6 steps for mining “tech equity” from the digital goldmine
- Tech equity is the value that technology adds to a business.
- Elements of tech equity exist in every company — and unrealized tech equity potential may be described as a “digital goldmine.”
- Emerging technologies in the digital goldmine include as AI chatbots, augmented reality (AR), and collaborative robots (cobots).
Every fourth quarter of the financial year, like a tenacious football team marching down the field in a final scoring attempt, small- and medium-sized businesses (SMBs) make their last efforts to post favorable financial stats and end the year strong. The fourth quarter is the perfect time to evaluate the year’s performance and adjust to maximize future success.
As companies run the numbers and reflect on their financial wins and losses, they can create strategies that yield an increase in the business’ value as they close out the year. SMBs will find that a tried-and-true strategy to increase valuation is to create “tech equity.” Organizations that create tech equity become better prepared to respond to challenges, take advantage of opportunities, and outperform competitors.
What is tech equity?
Tech equity describes the value that technology adds to a business. Tech equity is an asset, comprising key components of a company’s technology portfolio that drive differentiation and value creation.
The components of tech equity can be divided into two categories: Alpha and Beta. The Alpha components comprise the types of technology investment that create value and result in the greatest return on investment. Strong Alphas, including using data and analytics to glean powerful insights and improve customer focus, will increase company valuation, and enable SMBs to outperform their competition.
While the Alpha components provide the greatest investment return, the Beta tech equity components are essential for mitigating risk and volatility in an SMB. A company that hasn’t addressed Beta components, such as IT infrastructure optimization, is at risk for costly upgrades and is more prone to the volatility of outages than competitors that have maintained and modernized their Beta tech equity components.
The “digital goldmine”
The capacity for building tech equity is present in any organization. Some companies have years’ worth of valuable data collected in their databases sitting dormant and just waiting for the right analytics to bring it to life. Others may have a useful, informative web page that, with some sprucing up, can become a competitive e-commerce site. In any company, elements of tech equity exist — but planning and investment are required to capture its value and leverage it for the business. Countless sources of tech equity exist in what I call the “digital goldmine.”
The digital goldmine represents unrealized tech equity potential. Like the value of precious metal not yet pulled from the earth, the technology in the digital goldmine has great potential to create tech equity for an SMB.
The digital goldmine is much more than the commonly used technology solutions such as customer resource management (CRM) and collaboration software. Numerous exciting emerging technologies also exist in the digital goldmine, such as AI chatbots, augmented reality (AR), and collaborative robots (cobots). Each can offer SMBs opportunities to create tech equity for their organizations.
So, how can SMBs best mine tech equity from the digital goldmine? Well, just like the football team charging toward the end zone in the fourth quarter, SMBs need a playbook.
The tech equity playbook
The tech equity playbook is a set of six repeatable steps that SMBs can follow to create and sustain tech equity.
#1 Assess the current state. SMBs should start by identifying tech equity that has already been created in the company and note opportunities for improvement. Perhaps collaboration tools like Microsoft Teams or Slack were implemented quickly during a crisis. There are likely other opportunities to leverage those tools going forward. For example, does the company hold years’ worth of data in legacy databases that could potentially provide valuable insights if paired with the proper analytic tools?
#2 Get the team on board. SMBs embarking on the journey to create tech equity don’t have to go it alone. Getting the right players on the team is a key step. The business leaders best positioned to influence the decisions to create tech equity, the “tech equity influencers,” are the owner, CEO, CFO, and IT Leader. The tech equity influencers play a critical role in setting the right tone from the top and getting the necessary culture change in motion.
Other important players to keep in mind include the IT team that will be implementing changes, the knowledge specialists that will impart valuable knowledge, and the consultants that will provide expert advice and professional skills to help make technology projects a success.
#3 Form an alliance. By forming an alliance with an experienced IT advisory firm, SMBs can access expertise and talent that may be difficult for small businesses to keep in-house. Projects that otherwise seem to present insurmountable challenges can benefit from an experienced ally that has effectively implemented similar projects and has the knowledge to facilitate a successful outcome.
#4 Create value with Alpha components. The best way to get demonstrable results right off the bat is with the Alpha tech equity components. A good place to start is to work with the tech equity influencers to foster a culture change. Creating a digital culture that attracts talented people and fosters a flexible work environment will set the wheels of tech equity creation in motion.
Like anything of value, whether it’s cash, gold, or tech equity, assets need to be protected. Security is paramount in importance and that is why it’s one of the Alpha components. The risk of being lax is too great. SMBs should be sure to have proper security software, hardware, and protocols in place to guard against viruses, malware, phishing attempts, data breaches, and other cyberattacks.
There are many other solutions in the digital goldmine that can contribute toward creating value. For example, implementing a new CRM helps to improve customer focus, while an updated Enterprise Resource Planning system (ERP) can facilitate automating supply chain management.
#5 Mitigate risk with Beta components. SMBs should take steps to ensure that all their newly gained tech equity isn’t lost. The Beta tech equity components are vital to preserving value by managing risk and volatility. An aging infrastructure can introduce a great deal of risk, inefficiency, and uncertainty to any organization. If legacy custom software, servers, or network equipment are approaching end-of-life, or are still “on-prem” (on premises, rather than remote), tech equity can be created by moving these applications to the cloud and leveraging software as a service.
#6 Flex your muscle memory. Just like the football team that works year-round to keep its skills sharp and strong, creating tech equity requires consistent practice and dedication. The trick is to repeat the process again and again, develop tech equity muscle memory and continue to create and preserve value.
As SMBs make the final push of the year to put outstanding financial numbers in the books, it’s the perfect time to reflect on past performance and devise a strategy to create tech equity and become future ready.
