Sometimes it can be hard for leaders to give important matters the priority they deserve. All too often the urgent drives out the important. If this is allowed to continue, things can go bad quickly.
Let’s take a look at a real-life scenario.
The scenario
Imagine a business - let’s call it Brand A - that has been successfully operating for many years with essentially the same digital architecture they put in place when the business was founded.
The 20th anniversary of the founding of Brand A is approaching. The current owner-operators are siblings, the children of the original founder who has recently retired. They are considering what they need to do to get the business to the next stage of growth.
Like all businesses, they have limited resources to apply to new projects. One sibling wants to focus on digital transformation and the other is sceptical of the benefits of technology and concerned about what he has heard about other businesses’ challenges with digital - or “IT projects” as he prefers to call them.
While they debate this issue, the relatively junior person in the organisation who is the “IT genius” is becoming progressively overwhelmed. Everyone in the company has confidence in her - she’s been there for a long time and knows all the idiosyncrasies of the various technology components and is on first-name terms with 80% of the people that are her user base.
The on-premises architecture they are still running is becoming increasingly difficult and costly to maintain. Because IT strategy is “up in the air”, she can’t even successfully advocate for the budget that she needs to effectively manage things in the current state.
Competitors
Meanwhile, the biggest competitor Dnarb Limited has been concentrating on improving its digital strategy across the board. They migrated to the cloud, simplified their device management, and improved cyber security protection.
The automated systems they put in place dramatically improved operating efficiency and allowed them to scale more rapidly as capacity increased (without corresponding increase in costs!) The increase in returns on the business has built a strong cash-rich balance sheet.
Disaster strikes
Two days before its 20th anniversary, Brand A suffers a ransomware attack that freezes all its systems. They are unable to recover from backup because the backups were not being monitored properly and recovery has never been tested, so they are basically useless. For three days the IT manager and their support organisation work around the clock to figure out what to do, while nobody else in the company can do anything effectively.
Eventually, the decision is made to pay the ransom because they can’t see a faster way to recover. They are lucky that the ransomware attacker does release their systems once they get the money (most don’t).
The fallout
A three-day outage is just not acceptable these days and is enough to convince Brand A’s largest customer that they should look elsewhere. Three months later, that account is lost, reducing revenue by 20% overnight.
The IT manager leaves soon afterwards because she feels that unless something changes this will happen again, and she doesn’t want to have to deal with it or shoulder the blame.
The loss of revenue and inefficiency makes the Brand A business unviable, and it is sold six months later to Dnarb at a fire-sale price.
Real-life?
Does this seem like an outlandish scenario to you?
This is as real as any “true-life” drama on Netflix, a pastiche of real events we have seen over the years: among the team, we can think of half a dozen companies where we’ve seen this, or something similar, happen to first hand. There are probably hundreds or thousands out there with comparable stories, which is why we do what we do.
Ironically, this is not the worst that can happen. We have seen similar outcomes play out as a result of companies trying to make the needed changes, but not getting the strategy and change management right. It's at least as great a risk as a catastrophic external event.
We all live in hope that the flood will never hit us, but if you live in a river valley it’s probably rather prudent to prepare for it.
All too often we see SMEs who are taking significant risks without a full appreciation of the situation they find themselves in.
Just as those living on flood plains or waterfronts need to consider how climate change is going to affect their properties, so do business owners need to be highly aware of the risk of not keeping ahead of digital changes in the business world.
We’ve said it before, but it’s worth repeating:
Effective digital strategy is not something that you should delegate to the most technical person, the financial controller, or worse, put off altogether. It may not need to be done today, but procrastinating turns tomorrow into today pretty quickly.
Taking a step
If you are starting to experience some pain points - your systems feel a bit clunky, staff are starting to complain, or your competitors are doing some cool stuff - it can feel a little overwhelming.
It doesn’t have to be. You can quickly get a metric on your current state at no cost that may give you some reassurance (or the reverse) with our free Digital Strategy Assessment. If there are genuine issues that need to be addressed, you don’t have to wait! You can engage with us on a very low-risk basis to get a plan for moving forward, either with our ongoing virtual CIO solution, your own staff, or a combination of the two.
What matters is that you take a step – now’s good.
Ray Delany is Founder of CIO Studio. Want to discuss your digital strategy? Drop Ray or the team a note.
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