The evolution of business technology continues to change and challenge how we do business. According to a Statista study, $3,360 billion U.S. dollars were spent on technology around the world in 2019. New innovations are fueling improvements in efficiency, automation, connectivity, analytics, data storage, sharing, speed, and most importantly, financial savings. And yet, with all these advancements in technology, many businesses are still using technology or solutions that don’t leverage these benefits.
When employed properly, business technology that streamlines and improves visibility can help you operate more efficiently and experience tangible results across your entire organization. When you are using outdated technology or technology that is the wrong fit for your business and goals, technology can have the opposite effect. It goes from being a solid investment in growth to a sunk cost that cannot be recovered.
In this blog post, we present the side effects of outdated or ineffective technology and share some reasons why many companies continue to use the wrong technology for their business today.
What are the Side Effects of Outdated or Ineffective Technology?
Let’s start by talking about what “wrong technology” really means. At Tigunia, our team has extensive experience and knowledge across the entire business technology stack, from server infrastructure to business intelligence. When a business owner knocks on our door, they have a lot of technical burdens weighing them down and they are often the result of outdated or ineffective technology in place. When your current technology setup doesn’t fit your existing operations, it can have costly repercussions that disrupt productivity, infrastructure, processes, and service.
The trouble is, most businesses don’t always recognize the signs of potential sunk cost traps and technology failure until it has reached a breaking point. You can save a lot of time and money on technology by knowing the signs of ineffective or wrong technology. Signs like these:
- Sluggish Performance
- Regular Employee Complaints
- Time-Consuming Manual Processes
- Disparate Systems
- Rising Maintenance Costs
- Extensive Downtime
For more detail about the financial impact of using the wrong technology, download our white paper on the “Sunk Cost Fallacy” and how it shows up in business technology.
Why Do Companies Choose Wrong Technology?
Your company is full of intelligent people acting in the best interest of your company. Nobody purposely sets out to choose the wrong technology. The decision to select ineffective technology and continue to use an outdated solution is often a by-product of how an organization is structured and the lack of perceived value in technology. Here are some of the most common reasons for choosing the wrong technology:
- Silos
When purchasing decisions are made in silos, rather than as a collaborative entity, they tend to be based on emotion over logic. Choosing a technology you are familiar with from a previous job is an emotional decision. When you properly evaluate and vet technology for your business, it becomes a logical decision – and frankly, a more successful approach. - Cost
Business technology like ERP software impacts an entire company – and that doesn’t come cheap. The cost of evaluating solutions, implementing software, and training staff on a new system can be overwhelming and not in the budget so you end up making do with what you have – even though it is probably costing you more in the long run. - Bandwidth
Introducing new enterprise technology into an organization requires the time and skills of dedicated resources. The key to successful business technology adoption is organizational alignment. A shared vision of your technology requires input from multiple departments across your organization and a dedicated team that works to achieve that vision. - Communication
Legacy systems typically last far beyond their expiration date because they are hard to replace. The people who originally evaluated and implemented the technology might be long gone from the company and now there is confusion and lack of control around who is responsible for it.
The problem with selecting the wrong-fitting technology for your business is our tendency as human beings to want to recover our investment or “get our money’s worth.” Often referred to as the “Sunk Cost Fallacy,” many companies make the decision to blindly hold on to technology that doesn’t work in an effort to recoup those costs. The reason it’s a fallacy is this: those costs have already been sunk, and regardless of what you do, they will not be recovered.
How to Justify Your Technology Investment
Fighting the human desire to recuperate sunk costs is the first step to harnessing the power of technology and adopting software that best serves your business, your people, and your growth goals. At Tigunia, we work from the principle of sharing knowledge, providing clear documentation, building teams together, and training for success so companies can increase their ability to be self-sufficient. One way we do this is by offering educational resources, like the one below. We developed a more in-depth evaluation of the economics of the Sunk Cost Fallacy for both SMBs and enterprise businesses.
In this white paper, you will learn how organizations can overcome their fear of change management to deploy technology solutions that better serve their business objectives. Read more about the “Sunk Cost Fallacy in Business” and the true cost of technology that doesn’t work: