you won’t be able to get extended warranty and you will have to migrate to other hardware if you want support.

Method 3: Initiate off-site automated backups of your data

One insidious form of technical debt is in-adequate system backups. Losing company data can be catastrophic for a small business. Luckily, there are many services that offer automated and secure file backup for your business servers and user devices such as laptops, desktops and even phones and tablets that are affordable and easy to use. Services such as Crashplan,  Carbonite, and if you are an Apple user, there is iCloud. There are plenty of others as well. Most of these services offer client programs that you install and run that will automatically backup and encrypt your files and store them securely in the cloud.  That way, if something happens locally you can recover your data usually via a pretty easy to use web site that allows you to login and select the files you need to restore. The prices for these services have come down tremendously in the last couple of years.  If you are not doing offsite backup  these services make it pretty painless to get started.

Technical debt can affect your company in many ways. These methods offer ways to begin to take small steps to alleviate some of that debt.

 

Personal Growth

How to immediately improve your work performance no matter what

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Houston, we have a problem

At one point in my career I was part of an area of a company that had no vision other than to keep doing what we had been doing. Engagement was suffering. Growth was flat.  The pipeline was mostly empty. We were directionless and motivation was low. The strategies leadership had tried weren’t working. Layoffs had happened and we reasoned that more were coming. I was personally searching for some way out of this funk in spite of the circumstances. Maybe you have been in a similar situation.

The grass is always greener…

I consumed a lot of entrepreneurial and business books and was always excited by the stories of the business creators, interacting with boards of high-powered, well-known entrepreneurs and business movers and shakers. That environment mentally motivated me. At that time I didn’t work in an environment like that. Initially, when I thought about working in an environment like that it was intimidating because i knew my performance was not where it should and could be. So, that excitement I felt wore off quickly and faded into the same funk I was in. Again. I needed something to help me improve right where I was at that time.

It occurred to me one day that I didn’t have to actually work in a high flying silicon valley darling in order to increase my own performance and motivation. Many of the resources I was exposed to talked about taking action and visualizing where and what I wanted to be.

A key question

I asked myself “What if you did work at a company with an ‘A’ list board and executive team, what would you do differently?” That question changed my perspective about my own situation. I realized that if I imagined that I had a high-powered team of directors and executives I could work like I was working for them instead of working in the difficult environment I was in at the time. What if I was reporting to a personal board composed of business rock stars like  Marc Andreessen, or Seth Godin, or Pat Lencioni or Sally Hogshead or Steve Blank or Elon Musk or Cheryl Sandburg  or Warren Buffett or Richard Branson or Daymond John? Wouldn’t I step up the game in a big way if I was reporting to them? You bet I would and so would you.

Here is what I did

I actually opened up a Word document  (yeah I know, it was old school but thats what you did)  and started typing short imaginary bio’s of my pretend personal board of directors. They aren’t real people like I mentioned above, but they all had very impressive credentials. I even added the inevitable personality quirks that come with many high powered leaders.

Here is what changed

Then I asked myself, “What would I do differently every day if I reported to them?” “What if they were the ones grilling me about projects and strategy?” That forced me to change the way I approached my work. I realized that moping around about the bad environment only hurt me. Thinking about reporting to business rock starts helped me raise my game, improve my deliverables and motivate me in an environment where, at that time,  motivation was difficult. I thought through problems differently. I was more focused and thorough. It helped keep me from just ‘mailing it in’. Visualizing that I reported to the best motivated me to deliver my best in spite of the real circumstances I was in at the time.

No, this little exercise didn’t change anything about the environment I was in but it helped me to operate with a different attitude and a healthier perspective. And that is what makes the real difference. I proved to myself that you can change your attitude regardless of your circumstances.

Who is on your personal board?

Disruption, Small Business Growth

4 Takeaways From Big Bang Disruption

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Disruption is not new.

We have all seen it occur in many industries and companies.

Clayton Christensen detailed it in The Innovators Dilemma.

In fact disruption is becoming one of those over-used buzz words.

However, to the owners and employees of affected businesses and industries, disruption is real and life altering.

Lots has been written about disruption but the distinction that Big Bang Disruption draws is the speed and completeness of an industry or corporate disruption that is now possible due to the availability of “exponential technologies”. Because of this, authors Larry Downs and Paul Nunes argue that there is a new product life cycle model that now exists they call “the shark fin”. This product life cycle is different from earlier product adoption cycles such as that described by Geoffrey Moore in Crossing the Chasm in that adoption can occur rapidly across entire markets, almost without warning, deemed “catastrophic success“.  Similarly, as a new product saturates a market it can be just as quickly surpassed or abandoned, leading to rapid decline in market share. The authors lay out 12 rules that help govern strategic planning to help deal with big bang disruption both as disruptee and disruptor. Here are my take-aways.

Takeaway #1: Incumbent companies should be paranoid and humble

If your business strategy or product planning cycle starts with what you did last year and tunes or tweaks from there, you are doomed. Startups, hack-a-thon participants or savvy accelerator participants can use combinatorial innovation and successive market experimentation to arrive at a new product or service, sometimes in plain sight, with a short time to market that can be rapidly adopted. Incumbents must tear themselves away from the false security of established products market share and begin using these same techniques to find new combinations of features, technology and business models that can gain future traction in their market place. The arrogance that accompanies market leadership can prevent an incumbent from believing that their current product is doomed. A humble approach will allow them to view the market and their products with more realistic eyes and begin asking the questions that will help reveal what experiments need to be executed. You can work to disrupt yourself, or some other company or hustling individual will do it for you.

Takeaway #2: Ability to scale quickly in either direction is crucial to survival

To avoid ‘catastrophic success’ a business that has hit upon a big bang disruptor, must be able to scale their offering to meet the almost vertical demand that comes with ‘the shark fin’ model. This could impact computing resources, manufacturing capacity or actual head count or all of them. Similarly, when a business hits the saturation point it must be capable of scaling back quickly so that it is not caught with excess capacity, inventory or other resources that increase expenses during a time of rapidly declining revenue for that product.

Takeaway #3: Industries, companies and individuals will be disrupted, ready or not

Exponential technologies lower the barriers to potential disruption drastically. Market experimentation is also dramatically easier. The historical moats of market protection, such as high capital investment, intensive information or computing resources or large manufacturing requirements are gone. Social networks, crowd funding, contract manufacturing and big data as a service make product discovery more direct and fluid.  Downs and Nunes lay out 12 rules to help adapt to big bang disruption that apply across the 4 phases of the ‘shark fin’ product cycle. They describe them like this:

“These are not rules that speak just to the CEO or any other individual member of the executive team. As these clear, though sometimes counterintuitive, imperatives suggest, creating and surviving Big Bang Disruptors requires substantial change throughout our organization. Every part of your business is affected from strategic planning to marketing and sales, design and manufacturing, finance, technology, research and development, human resources, even legal. The rules of Big Bang Disruption, in short, apply to every leader and every employee in your business.”

Just as they state the rules apply to everyone, the effects of being disrupted apply to industries, companies and individuals, leadership or rank-n-file. Although Downs and Nunes do not discuss the disruption of individual employees I believe that these concepts apply there too. Think bank tellers.

Takeaway #4: A business must not ignore the power of “near perfect market information“

The advent of internet search with tools like Google or Bing, coupled with the power of user review and the personal sharing capability of social networks make large amounts of information about your product or service that you cannot directly control easy for a potential consumer to obtain. These days a prospect for your product is most likely to check review sites like Yelp, Amazon or forums like Reddit to check your product. And, as the authors note, most folks start with the negative reviews. They tap their social networks. They reads blogs and other independent reviews for information on your product. They check out affiliate marketing sites that do heads up comparisons on features and usage. In many cases, your potential customers know more about your product (or its perception) that you do as the business owner or manager.

As the authors note:

“Information barriers keeping consumers from determining price, availability, or the quality of goods and of post-sales support have also been disrupted. Companies can’t easily hide behind slick marketing campaigns or the strength of established brands. Each product lives or dies on its own merits, including that of it customer service and its fate is determined not in the past or future but right now.”

So what?

Following the 12 rules laid out in Big Bang Disruption will certainly help business be more aware and stay better attuned to the forces of disruption in their industry. Big Bang Disruption provides an actionable roadmap to adapt and be disruptive in their own right.

For business owners and executives, ignore the advice of Big Bang Disruption at your own peril.

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Big Bang Disruption by Larry Downes and Paul Nunes

 

Technical Debt

Signs your business has technical debt

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You might be thinking I don’t have any technical debt. Oh yeah? see if any of the signs below apply to you.

Signs of technical debt

Your corporate PC’s are running Windows XP.

You or your employees are still running Internet Explorer.

You are hosting a web site on an ancient version of WordPress.

You are updating your web pages with Front Page.

Your office computers use Office 2003.

You keep clicking “Remind me later” to the prompt to install your software updates.

If your software development team dreads touching one of your legacy products for fear that fixing one bug is introducing others, then you have technical debt.

Is the key web site app you use is based on a framework that stopped being developed and maintained 7 years ago?

Do you maintain systems that use libraries or other tools that were discontinued long ago?

Are you still making use of that open source project that the maintainer closed down 5 years ago?

Do you have unapplied patches, security updates, or  incomplete backups?

What about the server that has been running for 5 years you have been meaning to upgrade? Somehow you can’t seem to find the time to schedule the downtime and migration of the systems that is serves.

Are you still running the Snow Leopard on your MacBook?

Yep, all of these examples are technical debt.

But wait, there’s more.

What about your procedure and processes regarding your IT systems?

Is your documentation behind?

Business continuity plans and disaster recovery?

Customer data protection?

That too is all technical debt.

Does your website still say “Best if viewed with Netscape”? Oh man thats technical debt.

There are so many more.

No business not matter how large or small is immune from the problem of technical debt.

Step 1 of any 12 step program is admitting you have a problem  and if you have these signs in your business then you are a victim of technical debt. Maybe is it not causing you great pain now. But at some point it will.

The question is what do you do about it?

Technical Debt

9 Ways Technical Debt Affects Your Business

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In a previous post I discussed technical debt from an information technology perspective, what it is, and how it accumulates. So you know what it is and how it grows.

What were you thinking?

But you might be thinking

Technical debt so what?

Who cares?

Big deal. My stuff still works fine on the old versions.

It doesn’t matter that I am running 3 versions behind on Windows or MAC is still on Snow Leopard.

My site still runs fine on version 3 of WordPress, nobody complains.

That old version of works for me and runs for my needs fine. Why waste my time with updates and changes?

As a business owner you want to make an investment in technology and have it be as maintenance free as possible. I get that. I had a boss one time say that “the customer doesn’t want to pay for your platform updates“.

However, technology is a fast moving target these days. Things change quickly and in most markets customers have more choice than ever. So before you cry “Update, schmupdate”, there are a myriad of things to consider in terms of the effects of technical debt on your business.

Areas of technical debt impact for your business

Technical debt limits your ability to take advantage of opportunity. I have been in many meetings where the phrase “the site(or app, or server, or software) doesn’t support that” effectively ended the conversation regarding a new sales or marketing opportunity.  Not every sales or marketing opportunity is worth pursuing but at some point your technical debt can cause you to leave money on the table.

Technical debt can cost you time. A business I worked with had systems that could not automatically transmit orders between them, necessitating the manual entry of data in three different places. This was a huge time waster with duplicated effort until we completed the development to allow the orders to flow automatically.

Technical debt increases the inertia for change. Technical debt sits there like a pile of tasks that is harder and harder to move as it grows. Large amounts of dependent technical debt make even small changes difficult to implement.

Technical debt can make you vulnerable. Hackers love to exploit known issues in systems that haven’t been updated or patched properly. This can result in downtime, data breaches or worse.

Technical debt increases risk of unfavorable situations. As systems become outdated, aged, or are allowed to continue to run with known issues the risk of a business affecting event increases.

Technical debt can affect your competitiveness. I worked on a web based video delivery system where customers were asking for more speeds in multi-speed playback. Our competition had it but we didn’t. We had not had time to switch to the updated software to support that feature. It put our product at a competitive disadvantage in the eyes of the customers until we could make the necessary updates.

Technical debt make it difficult to get support. Companies who offer software and hardware usually have windows of time where support is offered for a given release or model. Once that time draws near you may be notified of “end of life” for that product. That means that the provider will no longer support you on it. You are on your own.

Technical debt can accelerate obsolesce  Technical debt has a compound effect. The longer you delay the worse it gets in a non-linear fashion. This is due to the interdependency of many information technology systems and platforms. As a simple example it works like this: A new feature you want requires an updated driver. The updated driver can’t be installed because it requires the system update you haven’t made. The system update fails because it needs more memory in the server for the new processes that run. The dependency compounds the effort and its at this point that some folks just start over.

Technical debt can affect your workforce in negative ways. Any developer tasked with maintaining a legacy software application  can attest to the drudgery that is trying to maintain something old and out dated that you didn’t write. Employees like to use relevant and current technology and they understand the advantages to the business of doing so. Brandon Savage even discusses how technical debt could cost you employees.

Keep your technical debt payments up to date

All businesses live with some level of technical debt. It’s unavoidable. Thats not the issue. The issue is knowing what the risks are and properly prioritizing the work to alleviate the debt in necessary steps along with the other business objectives.

Most of the time, the urgency of technical debt is not as high as other business activities.  It’s easy to be pushed aside in favor of the other fires a business owner or manager has to deal with.  While easy to ignore, the astute business manager will see not addressing technical debt as an unnecessary risk and avoid it in conjunction with on-going business operations.

Technical debt extracts a price, the question is when do you pay? And, just like the old FRAM commercial, you can pay now or potentially pay a lot more later.

 

Technical Debt

What is technical debt and how does it grow?

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Technical debt is the situation where a business uses technology that is, for whatever the reason, out of date, obsolete, ill-suited, problematic to maintain, difficult to scale to your needs or adapt to new situations the business requires.

Technical debt is the difference between what you really need longer term and what you have. It can also be the difference between what you have and what’s currently mainstream in the marketplace.

Granted, there are many different types of technology that a company can use.  I am limiting my scope for this article to technology debt related to the information technology area within a business.

How does technical debt grow?

Technical debt builds up anytime the pain or cost of a needed change is perceived to be greater than the pain of ongoing use of the existing technology already in the business. In other words, it can, in some cases, provide a short term gain. But this almost always comes at a long term expense, thus technical debt. This debt growth can happen in many ways.

For example, several new security updates are released for your system but you find yourself saying “we will install that update next quarter, we are too busy with …”

Or what if a critical portion of software in a key application has become so unwieldy to update that you are breaking the nightly build and test on a regular basis and you find yourself thinking “we can refactor that code in the next release because we don’t have time now“?

What about that 5 year old server that is running the accounting software that has been end-of-lifed by the vendor but you think “we are short on budget the rest of the year so we will put that server in the plan for next year, its running fine now“?

And on and on it goes.

Multiply this over several systems and you can see how this compounds quickly.

The changes are put off and the technical debt grows. The technical pace of change, especially in the IT and software world is rapid. If your team or business is strapped for resources it can be hard to meet the more urgent demands of the business  and have any margin left to deal with the issues of technical debt.

How is technical debt growing in your business?