The prevalent school of thought today is that every company is a tech company. The CEO of Domino’s announced years ago that the company was a “tech company that just happens to make pizzas” — and that their single largest department is IT.
Since then, Forbes, Business Week, NPR and the Harvard Business Review have all written about why businesses need to focus as much on the technology they use as the products or services they sell. As Dirk Hoerig, the co-founder and CEO of commercetools has said, “Technology is the direct bridge to your customer.” With this in mind, why do so many tech leaders still struggle to convince business executives to invest in tech investments?
Andrea Stubbe, Vice President of Product at commercetools, believes that the problem is that tech and business leaders don’t speak the same language. Here, she reinforces why tech work is important today, shares insights on how to position your pitch to resonate with the business leaders and offers some tips and tricks to ensure you can secure the budget needed to take your company’s technology to the next level.
Q: Why is tech work so important today?
A: The world keeps evolving and everyone expects speed and performance. Old tech simply can’t scale to meet expectations, support innovation or handle continually increasing traffic and usage. As a result, bugs sneak in and glitches happen. In addition, because code bases that grew over decades are difficult to navigate and change, completing tasks takes longer than it should, which lowers the productivity of your teams across the board. Basically, just like you have to renovate your house every now and then, (Guess, what I'm currently in the middle of?), you also have to update your technology to deliver more modern customer experiences.
There’s a great video, “Prioritizing Technical Debt,” that reviews Lehman’s Laws of Software Evolution which confirms these issues are unavoidable. They state:
A system must be continually adapted or it becomes progressively less satisfactory.
As a system evolves, its complexity increases unless work is done to maintain or reduce it.
So, if you don’t continually make tweaks and changes, performance suffers. The experiences you deliver become less predictable and everything takes longer, ultimately impacting your end users and potentially, your bottom line.
Q: Is it the frustration tech leaders feel that causes them to turn to business leaders to invest in improvements? Then what happens?
A: Yes. It gets to a point where the situation is so bad that it’s difficult for their teams to do their jobs. They voice their opinion, but no one listens. This is because they present what matters to them, not what business leaders want to hear. The thing is, every business leader knows they need to invest in tech — that’s not the problem — the issue is that tech isn’t always aware of what business cares about.
There’s a quote from the book, “Managing for Business Effectiveness,” by Peter Drucker, who is a widely influential thought leader on the subject of management. Even though it was written in 1963, it still resonates with business leaders today. It says, “What’s the first duty of the business manager? To strive for the best economic results from the resources currently employed and available.” It’s this mindset that tech leaders have to understand and consider when working with business executives.
Q: What’s the secret? How should I present tech work to my business leaders?
A: First and foremost, recognize that business leaders do care about three things: Creating revenue, lowering costs and preventing losses. Accomplishing those three goals is their job. So, whether you’re looking for approval to implement new technology or create a product, you need to show Product-Market fit. Prove there is a need for what you’re asking for, and that investing now will effectively deliver results that impact the bottom line.
Your presentation should provide tangible examples in the form of:
Improved operational efficiencies
When tech leaders pitch commercetools to business leaders, they’re able to use data showing the results actual customers have recognized after investing and implementing our Composable Commerce solution.
75% lower operating costs — The Salling Group
300% faster site speed — CHRONEXT
60% higher conversion rate — Bang & Olufsen
There’s a finding from a Forrester® study showing that 90% of decision-makers said it's important for them to have a next-level business case that provides economic justification for their investments in technology solutions. This statistic confirms that giving your business leaders tangible data to reinforce your case increases your chances of getting them to say yes.
Q: Is data a part of confirming Product-Market Fit?
A: Absolutely. The idea is to determine whether or not there is a strong market demand for what you want to do. To achieve that, you have to have data to back up your idea. This is critical to gaining buy-in from your business leaders.
Dirk has a philosophy: There’s no point in creating a product that is not solving anyone’s problem.
It doesn’t make sense to create a product just because your team thinks it’s a cool idea. You create a product when you identify a problem and see a huge demand for that problem to be solved — and you think you can solve it. That’s how you deliver value.
Co-founder and CEO, commercetools
So, you really have to do your homework and build your case so, your business leaders not only hear what you are saying; they agree with you.
Q: What else is important to business leaders?
A: One thing tech leaders tend not to consider is what stage the company is in. That’s key, because as much as you can get excited about new tech advances, often your company is just not ready for them yet. So, you want to make sure that you clearly understand the current business strategy and goals of the company, and ensure what you’re asking to do aligns with these. You have to look at all the factors involved — financial position, available resources and current priorities — and then decide if your ask is actually feasible.
Q: You mentioned the importance of prioritizing tech investments, do you have any tips on how to do that?
A: I mentioned I’m in the midst of renovating my house — because it’s not delivering to our expectations anymore. This is what happens with tech as well. But, sometimes you just need to do a bit of housekeeping. I would say it’s important just to keep a clean house because small problems can escalate pretty quickly. Don’t dismiss this crucial step. Working around or just putting duct tape on something isn’t going to cut it in the long run.
If you ignore small bugs, they grow, multiply and become big problems. It’s a lot easier and less costly to find and kill a few bugs than a whole army. And the thing is, the more people use the system — i.e. customers, the more bugs surface. This creates a domino effect, as the longer the issue goes unresolved, the more customers experience it and the greater impact it has on your business.
Also, keep in mind that if your teams are spending more time fixing bugs than building new things, or trying to decipher old, outdated code than writing new code, that’s not a good place for your business to be. Not only does this create unhappy tech employees, but it also increases risk. Consider how much you’re spending to employ your tech team — engineers are expensive. Do you really want them spending time reading code and fixing bugs, or do you want them building things that deliver value?
You probably can’t convince your business leaders to invest in tech work to cheer up your developers and engineers. However, you can show the time and effort spent on solving problems and reducing risk and how it could be reallocated to projects that drive revenue.
Again, I’ll point to something Dirk said about how a business can determine whether it’s time to invest in new technology. “If too much of your budget is going into maintenance and not innovation, and the core of your business is driving revenue and increasing customer retention, then you’re spending your money wrong.”
Q: What’s the number one people of advice you would give tech leaders to help ensure they secure the investments they need?
A: Always remember that your business leaders don’t easily make the connection between how technology works and its impact on the business. At the same time, they want the business to succeed just as much as you do — that’s just what leaders do. Even if you approach this goal from different angles, you need each other to make the best decisions. So, ultimately, the best advice I can give is to become a good consultant and trusted partner.
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