In this episode, we have our guest Wayne Sadin, who shares his thoughts on forming an advisory board and its importance. He also shares his perspectives on growth implications because of technology misalignment. Additionally, he shares his experiences on digital transformation and digital optimization and why business processes are more than important than individual systems.
- [0:00] Intro
- [2:42] Personal journey and current focus
- [5:15] Perspective on growth
- [7:41] The value of having a board for companies
- [12:09] The value of building a board
- [15:26] Why companies may not be using enough technology
- [20:31] Perspective on open source ERP systems
- [25:53] Why ERP systems are difficult to implement
- [36:21] Closing thoughts
- [39:34] Outro
- What people tend to miss is there’s also an augmented product. That is every interaction you have with the firm. From the first time you look at their website or the first time, you see the CEO speak. Or the first time a salesperson calls you up through how you get the order fulfilled.
- The purpose of a board of directors of a fiduciary board is to represent the shareholder or shareholders in a public company. And so keep the agent, the management team aligned with the interests of the shareholders.
- if you’re a small company, under say, half a billion in sales, and you’re not wedded to 30-year-old technology that you’re afraid to get rid of, you have a tremendous opportunity to leverage modern technology, with your knowledge of the business and your ability to make decisions quickly.
- The challenge of technology is not about the software if you were to go to Oracle or SAP or Microsoft, and they’ve got, let’s say $5 billion, and I’m not exaggerating, invested in their software, and they gave it to you for free here is all of Microsoft software in a pile on your desk, and you didn’t know what to do with it.
- Every vendor designs their software with a perspective, a point of view. And unless it accidentally overlaps the old product, maybe one vendor with multiple products, you’re going to find that the software runs the way it runs.
- When you’re buying a software package, recognize you’re buying a lot of best practice planning a lot of scaffolding, and tools, but you’re also paying a price for it.
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Wayne Sadin has had a 30-year IT career in several industries, including logistics and Manufacturing. Computerworld named him a ‘Premier 100 IT Leader’ and an Honors Program’ Laureate.’ He is a ‘Top 100 CIO,’ one of ’21 CIOs to Follow on Twitter,’ a ‘Cloud Global Power 100 Influencer,’ and a ‘Cloud Top 100 Influencer.’ In August of 2020, he was named to the #2 position on the new ‘IT Leader Power 100’ global list.
- Connect with Wayne
- Wayne welcomes questions, discussions, and challenges. Reach him on Twitter & LinkedIn (waynesadin)
Wayne Sadin 0:00
If you’re a business executive and you’re not comfortable with IT, get comfortable, it is important. We have gone past the point when IT can be an afterthought in most companies.
Growing a business requires a holistic approach that extends beyond sales and marketing. This approach needs alignment among people, processes, and technologies. So if you’re a business owner, operations, or finance leader looking to learn growth strategies from your peers and competitors, you’re tuned into the right podcast. Welcome to the WBS podcast where scalable growth using business systems is our number one priority.
Now, here is your host, Sam Gupta.
Sam Gupta 0:48
Hey everyone. Welcome back to another episode of the WBS podcast. I’m Sam Gupta, your host, and principal consultant at digital transformation consulting firm, ElevatIQ.
If you don’t have experience growing a company, you may make rookie mistakes for which there is already plenty of advice available from senior executives who have been there multiple times and done that. Your growth strategy requires alignment with people, processes, and technology. Having technology experience on your advisory board can set you on a growth trajectory from the get-go.
In today’s episode, we have our guest, Wayne Sadin, who shares his thoughts on forming an advisory board and its importance. He also shares his perspectives on growth implications because of technology misalignment. Additionally, he shares his experiences on digital transformation and digital optimization and why business processes are more important than individual systems.
Let me introduce Wayne to you.
Wayne Sadin has had a 30 year IT career in several industries, including logistics and manufacturing, computer world named him premier 100 IT leader and an owners program laureate. He’s a top 100 CEO, one of 21 CEOs to follow on Twitter, a cloud global power 100 influencer, and a cloud top 100 influencers. In August of 2020. He was named to the number two position on the new IT leader power 100 Global lists.
With that, let’s get to the conversation.
Hey, Wayne, welcome to the show.
Wayne Sadin 2:40
Thank you so much for having me, Sam.
Sam Gupta 2:42
It’s my pleasure. So to start with, do you want to share your personal story and what you are focusing on these days?
Wayne Sadin 2:51
Sure, Sam might be happy to. So my personal perspective, I started out as an engineer working in manufacturing while I was going to school at night for my IT degrees.
When I completed the IT training, I wound up working in it on Wall Street, worked for some of the big financial service firms as a low-level tech person, and ultimately had a chance to move to Texas and become a Head of the Infrastructure.
And then ultimately my first CIO job about 30 years ago. And as I worked in financial services, manufacturing, logistics, distribution, healthcare in a number of other industries, I began to see a theme. Companies were not using technology well, in their business, the technology might be fine, the business might be fine, but they weren’t working well together. So I tend to gravitate towards turnaround situations, troubled situations, companies that just needed help.
Wayne Sadin 3:42
And after doing half a dozen of these in a row and helping sell the company or having it sold out from under me, I eventually decided the answer was to hang out my own shingle and become a consultant in the area of digital transformation, which I define as changing the culture, changing the product, changing the market, changing the customer experience, changing the employee experience of your company.
And digital optimization, which is doing what you do today, but doing it better, and faster, and cheaper. I’m often retained by a CEO, or sometimes by a board, very rarely by an IT person. But I may often have an IT role. And I like to think I work at the intersection of technology and business process.
In fact, Sam my business card reads, when you outgrow your IT strategy, call me. And when I meet a CEO who has outgrown their IT strategy, they see my card and they go, yeah, that’s what happened around here.
So for the last eight years or so, I’ve been working with companies in a number of industries, some manufacturers, some logistics distribution, a little bit healthcare, construction companies lately, helping them define how they want to use technology to advance their business. And that’s a fascinating area. Because it’s not about the tech. It’s about how the executive can understand the tech and use the tech to drive a business agenda.
Sam Gupta 5:15
Okay, so before we dig deeper into your background, and there are certain things that I would like to dig deeper, but one question that I always like to ask all of my guests, and that is going to be your perspective on growth. So in your opinion, tell me what growth means to you?
Wayne Sadin 5:33
Well, growth means to me to satisfy the needs of a group of potential clients. When we talk about marketing, which is where it all starts. People think of it as advertising and making people buy things they don’t want to, that’s nonsense, you got to understand what people want to buy, what people need to buy what people are willing to pay for, and then figure out how to build a product.
And more than a product that delivers, I tend to like the definition of the core product, actual product and augmented product. There is the core product, the thing the customer wants, the problem they want to solve, then there is the actual product, the thing on your price list or in your catalog that you sell, here’s the price, we do this, that solves that problem for you.
And then what people tend to miss is there’s also an augmented product. That is every interaction you have with the firm. From the first time you look at their website or the first time, you see the CEO speak. Or the first time a salesperson calls you up through how you get the order fulfilled.
Wayne Sadin 6:36
How do they live up to their objectives and their promises? And how do they serve you when there’s a problem? How does the billing work? So all of these things are factors in your product? To give an example, that always uses the core product? Or the actual product? Maybe I want to buy a drill? Is that what you want? Nobody wants to buy a drill. What they want to buy is a hole. How do you get a hole with a drill?
So the core product, the thing you want is a hole. The actual product you buy is a drill. The augmented product is how does their catalog look. How easy are they to do business with? Are they the right price? Are they battery power drills or corded drills? How big is the drill? Is it a two-person drill to drill two-foot holes through battleships?
So when you look at this growth is about understanding the need of the customer, the core product, having products that people want to buy the actual products, and not forgetting the augmented product, the whole experience of dealing with your company, which largely comes from your culture, and your people.
Sam Gupta 7:41
Okay, so tell me a little bit about the journey of different companies. And since you, you’ve spent so much time on boards, and some of our smaller customers may not have a board yet.
What is the value that the board brings to the table? And what audience does the board need to have to make sure they are able to grow the way you are describing?
Wayne Sadin 8:07
Sure, Sam, Well, let’s say given my experience. I’ve been on public company boards as an advisor. I’ve been on private company boards. As a fiduciary director, I’ve been on startup boards. So I have a little bit of experience in a number of industries.
And I’ll say this, if you need advice, if you need suggestions, if you need help from somebody that isn’t you’re paid everyday employee, having an advisory board is a terrific idea. I started companies where we had three employees. We had two advisors. I just took a role with a company that’s a startup, they have five employees, and they have 10 advisors.
Our role as an advisor in this advisory board is to help them with their business strategy, to help them with their go-to-market to help them fine-tune their marketing message. And frankly, to use our connections. Who do they who do we know that we can introduce to these folks?
Wayne Sadin 9:00
So the CEO of the company that I’m thinking of is got a tremendous amount of experience, he probably doesn’t need any of our advice, because he’s been so successful. But he wisely took the step of saying, Can I get some smart business people who come from backgrounds different than mine? and have that group advise me, that’s an advisory board.
Let me be careful that when you say the board and don’t modify it, people often think of a board of directors, a fiduciary board, technically. And remember, I’m US-based, there are different terms in different countries. So a public company requires a board of directors and the Board of Director’s job is to look out for the shareholder’s interests.
If you go back in history when you own your own company. Is there any question that you’re aligned with the interests of the owner? No, you’re the owner. You’re in the company every day running the company. What happens when you’re not running the company? Every day you have an agent to run the company as CEO, a C-suite, whatever you call your executive team, now, the owner in a public company, the shareholders are not the same as the people running the agents.
So you get what’s known as the agency problem. How do you know that the agents, the paid people running your company, are acting in the best interest of the shareholders? So in simple terms, the purpose of a board of directors of a fiduciary board is to represent the shareholder or shareholders in a public company. And so keep the agent, the management team aligned with the interests of the shareholders, that gets very complicated. There’s a whole bunch of laws about it.
Wayne Sadin 10:42
But it comes down to two things. Essentially, a board member owes a duty of loyalty to the company that says, as a board member, My responsibility is to act in the interests of the company, not in my own, that prevents me from signing a sweetheart deal with a company to use my consulting company or buy from me as a vendor at some market price.
The other thing they owe is a duty of care. The duty of care says, I actually know enough, I’ve read the material, the board presentation, I know the industry, or I’m learning the industry I know how the company is doing compared to the competitors. And I’m able to offer valid and valuable input into running the company.
And so if you think about it, as a CEO, or as an owner, if you want somebody who can give you advice, who’s been there and done that, you might want one or both of those boards. If you’re planning on going public or planning on even taking your debt public, you’re going to want a fiduciary board.
And in the case of an advisory board, they advise you they do what you ask, they answer questions as you ask them. In the case of the fiduciary board, they have a little more responsibility. But if you’re the majority owner or the entire owner, then they serve at your pleasure as well. So whether you’re a startup, or whether you’re multinational. If you want some smart people that don’t work for you, you can look at having some sort of board at some level advising you at almost any size.
Sam Gupta 12:09
Okay, so let’s say if I’m a manufacturing startup, obviously, having somebody who has done this before, sounds like a great idea. I mean, it is a brainer there. Every founder out there or the owner out there is going to have some sort of questions that they are going to struggle with, and they need to look for advice.
Now, if I’m looking at a startup, and I would like to have somebody in on my board with this experience, number one, what is going to be the price tag. And number two, what is going to be the process of hiring these guys.
Wayne Sadin 12:40
Those are good questions. And I’ve served on a number of advisory boards. I’ve been in some software advisory boards, where they were established companies. And so they got customers and even prospects, who had opinions and thoughts and been around to just advise them really for the ability to help shape the product.
In a startup, I’ve been paid in two ways, sometimes with equity. And if the company has a liquidity event planned, you tend to plan to go public or get acquired, that has value over time, it may be in the form of performance units, some kind of Phantom share, if the value of the company goes up, you will have a claim on a percentage of that value increase just like you might compensate your executive team.
Other small companies use cash, or some companies use a combination. And if you find the right advisor or right fiduciary board member, you want somebody that actually cares about you cares about how your company in your industry is going to perform.
I’m an IT person, I’ve worked in a number of industries. When I look at an invitation to be on an advisory board or fiduciary board. I rarely say Oh yes, this is something I’ve already done. And I know everything.
Wayne Sadin 13:53
I like to know something. But I also use it as a way to stretch my brain as a way to learn new things as a way to see things from a different perspective. So you might be surprised, as a small business owner, as a startup founder, that the people in your community, either your geographic community or your industry community, or just the community of people, you know, might have an interest just from the standpoint of participating and learning and kind of sharpening their tools because it’s easy, especially look at the COVID we’re all probably getting out less, we are all interacting less.
And so for me, the opportunity to join a board recently was fantastic. The company does Human Resources consulting. They do search work. They do succession planning, strategic planning, a lot of kind of soft skill, things that are a little different than what I’ve done for a living, but things I’ve been involved in most of my career.
And so I could bring them kind of a technology perspective. Here’s how technology is changing the world of work, and they would then have people who are Chief Human Resources officers and behavioral science Scientists and psychologists, and I’ve been to only a few meetings because it’s brand new for me.
But I’ve learned a heck of a lot. And so for me, this is increasing my value as a manager, my value as a consultant. And so I’m easily persuaded with the right company and right management team, if I feel aligned with their mission, that it’s a great thing for me to do, from my perspective, not just for mere economic gain.
Sam Gupta 15:26
Okay, I want to go back to one of the comments that you made when you described yourself as companies not using enough technology. And I would imagine that that is going to have some impact on growth. So tell me a little bit more about that. Why do you feel that companies are not using enough technology?
Wayne Sadin 15:45
Well, say and let me say, it’s not that they’re not using enough technology, it’s probably that they’re not using technology enough correctly. The nice thing about being a small company today is the world of the cloud. And the world of it, as it exists today has changed the playing field. Go back 25-30 years ago, when mainframes walk the earth. If you’re a startup, and you need computer power, you couldn’t get it.
There were some time-sharing companies, just a few. But you were hamstrung because the big companies could afford a mainframe or two mainframes in a building they built with a custom staff of people to walk around in white coats supporting it. And I started that way on wall street with very large firms with essentially unlimited tech budgets, and they could pound their competitors into the ground.
Now fast forward to today, I’ll give you a quick example, about 15 years ago, I wanted to use for a client, an AI tool for pricing, they had a very complex product configuration model. And they said we think AI will work for our pricing. And in fact, there was an industry-standard AI package that they could buy.
Wayne Sadin 16:52
So we contacted the manufacturer, and we had to put in a bunch of servers. And we had to put in some special operating system software, we had to buy that software from the company, and we had to set it up and make it all work.
And then we discovered and we plugged the servers and it wasn’t compatible with something else in our system. Long story short, before we put the first pricing test transaction in, we had spent about seven months and about half a million dollars on hardware and software installation and blah, blah, blah.
About 18 months ago, a client said to me, hey, we’d like to try pricing with AI for our product. I looked at the pricing for a number of years. So I said, Okay, you’re a Microsoft Azure client. Let me go to the Microsoft Azure dashboard and see what’s going on.
And I walked around, click, click, click. And I discovered that we could be pricing our products, using a Microsoft AI tool, probably 1000 times more capable, for you’re ready for this $6 a month. For the first few transactions, they give me two months free. And so the next week, for zero cost we were playing with AI-based product pricing. And that’s really what’s happened in 15-20 years. If you are a small company, the advantage of the large company having hundreds of 1000s or millions or hundreds of millions of installed technology base is nullified.
Wayne Sadin 18:16
Because they’ve been building this for five years, 10 years, 40 years, 60 years. And they got this enormous install base, subject to a problem called technical debt we can talk about if we have time. But they’ve got this albatross around their neck, and they’ve got to keep all this stuff fed.
You as a startup though, I like Google. I like Microsoft. I like this SAAS-based ERP system. And you can have it up and running. Because you probably don’t have the politics, because you probably don’t have the global decisions that have to be made in the 100 people in a room.
You can use your nimbleness connected to Amazon, Google, Microsoft, Oracle, Acumatica, Infor, you name it. That the big company can’t or won’t implement. And you can beat them at their own game. You’re sitting on top of about a $50 billion stack of technology that you can buy the drink. I want to sign up for the Microsoft blah, blah, blah, click, click click credit card.
But one of the clients literally Microsoft announced a 50% off sale. If I act by Monday, guess what? We’re going to act by Monday. If you don’t like the Microsoft solution, after you’ve tried it, let’s switch to Google. You don’t like the Google switch to Amazon.
Wayne Sadin 19:31
That is something those big companies can’t do. So if you’re a small company, under say, half a billion in sales, and you’re not wedded to 30-year-old technology that you’re afraid to get rid of, you have a tremendous opportunity to leverage modern technology, with your knowledge of the business and your ability to make decisions quickly. Which modern technology now enables you to beat them at their own game. So it’s not you don’t use enough technology.
In fact, you’re probably if you’ve got technology that’s more than about 10 or 15 years old, let’s say you’re not a startup, you’re probably using some of the wrong technology. You’ve just got to have the knowledge and the guts to be willing to switch from installed base of capital assets to the buy the drink, or the as a service model, and take advantage of technology that’s moving 10 times faster, 100 times faster than everything, anything you’ve ever seen in the old, on-prem, or service bureau software.
Sam Gupta 20:31
Okay, since you mentioned about this $50 billion comment related to the technology, we have this notion, especially in the smaller sized business, the reason for that is because you know, they feel the software development is easy. Since you have so much background in building the enterprise-grade system, I’m pretty sure when you are going to agree that designing an enterprise system is never easy. It’s a very difficult, expensive, and risky job.
So I want to touch on one of the products that we see very commonly in the small to medium-sized businesses called Odoo. Okay, that’s the ERP system. And they are trying to promote the notion of open source. Okay, an open-source idea is great. But when we talk about building the technology, building the custom platform, and let’s say if I’m a $10 million shop, would you recommend me building this? Or would you rather recommend utilizing a SAAS tool that you can buy at a fraction of the cost? What would be your perspective on that?
Wayne Sadin 21:38
Well, Sam says we only have probably half an hour to talk, you’ve asked me to have a two day conversation that requires an understanding of culture, say it is about culture, as a CEO, and a board and an executive team are set the culture of the company, are you an IT company? Do you see that investing in cutting edge makes you better? Or would you rather invest in cutting-edge machine tools or 3d printing, or better customer service, or a better supply chain to some low-cost manufactured area?
So you got to figure out what you want to do and how you want to spend your money. Open source is free. And I’m doing air quotes, we’re not on video, so you can’t see. It is free in the sense that you can get a bucket of code delivered to you by downloading it. So here we go. I download all this code. Now I have 5000, or five, that 5 million lines of code sitting on somebody’s PC. Now what do you do with it?
Wayne Sadin 22:33
The challenge of technology is not about the software if you were to go to Oracle or SAP or Microsoft, and they’ve got, let’s say $5 billion, and I’m not exaggerating, invested in their software, and they gave it to you for free here is all of Microsoft software in a pile on your desk, and you didn’t know what to do with it.
And you were a small company, what would you do? You trip over your own feet, open-source requires you to build an IT capability within the company, so that you can work with the stuff that comes from them.
Because remember, open-source means that nobody is officially getting a profit, everybody’s doing this for the good of the whole, it’s a noble idea. But it means you’ve got to have a labor force and an orientation that says experimentation is good. And that level of it knowledge must be maintained within the company because you’re building yourself. In software, the world breaks down into packaged software, and bespoke software, I can build it myself, or I can buy it. And then with the purchased software, it breaks down into open source or proprietary. And then in both cases, it’s a suite or best of the breed.
Wayne Sadin 23:39
So there’s a relatively complicated decision model that in my view is more aimed at the culture of your company. How do you see yourself? What are your goals? What are your needs for the software? So open source isn’t a bad idea. I have a good friend to work for me on the business side of it for years. And he loves open source.
So when he becomes CIO of a shop, they almost always throw out the expensive stuff from the name company. And they download everything. But he hires 12 programmers. And instead of paying Oracle or Microsoft or whoever, a bunch of money, he pays a whole bunch of programmers to maintain his own code.
Not a bad model, not a good model. It depends on what you want to be. If you’re in the university environment, when you have an unlimited number of free labor, graduate students, people looking for a grade, open-source is terrific. If you’re a proprietary company, and software is not changing quickly. And you’re looking to minimize your acquisition cost and don’t intend to mess with it very much. Maybe open source will work for you.
Wayne Sadin 24:44
If you want to use software to drive process change and be on the business side of this and less concerned as a CIO with did it compile? Is the program working or do I need a patch from Bulgaria that I don’t have? Maybe Want to spend your money by paying Microsoft or Acumatica or in for somebody chunk of money, having them maintain the software, and then you would tweak the business function, and you would build the processes.
Because I say this is a 40 year IT person, the differentiation of the company is not picked by what software you choose to run the company, you differentiate your company by how you pick your processes, how you pick your people, and how you interact with the customer, with the employee, with one business unit, business function business silo to the other.
It’s not something you buy in a box, it’s something you grow as part of your company culture, as part of the way you see yourself and the way you deliver your value proposition. So the answer is all software is equally good. If you don’t tell me the company and the problem they’re trying to solve.
Sam Gupta 25:53
Yeah, I cannot agree more with that insight. In fact, I want to touch a little bit more on that topic from a different angle. So let’s say if I look at the journey of some of the e-commerce shops or the manufacturers when they start, they are going to be starting with a very small system. So the digital capability that they are going to have; might have internal capabilities.
For example, let’s say if they have the WordPress site, or they might have a bit of WooCommerce, they might get to roughly $10 million in revenue. With that capability, they might have, let’s say QuickBooks towards the back end. And now they are at that inflection point where they probably need the enterprise capabilities to make sure their processes are streamlined.
But one thing that they don’t understand is when it is so easy to do things in let’s say QuickBooks in WordPress and WooCommerce. And an intern can probably do that. When when you get to the ERP conversation, everything becomes so bloated. So what is your perspective on that?
Wayne Sadin 26:57
It starts not with what software you picked, it starts with what your processes are, and what you need them to be. So when I talk to customers, we don’t talk about software. Initially, we talk about what they’re trying to do today, what their issues are, where they’re bottlenecks, what do they wish they could have?
And what do they want to see in two years, three years, five years, however, their strategic planning process works. I had a client say to me recently, I was there for about two weeks, and one of the business executives came to me and said, You’re a weird IT consultant.
I said, Oh, really, I was a little offended. What are you talking about? And he said, yeah, you don’t want to talk about technology, you want to ask us what we do? And I said, Well, no, I’m the right IT consultant for you. I’m the one that wants to understand what problem you’re trying to solve and help you solve it.
The answer could very well be QuickBooks, the answer could very well be Excel, it depends on what you’re trying to do. If you work in an industry where management of huge quantities of information is vital. You need an information management strategy.
Wayne Sadin 27:59
If you’re managing a few buckets of very large numbers, who cares if they’re in QuickBooks, I live in Texas and the oil industry, unless you’re a very, very large company can run with very simple software. Because if you’re drilling a well, for example, there’s a lot of money coming through that well, but the accounting for it is relatively simpler than a bank, that for that much volume of revenue may need 100,000 customers.
So you can often get by with simple software. As long as your process works for your business. And your software works for your process, where people get out of whack is they will buy software designed to work one way, and they have their processes working a different way.
And they try to shoehorn the software into their process. The worst mistake I’ve seen customers make is they’ll have an ERP system or now ERP is a fancy term. They’ll have a manufacturing system or inventory system or billing system recover system that works a certain way. And then they get the idea. We want to buy a different product. And they interview the vendor.
Wayne Sadin 29:02
And they discovered the philosophy of the product is different. It sees customers differently, a price is different, it’s very different. And the client then goes to the vendor and says I like your software because it scales better or it’s lower cost per transaction.
But I want it to look like that other product over there. If the vendor says Oh, sure. run screaming from the conversation. Because every vendor designs their software with a perspective, a point of view. And unless it accidentally overlaps the old product, maybe one vendor with multiple products, you’re going to find that the software runs the way it runs.
And so you’re going to be choosing here are the processes that I have today. Here are the processes I think I want. Here’s the software I’m looking to buy, and how does that work together? If I’ve got to change my processes, maybe that’s a good answer. If I’m buying an industry-standard package, and I can implement an industry best practice that might be terrific. Maybe I have a very customized process.
Wayne Sadin 30:03
And maybe I can find vertical software written for my industry that understands my terminology, understands my geography, my nationality, my regulatory climate. And that may be terrific. Or you may decide I’m going to take software that’s good for most things. And then we’re going to put most of our money into rewriting that part or bolting on another product to do that function.
But like I say, you can’t just answer once for the whole industry, or once in general, you’ve really got to come down and say, how well do my processes serve the needs of my actual product? My augmented product? How does it serve my growth needs, what problems might be having, and then you can fix the process. And then you go find software that implements your process, hopefully, or you bolt some stuff together best of the breed to implement your process? Or you may have to write something. But again, I hate to say that the answer is it depends. But there is a little conversation that has to occur.
Wayne Sadin 31:00
And maybe we should talk about this a minute, Sam, even if you’re a small company, there is something called the CIO. I’ve been a CIO, for most of my career, I’ve been a CTO and a CTO, which is Chief Digital Officer and a CIO, there is a strategic conversation that I don’t care if you’re a $20 million company, you should probably have with somebody that speaks business, and technology at the same time.
Who can say I, what I heard you say is X and your M&A strategy in your customer satisfaction strategy, in your employee engagement strategy. And therefore, I think your processes may be adjusted over here on over here, and over here, maybe you’ve outgrown them, maybe the markets changed on you, maybe new competitors emerge, maybe you’re operating in multiple jurisdictions, and all of a sudden, you have regulatory issues you didn’t have before.
So having a little bit of consulting from somebody that can think with your board or your C-suite, and you as the executive, and then guide your IT people, whether you outsource it to a third party to a bar to an ISV, or you have an internal IT staff, or you do whatever.
Wayne Sadin 32:05
Having that strategic alignment discussion will save you an awful lot of time down the road. Sam, I have a rule of thumb, we talked about enterprise software is hard. So I’m going to share a couple of rules of thumb one is mine. What I got from a book, My Rule of Thumb, is that if it costs you $1, to do something in design, it’s going to cost you $10 to do the same thing, once you’ve started the development of that code. And it’s going to cost you $100 to do that same thing after the software is in production if you want to change it.
So that says it’s always better to invest upfront in the design discussion. What are my processes? And what are my needs? What are my systems? How do they align and building that roadmap with somebody that speaks business and it when companies promote a great programmer into this Head of IT job, maybe they’re terrific, if they’re doing it for the first time, they have a lot to learn. But I did it for the first time once too, and I had a lot to learn, but getting an experienced hand and to help you a little bit to mentor your team, maybe money well spent.
Wayne Sadin 33:12
The second rule of thumb is a rule from a book called The Mythical Man Month by a guy named Fred Brooks wrote about 40 years ago, he was the architect for the IBM 360 software packages, which was billions of dollars soft. And Fred Brooks said, if a piece of software that you’re going to run as your programmer, like an Excel spreadsheet, costs you $1.
And you’re going to build a set of them that have to co-operate a software system, a figure that’s $3.03 times the cost. Now, he said look at another way, if I’m writing software that I’m going to run myself, it’s going to be running on my desktop, I’m going to supervise, it costs $1. And then I want to generalize it, so people I don’t know can run it. That’s going to be three times the cost of building the training and the documentation.
And if you want to take the Excel spreadsheet that you ran, and you want to turn that into a bunch of Excel spreadsheets, or a bunch of programs that you sell to people don’t know you personally, that’s three times three times the cost or nine times the costs.
So we talk about complexity, it comes from interaction. It comes from the need for generality. It comes from a lot of things. And so when you’re buying a software package, recognize you’re buying a lot of best practice planning a lot of scaffolding, and tools, but you’re also paying a price for it.
Wayne Sadin 34:28
There may be places, although for most standard business processes, I don’t know where they are, where you want to code your own stuff, where you don’t just want to buy a generic product and use it generically. You need to be able to get that last bit of performance or specificity or customer interaction.
And so it’s worth building very customized stuff and spending the money to maintain it. And that’s again, important. You’ve got to decide where you want to invest, whether you’re building a factory or you’re building a software stack. So it all ties together with the business technology discussion. Technically, that’s known as an architecture for business architecture and technology architecture.
And please don’t think that I’m a small firm, I don’t need architecture, it’s not true. If you’re a small firm, your architecture may take three days to come up with, I have small clients that I can spend a week or two and give them an IT roadmap that lasts a couple of years, I have bigger ones where I’m there for months or even years because they’re just that much more complicated.
Wayne Sadin 35:32
So everything we talk about needs to be thought through for your size, your complexity, and your IT intensity, how much it is in every dollar of your finished product. And so again, those are discussions we can have in detail.
With, you can read it in books, you can go to Google, you can talk to somebody like me or the many people like me in the world. But it behooves somebody at the executive level, to have an IT advisor. And to go back to the earlier discussion, Sam, that might be a fiduciary board, it may be an advisory board, it may be a paid advisor, it may be listening to a bunch of podcasts like this one.
But one way or another, unless you’re an IT person or process person, you really need to think about your processes and your technology with someone that’s been around the block a couple of times,
Sam Gupta 36:21
Oh, my goodness, this conversation is so insightful that I want to go on, to be honest. But unfortunately, we have run out of time. And that’s pretty much what we can cover. Do you have any last-minute closing thoughts?
Wayne Sadin 36:33
Sure? Well, I’ll just say as a last-minute thing from the discussion we had, if you’re a business executive, and you’re not comfortable with IT, get comfortable, it is important, we have gone past the point when IT can be an afterthought in most companies. I don’t care if you’re pouring concrete or forging steel or building an e-commerce product, understanding the technology not to be able to code any more than you want to be able maybe to draw the blueprints or design the circuit.
You don’t need that to be a CEO. But you need an advisor with who you can have that open, honest conversation. This is my concern, this is my problem, this is my opportunity and get feedback back whether that’s a fiduciary board, advisory board, an employee, or some other trusted advisor, it is too important to be an afterthought in almost every company that I’m aware of in 2020 going into 2021. So don’t be afraid of it. But don’t be afraid to have a discussion about it.
Sam Gupta 37:30
Okay, amazing. Thank you so much for your time and insight when it’s super helpful.
Wayne Sadin 37:36
I say I’m always happy to be part of these kinds of discussions. And I’ll just say to the group that’s listening, I’m very active on LinkedIn. I’m very active on Twitter. I’m WayneSadin on Twitter, feel free to engage with me. And I love and welcome discussion, disagreement conversation, because I want to learn, just like everybody else wants to.
Sam Gupta 37:57
Yeah, we are going to be including everything in the show notes, so that our listeners know how to reach out to you.
Wayne Sadin 38:03
Good. I encourage that. Thank you so much. And again, I really appreciate the opportunity to have discussed this stuff with you, Sam, and I hope other people find it useful.
Sam Gupta 38:11
I cannot thank our guests enough for coming on the show and sharing their knowledge and journey. I always pick up stuff from our guests, and hopefully, you learned something new today.
If you want to learn more about Wayne Sadin, you can reach him on LinkedIn or Twitter. His handle on both social media platforms is WayneSadin. links and more information will also be available in the show notes.
If anything in this podcast resonated with you and your business. You might want to check other related episodes, including the interview with Jim Gitney, who brings a unique perspective on growth, inflection points, and how the need for people, process, and technology changes at each inflection point. Also the interview with Erin Koss from Syte Consulting, who touches on why culture is an essential ingredient for large-scale digital transformation projects, such as ERP implementations.
Also, don’t forget to subscribe and spread the word among folks with similar backgrounds. If you have any questions or comments about the show, please review and rate us on your favorite podcasting platform. Or DM me on any social channels. I’ll try my best to respond personally and make sure you get help.
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