Christopher Doerschlag likens technology purchases to gambling.
The problem with IT investment is its hard to quantify the ROI, says the president and COO of WDA&E architects and engineers. Its a very gray kind of decision.
Doerschlag has seen the gamble bring him a loss. His first investment, a $35,000 workstation purchased about seven years ago, was ahead of its time. The software hadnt been developed well.
It was bleeding edge versus leading edge. You almost had to be a programmer to use it, Doerschlag says. It was an absolute disaster. Thank God we only bought one.
The workstation was later sold to a computer reseller for a mere $1,000.
Doerschlag learned from that experience, and, over time, his investments have paid off in big ways.
Between late 1996 and early 1997, WDA&E sank nearly $50,000 into developing software that streamlines for the firm the process of assembling building configuration options for clients.
That software, Doerschlag says, was a major factor in winning a contract from Mobile Oil Corp., which earned WDA&E $1.8 million in the first two years of service fees.
That was a big gamble that paid off. Wed made investments in software and hardware because they sounded like theyd make sense, but this automation was kind of, Throw it against a wall and see if it sticks, Doerschlag says. The software is now used for other clients as well and cuts project delivery time by at least a third.
Since 1995, the firm has increased its technology investment every year, from 5 percent to the current 15 percent of the companys operating budget. During the same period, the companys revenues have grown from about $5.1 million to $8.5 million.
Heres how Doerschlag has learned to hedge his technology investment bets more carefully.
Doerschlag says investment in technology is especially important in his field, where the architecture industrys use of graphics and engineering applications requires heavily powered applications.
While Doerschlag says much of his effort to analyze the firms technology needs comes from intuition Its a management-by-gut type of process he has found more tangible ways to make decisions.
- Do the math. For us, it was a simple equation of cost of new, divided by billable rate, equals time it would require to pay back, Doerschlag says.
- Get input. WDA&E has one full-time person and one part-timer to handle information technology needs. Thats nowhere near adequate, Doerschlag says, noting that he recently hired a consultant to help.
Hes also set up an informal board for brainstorming. He and his brother, Martin, the companys CFO, seek advice from WDA&Es human resources, IT and operations staff to make investment decisions based on what theyre hearing from employees using the technology. They also survey employees twice a year to analyze the firms equipment and software and send key people to major software shows to keep track of new technology.
- Plan for change. Doerschlag talks with vendors to make sure the technology he purchases can be upgraded rather than replaced over time.
He also remembers Murphys Law.L
In consideration of implementing new technology, something is always going to go wrong, he says. Dont ever think its going to be smooth. Always plan for conflicts in upgrading.
He also points out that as companies grow, they must consider what their competition is doing. Big businesses often have a disadvantage in the technology investment realm because they get established and would rather hang onto profits than devote funds to the latest technology. Smaller, more entrepreneurial firms can come in with a splash of new technology and pass established competitors.
Youve got to keep track of the little guys, he says. You cannot become complacent when it comes to investments in technology.
With faster machines becoming unnecessary due to the speed of the Internet, however, WDA&E has reached a plateau where Doerschlags been able to slow the firms hardware investments.
Cost versus time savings was an equation that made sense, he says of his previous thoughts in constantly buying new hardware and software. Now its all about training the user how to use the software effectively and efficiently.
The people factor
Doerschlag says hes planning to add the employee training factor to his technology investment equation.
When youre upgrading technology as frequently as we do, you really need to pay attention to the training side of it, he says.
Already, hes on the right track:
- The vendor of the new technology and the firms IT staff put on lunch time training seminars in two forms. Large groups get a general orientation about the capabilities of the recent investment. Then smaller groups gather around workstations to walk through the new technology. Learning is in the doing, Doerschlag says. Its not in the listening and the hearing.
- New employees go through orientation, then are partnered with a seasoned employee for hands-on practice.
- To streamline the training and keep the load lighter for the small IT staff, managers who are a bit more technically adept are identified as information sources, too. Doerschlag hopes to hire another IT employee who will spend 25 percent of work time on computer support and the balance to train employees.
Technology investment, Doerschlag says, is not just a way to bring a monetary return.
Hes found the investment important from a recruiting standpoint since high-powered technology can make an employees job easier.
Technology upgrades also are a factor in retention, as employees see the firm willing to make such investments. When WDA&E moves into its new building in Grandview at the start of next year, the firms technology will be a focal point in a mezzanine space.
Were doing that because we want to showcase our investment, Doerschlag says. Its a very important part of who we are.
Joan Slattery Wall (email@example.com) is a reporter for SBN.