The Impediments to Productivity: A Case Study

Modern Times
Modern Times

In my book The Pursuit of Productivity: A Manager’s Guide to Information Technology Decisions I emphasize two things: 1) never try to fix a fundamentally broken organization by purchasing technology, and 2) always have professionals implement commercial-grade solutions. A recent contract I did for a small mid-western technology company is a good case study in how not doing the latter robs an organization of productivity.

When I came on the scene this company’s primary customer-facing systems were crashing multiple times a day, and when they were not crashing they were so slow that the company was getting 500 calls a day into their NOC. I soon discovered that their legacy VMware virtual machines were running on ten-year old Dell servers. So, I immediately suggested moving all VMs to the cloud, which was possible because the business just happened to have fiber optic access to a local VMware vCloud provider. After the move was complete we saw that we had solved the problem of crashing but we still had a problem with performance. I then suggested a few architectural changes which, once implemented, solved the performance issues.

It was at this point that I was asked to come up with options for the company to move forward. I did a cost comparison between hosting their systems on AWS, their local vCloud provider, and the cost of purchasing their own hardware to create a new premise-based Data Center. In the end we implemented a hybrid strategy, leaving about two-thirds of the VMs in the cloud.

At this point my original objective was complete but the owner asked me to stay on and work on a few other things, like their failing QuickBooks Enterprise setup. I quickly learned that they were attempting to host twelve simultaneous users on a setup meant for only three to five. The system was glacially slow, constantly crashed, and the database had to be rebuilt every couple of weeks. So, I suggested that if we were to improve performance and stability we should switch to Intuit’s recommended model, which was a Microsoft Remote Desktop Services system. It took me about two weeks to implement this solution and get all the users moved over and familiar with how to use the new system. Everyone was very happy.

So, far there had been a lot of success and the cost had not been prohibitive, especially since call volume to the NOC had been reduced by 90% and those using QuickBooks were ecstatic about not having to restart their sessions twelve times a day. However, this is where the fairy tale ended. Management asked me to stay on and help them with their other systems, but I soon learned that they had no intention of making any more changes, even though their PBX was eight years old and unsupportable, their CRM was practically non-existent, and their project management software was an open source project that had been defunct for years.

Hoping to convince them otherwise I went right at the system I thought could easily be justified by cost: their legacy PBX system. They were using an old version of an open source software called Asterisk. They also had a separate fax service and six of their phone lines were hosted by three different telecoms. I computed the cost of all this including the conservative cost of system administration and found that they could switch all of their lines, plus fax service, to Vonage Business. This would have yielded a yearly cost savings of $21,000. However, the cost savings was not all they would be getting. They would also be getting far superior service and all new handsets at no cost. They did not even have to sign a contract for service; it was month-to-month!

This would have been a qualitative game-changer since the twenty people in their NOC were using freeware VoIP software, which performed at best in a spotty manner. Vonage was going to include in their fixed monthly cost unlimited toll calling, call recording, and a new VoIP phone for every desk! However, the owner would have none of it. He was convinced that the way they were doing things was superior, even though no one in the organization could now adequately support the legacy PBX system and call quality was well below average and unreliable. In this instance I could not even lead the horse to the water!

I also wasted much time showing them how a modern CRM could revolutionize the way their sales team did business. I showed them how the CRM could even give them the ability to have their customers pay online and how it could integrate into their QuickBooks server. It also would have provided management with extensive reporting on sales campaigns and how often sales people were talking to new and existing clients. Again, it was like talking to a stone wall.

I tried to show them how using a modern, web-based project management solution would allow them to better communicate with their field technicians and also monitor the daily progress of jobs. “Nope! Our Excel spreadsheets work well enough, along with our defunct open source software.”

Now from an accounting perspective you might argue that spending an extra thousand dollars a month on productivity software is just an expense; however, if you are a small company and want to leverage the productivity gains that new technologies make available you have to invest. Unfortunately, this company was like many that I have worked for: low-margined recurring revenue that relies on low-wage workers working off a script of known problems.

This company could not see that if they grew twice as big that they would need to raise their employee count by thirty percent to handle the extra load. Of course, growing that big might change their view when it came to investing in new technology but, then, investing in new technology would mean the elimination of that previously added workforce. They wouldn’t need that many people. You see, I was already convinced by the time I left that their NOC was thirty percent bigger than it had to be because of antiquated technology. The only reason they could get away with this is because they were paying between eight and ten dollars an hour to the staff. However, if the company was to grow dramatically, over a year or two, those extra six people in the NOC would have been essential, but not without updates to their CRM, ticketing system, PBX, and project management system. Without these updates the company would have had to add more people and then they would have wondered why they weren’t making substantially more money as a result of increased revenue. Why? Because they were not leveraging new technology to increase productivity!

To be fair I have worked for a lot of companies that simply did not have the money to invest, or where the staff were not up to a level that they could be easily trained. However, this was not the case at this small mid-western tech company. They could have easily afforded several smart investments that would have paid off in amazing ways, even if they did not immediately grow the company. And, if they did grow dramatically they would have seen a tremendous amount of productivity turned into bottom-line profit.

I am convinced that this is too often the story at small and medium-sized firms. They are convinced for a host of reasons that they cannot effectively leverage new technologies into their businesses. Some simply fear the investment will not pay off. Some fear losing control because they do not understand the technologies themselves, which forces them to rely on others who might demand more in compensation. Whatever the reason it keeps them all from realizing their full potential, and it could even mean the difference between maintaining a going concern and going bust. 

Unfortunately, one of the biggest impediments to growing a business is moving from small-to-medium-to-large while trying to maintain the same management style. These differently-sized businesses cannot be run the same way. Even when a small business remains small it cannot be run the same forever. A small business has to move with the times like any other, adopting new ways of communication, news ways to create and store documents, and more efficient ways to plan out how work gets done. Technology makes all of this possible but only when we know when and how to use it.

Much has been said about the lack of productivity in the United States and elsewhere the last forty years. I’m convinced that there is a wealth of productivity locked up inside small and medium-sized businesses. The only thing that stops us from tapping into it is a lack of imagination and gumption on the part of small and medium-sized business owners. The productivity is there for the taking but you cannot always make the horse drink, if you can get them to the water at all.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s