One of the most pervasive myths that stalks the boardrooms of organisations up and down the country is that investment in digital technology will save that organisation money.
It stems from a number of factors, I think. The way in which we structure business cases in most organisations still shapes thinking about technology as a cost-saving opportunity. The mythology of the technology industry has allowed ideas as ludicrous as that an iPad is somehow more ecologically effective as a paper book or newspaper. The Internet is often free to use so therefore its true costs are vastly underestimated. The list goes on…
Thinking that investment in digital technology will automatically save money is akin to thinking that buying a car will save you money. Think of all of the savings in shoe leather! Think of all of the minutes of walking that you could repurpose to do something else!
Of course what buying a car does is to open up new opportunities: to travel further distances than would be possible on foot alone. Those new opportunities in turn might make you a return (a better wage from having more work opportunities within your reach). But does it of itself save you money? Probably not.
When it comes to thinking about technology investment, I think it can help to frame the conversation in terms of the technology being like a machine in a factory: imagine you are currently making widgets by hand, and the opportunity arises to buy a new AutoWidget Machine that can make the widgets ten times faster than human effort alone.
If you were to buy an AutoWidget Machine, you’d be looking to do one or both of two things, primarily: increase your manufacturing volume (which in turn needs investment in both the machine and raw materials) and/or reduce your employment costs (as presumably the machine that can do the work of ten people doesn’t need ten people to operate it).
Both of these would have the opportunity to increase a commercial organisation’s bottom line: increase in revenue (and hopefully margin) in the former, and a decrease in cost in the latter.
For digital technology investment, it seems that these equations are a bit skewed towards the cost-saving end of the spectrum; so much business technology investment still doesn’t directly impact operational productivity in the way the AutoWidget machine would. For not-for-profit organisations it becomes even harder to pull the gaze away from cost saving. Mythical person-hours of timed saved from 5 minutes efficiency here and 5 minutes better effectiveness there pollute business case logic.
But let’s get back to the car example; maybe investing in digital technology might allow you to do things that you otherwise would not be able to do. Increasing the quality of your service, perhaps, or giving the opportunity to reduce risks. Then a cost-benefit analysis becomes harder because you are stacking financial costs against woollier quality or risk metrics. Often it takes some sort of disaster to focus the minds of executives enough to allow these kind of investments to take place. “Pandemic” will be featuring in the lot of business cases for the next few years, I’d wager.
Does any of this matter? Well, yes. It does. If you only can justify projects on the basis of a positive financial return, people (to be blunt) make shit up. Spurious, over-optimistic benefits cases are made up to run alongside dubious, undercooked costs. One side under-delivers and the costs escalate. The very control mechanisms that were put in place to reduce risks end up creating them. These projects don’t end well.
But moreover, unless you are open about where costs and benefits might lie, you can end up trying to implement technology where there simply isn’t the scale necessary for it to be a success. At a certain level, it might just be more effective and cheaper for people to do the work, rather than subcontracting it to software developers by proxy.