Tech investment: Asking the right questions

HR leaders correctly believe that technology offers competitive advantage. But many do not understand how to invest in technology to optimize returns. Nor do they understand the questions they should ask about technology.

The premise here is that answers to the right questions will yield greater returns on technology investments.

Here are some questions HR leaders should ask before they invest in digital technology.

Context

The immediate context is how the company does strategic thinking. How is business strategy done at the company? How is technology strategy done? Any ambiguity here is a red flag.

Questions about business strategy should focus on business vision – what is it? The current and future value propositions should be described with special emphasis on differentiation.

Who are the competitors? How is technology strategy developed? Is the company adequately assessing emerging technologies, like generative AI, machine learning, 5G/6G, blockchain, virtual reality, augmented reality, hybrid-/multi-cloud, 3D design and manufacturing, quantum computing, edge computing, low-code applications development, the internet of things (IOT) and even the metaverse?

What’s the innovation quotient at the company? Does the company innovate incrementally or disruptively? HR leaders need to take the pulse of the innovation culture.

If the culture is predisposed to incremental innovation, then future market success will be limited, but if there’s an appetite for disruptive change then a real competitive position can be created.

Business and technology are mutually dependent. This is a relatively new trend that’s now complete: all companies are technology companies, at least to a significant extent.

The recognition of this intersection must be widely accepted across the company. If it’s not, then business-technology strategy will be incomplete at best and inadequate at worst.

There are a series of questions that extend from this context. The answers to these questions will improve the return on any technology investments a company makes.

Asked another way, what if HR could not answer these questions?

Organization questions

1. How is technology organized at the company? Is it centralized or decentralized?
2. What are major titles and functions of the technology team? Ideally, there’s a CIO and a CTO (or a CDO). CIOs should focus on operational technology. CTOs should focus on the intersection of operational and strategic technology.
3. Who reports to whom? It’s impossible for CEOs to not be closely involved in technology at their company simply because technology enables existing and future business models and processes. CTOs should run the technology show and report directly to the CEO.  CIOs should report to CTOs.
4. Budget questions are always important. It’s also important to ask about budget responsibility. Budget trends are important as well.  Especially as it compares to competitors.
5. Sourcing questions are essential to understanding how technology is acquired and deployed at companies. HR leaders should ask about trends as well as justifications for whatever sourcing strategy is in place. They should ask about overall sourcing trends, such as the pace of movement to the cloud, the range and nature of operational and strategic sourcing dependencies and vendor management.

Performance questions

1. HR leaders need to ask some basic questions about how well – or poorly – technology is performing at their company, and they need to know this every single week. The first question focuses on performance metrics in several areas including infrastructure, delivery and innovation. These metrics should be quantitative – not qualitative.
2. The optimization of Service Level Agreements – SLAs – is a best practice that everyone should understand.
3. Performance dashboards inform HR on at least a monthly basis of technology performance. The performance metrics in the dashboards are derived from the SLAs in place at any given point in time. They should be summarized on a quarterly basis.
4. HR leaders should measure technology performance accordingly, if a company has lines of business that report their profits and losses separately. Enterprise and business unit performance questions should always be asked.
5. HR leaders should also ask about the technology organization’s ability to innovate and pivot in response to market changes and competitive threats.

Strategy questions

1. The first strategic question HR leaders should ask is how the company does strategic thinking. How is business strategy done at the company? How is technology strategy done?
2. Questions about business strategy should focus on business vision – what is it? The current and future value propositions should be described with special emphasis on differentiation. Who are the competitors and where are they skating to? How is the technology strategy developed? Is the company adequately assessing all of the emerging technologies? How good is the team assessing these and other technologies?
3. What’s the innovation quotient at the company? Does the company innovate incrementally or disruptively? HR leaders need to constantly take the pulse of the innovation culture.
4. Is there adequate understanding that business strategy and technology intersect?
5. Who’s in charge of business technology strategy? Dedicated, well-funded teams should exist to pursue these dual strategies.

Immediate investment questions

1. What technologies do we need right now? Are we ahead or behind in the adoption of AI?  What other emerging technologies should we pilot?
2. Do we need a formal organizational assessment?
3. How can we improve operational performance? Should we deploy more of our infrastructure and applications to the cloud?
4. Should we invest in an Innovation Center of Excellence?
5. What new talent do we need to recruit?

The search for ROI

The answers to these and related questions will enable HR leaders to target their investments. The answers provide context and focus.

They also increase the technology literacy of the people responsible for technology investments which should be made holistically.

It’s impossible to optimize investments without a full understanding of how, where and for what purpose investments should be made.

The list of immediate investment requirements should extend directly from the Q&A described above.