Do you really know your Tech?
We are seeing the dawn of technological realisation in the business world. Companies have embraced the need for digitally transforming and have really started to focus on reaping the benefits. Technology has brought a new dimension to businesses whether it is to increase distribution, improve efficiency, engage with new customers or deepen their offering.
Many growth or transformation plans assign a significant proportion of their future to the investment they are going to make in technology to scale and improve their business. It’s a transform or miss out world so this investment must make sense.
What doesn’t make sense is the approach to understanding what you have and how you currently operate and then being able to relate that to how you should evolve and how you should approach what you actually need to do. The underlying problem is that technology has broadened and is changing at an increasing pace, but we are still looking at it like we did 10 years ago.
Ten years ago, unless you had a beard and wore sandals with socks, you wouldn’t have had a clue as to the meaning of terms such as WebApps, Big Data, AI, APIs, Blockchain, Cryptography, etc. You might have come up with terms such as Mainframe, or Server or Database, but in reality, you probably didn’t even know what they were. Tech was relatively stable and just evolved and was dealt with by the geeks that worked in the basement.
That’s not the case now as tech enables more and it is now interwoven with business decisions. CEOs now need to know their tech strategy and some of the control on these decisions is quite rightly sitting with the business rather than in the IT department’s golden temple. There is still an inherent fear in companies that they aren’t doing enough and that has led to an unbalanced growth in IT teams. The teams are no longer counted in single numbers – its hundreds of engineers with a wide variety of skills. Sometimes there is no method, it’s just growing a team to show you are doing something.
Companies and their management need to take a step back. They need to understand what technology they have, audit their internal capability and plot an ROI driven evolution of their tech strategy.
My experience suggests that to do this you can’t rely on one person. Having spent the past 20 years in the world of tech (providing it, being reliant on it, or as an investor in tech companies),what I have found is that each year my knowledge gap increases. It’s not that I’m not learning about something new every day (it’s the thing I enjoy most) it’s just that there is no Moore’s law to the invention of new tech – one brain (or at least my brain) can’t keep up. Technology is now at the point that you are lucky to have a general understanding across the board, you can’t be an expert in everything. You need a team which combines generalists and specialists to have a fighting chance of knowing if a system, product, service or even a company can scale. It’s this point that puzzles me most as for a lot of people the mindset is as if Tech hasn’t progressed.
A number of years ago, I was raising Series B and C rounds from VCs. I was running a cutting-edge tech company and we were scaling very quickly. Back then, the typical technical due diligence was a CTO of one of the VCs investee companies having a few phone calls with our tech team. Even then I found it unusual – large sums were being invested and there was reliance on one person who didn’t even work in our specific domain to understand hardware design, embedded software, link budgets, networking and enterprise grade web applications. Why I found it even more unusual was that we had experts in all different aspects of the tech who wouldn’t profess to be on top of the other’s specialities.
We now work with a number of scale-ups and it seems in the norm things haven’t progressed. Quite often, the tech DD is a conversation with a generalist and no deep inspection of anything that the business is relying on to grow. This is great for the investee as long as you can talk a good game you can get through this simple process. However, it wouldn’t provide me with the comfort to know that my investment would be well spent.
To be fair, this is not always the case. We have worked with some diligent VCs like LGT Lightstone who want a more thorough look at where their capital might be going. To do this we have had to create a rigorous framework that enables us to look at all aspects of the tech stack. It was a challenge to get this balance right, as it’s easy to get lost in code and forget how to look at the fundamentals. We found our method by using our experienced technology specialists to give a view on their area of specialism to say what’s good and what might need to change and how. This means that as an investor, firms that work with us get a proactive technology health check to give them a greater sense of security on their investment.
This health check is not limited to investing. In the norm, any company that wants to use technology to scale needs to understand where they are and where they are heading. Non technical people seem to be scared of tech and therefore rely on the advice of the technology expert. That expert maybe great, but as I said, it’s impossible to keep up, so relying on them to plot a comprehensive strategy is illogical. My advice is don’t be scared to ask for third party expert opinion. Often companies come to us when they start seeing the symptoms of technology debt or gaps. Typically, systems are starting to lag, they are experiencing problems evolving at the required pace to meet the business demands or can’t scale reliably. We perform the same health check working with their technology team to see what’s there and what’s planned and identify the gaps. It’s that same due diligence process.
All of this is about understanding where the business wants to get to and then seeing if the people, processes, architecture, infrastructure, security and reliance on third party systems are on the right path or need some help. It’s not bad to ask people that know – it’s what you should responsibly do
Getting it wrong can be costly we have all heard of the many failed and incredibly expensive transformations. Moving from bootstrap to enterprise needs experience so that you don’t impact the business whilst you change. That experience needs to be across a number of experts as I have yet to meet the person who is best in class across the range from AI to Design and User Experience. Getting the right people involved may save you serious amounts of money and ensure you really do know your tech.
