“What’s the ROI on software?”
This is the question facing many leaders of traditional mid-market companies. For a well-established family-run business, there is often the temptation to invest in assets that can generate revenue faster in the short term instead of technology upgrades that don’t deliver immediate profit.
When I first met Mike Lee, president of Lakeside Industries, he asked an interesting question: “Are we doing the right things when it comes to technology?” Lee understood that his 600-person asphalt company in Seattle’s Fremont neighborhood had to make technology a strategic objective in order to ensure the future of the business.
Here are a few ways Lee showed leadership in making ones and zeroes important in an industry focused on rock and oil.
Establish crystal clarity about how digital can support the overall vision.
Lee had a compelling “why” and vision for the company in place: to make a lasting impact on our community, our relationships and our people, and to be the low-cost supplier that provides an exceptional customer experience. The core values focused on safety, environmental responsibility, quality and profitability. But there was no solid technology vision to realize it, and IT didn’t have a presence at the business table, so Lee made a point to involve the CFO/acting CIO. The beauty of setting a digital vision is in its simplicity — not looking at every solution available, but only those that can further the company’s reason for being. In Lakeside’s case, how could new technologies bring it closer to its employees, its community and its customers? How could software make it improve efficiency, visibility and environmental commitments? When Lee looked closely at his vision, it became clear that technology could help bolster it, but that it couldn’t happen without tech being elevated.
Identify the gaps that technology can fill.
“There is more to our business than asphalt and paving,” says Lee. “We have to keep up with plant and equipment management, communications, competitors, security and environmental regulations.” Lee met with his CIO and IT directors to determine how technology was going to add value inside and outside the business. The firm developed a digital roadmap that provided clarity around the technology initiatives people were going to work on; for each, it set accountabilities, timelines and goals. They used this roadmap to manage ongoing progress and to determine whether or not the new “shiny technology objects” matched the vision and strategy. The most important initiative was to replace Lakeside’s aging enterprise resource planning system. This would require modernizing processes and technology infrastructure to support collaboration with business management across the company — a broad impact to the business. Another key initiative was improving how it estimated projects and managed customer relationships. This new system would only be successful with buy-in from the people in the field using the software.
Communicate the importance of technology to the management team.
While its employees are part of a family, Lakeside Industries is also a distributed business run by a group of autonomous regional managers who needed to believe in the vision. Lee presented the specifics of the strategy to all managers: The message was “IT can no longer be just a department.” Business and technology leaders — who rarely interfaced — had the opportunity to discuss and debate what was at stake. Their conclusion? Software isn’t a gutsy gamble or a bold bet — it’s table stakes. The result was a set of guiding principles, alignment and excitement for what’s ahead. For the first time in the company’s history, business and technology people now have harmony around a shared digital vision — working together as one to contribute to healthier profitability and improved customer relations. In the end, Lakeside Industries’ road to the future has been paved with much more than good intentions.
TIM GOGGIN is president of Sappington, a Seattle consulting firm that advises clients on digital change. Reach him at email@example.com.