Is Technology The Answer ?Oct 16, 2023
As we move into the 4th quarter of 2023, this is a great time to evaluate the many ways your business has changed as a result of technology in 2023.
Technology isn’t just a wish. It is a must-have for most business owners. But as we start to wind down the year, it is important to identify the return you are getting from your technology investment.
How do we determine our return on investment in technology?
Return on Investment (ROI) in technology refers to the financial benefits or gains that your company receives from investing in and implementing technology solutions or IT projects.
In the hospitality industry, this would include evaluating the return on the investment in your POS system, scheduling software, third party platforms, and every other platform used in your operations on a daily basis.
By evaluating the ROI on this investment, we are able to evaluate whether your technology investments are generating value and whether they are worth the costs involved.
Step 1: Define Objectives: Clearly define the objectives and goals of the technology investment. For example, your scheduling software may cost $300/month, but the goal of this investment would be a time-savings for your team and possibly better transparency on hours worked by staff members.
What specific business problems or opportunities is the technology meant to address?
Step 2: Cost Identification: Identify all the costs associated with the technology investment. This includes not only the initial purchase or development costs but also ongoing operational costs, maintenance expenses, training, and any other related costs.
What is your organization spending monthly on software/apps/IT?
Our recommendation is to track this in a separate expense line on your P&L so that you can evaluate the increase in costs and potential savings in other areas.
Step 3: Benefit Identification: Determine the benefits that the technology investment is expected to deliver. In other words, what were you promised when you purchased the software or app? These benefits may include increased revenue, cost savings, improved productivity, enhanced customer satisfaction, or reduced risk.
Step 4: Comparative Analysis: Compare the ROI of the technology investment to alternative options or scenarios. For example, if your scheduling software enables your manager to write the schedule at-home during off hours, and team members to instantly view the schedule on their phone, the alternative to the cost of this software would be the schedule posted in the kitchen and emailed to staff. For many technologies, the benefits may be in team member satisfaction and not necessarily a difference in profitability. That being said, working through these scenarios helps in making informed decisions about which technology investments offer the best returns.
Step 5: Adjustment and Optimization: After working through these steps, we want to adjust our technology strategy based on this analysis. If the investment is not meeting expectations, what are the changes we can make in this area as we head into 2024?
Step 6: Set a goal of evaluating your technology investments quarterly. Technology evolves, but setting the goal of evaluating technology and your return on this investment regularly will help make sure that there is a benefit to your business and your bottom line, and not just an increasing cost.
Are you ready to grow your business to the next level? We can help! Our accelerator coaching program is a great solution for those looking to improve their business and scale in 2024!