underestimated costs = underestimated risk 

It’s fairly well-known that we weigh many different factors when making a buying decision – some logical, some emotional.  When purchasing cloud computing, it is easy to fixate on the most obvious factor - the monthly fee – while developing a blind spot for many other key considerations.  For many IT buyers who are used to big dollar projects, the relatively low up-front costs of cloud computing can be as distracting as a sparkling toy to a child. (Ooo…shiny!)

So how do you ensure you don’t overlook key considerations that are lurking in your blind spot when you’re buying a new IT system?  

The other day I was talking with the enthusiastic corporate sponsor of a bank’s new cloud-based software system and he told me with the number of impacted staff, ‘the whole thing will only cost $100 per employee.’ When I asked him to describe the process by which this software was chosen, he giddily told me how easy a decision it was, given that the most they’d be out if it failed was $100,000 over the next two years. He was excited by how little risk to which his buying decision had exposed the bank, given how ‘cheap and easy’ it would be to implement.. (I repeat: Oooo….shiny!)

Does this sound familiar?

As our conversation continued, it became obvious that this bank executive was fixated on the $100 per employee cost. It’s how he got buy-in and it’s what he’ll be measured on at the end of the year. However, despite numerous attempts from a variety of people, no amount of persuasion could convince him that there were any other cost considerations besides the check he’d sent to the vendor.  His tight focus on the $100 per employee number meant he wasn’t able to consider anything that might change how he calculated the true cost of the cloud investment. It was clear his emotions were affecting his thinking and by significantly underestimating the true cost of the bank’s IT investment, this corporate sponsor also significantly underestimated the amount of risk the bank faced if the project failed.

Consider This

Industry estimates suggest the true cost of a cloud implementation is anywhere from 3 to 10 times the price of the system. To put that in hard numbers, even if the vendor is selling you the new system for only $100,000 per year, you’re staring down the barrel of a $300,000 to $1,000,000 in true costs.

And industry estimates suggest IT projects fail at a rate of 60 – 70%. (Oh. Not so shiny.)

Miscalculating an IT investment’s cost and opening up the organization to more risk means it’s even more important that you take action to make sure the system generates real value and capture a high ROI as soon as possible after go-live. After you adjust your estimated expenditures to reflect something closer to reality, you need a way to create value, produce positive ROI and mitigate the risk. How? It’s deceptively simple: get people to use the system. How do you do that? User adoption plans.

What It Means For You

When you consider all the costs of your cloud system, you probably have a lot more at risk than you originally expected.  You therefore need to make sure you get more value from the system to justify the additional risk.  You need to be able to demonstrate that your cloud system is being used and is creating real, measureable value. But how do you get people to use the system?

It’s really not about the technology, it’s about behavior. Changing the technology is the easy part (relatively). Changing peoples’ behavior takes a strategy and a way to execute that strategy, including having the organizational infrastructure, necessary skills, knowledge, experience, and, of course, executive support.

Things to Think About

1. What non-subscription costs do you need to include when determining your true cost of your cloud investment?  Where else are you spending your time, resource, money and effort to purchase, implement and support your cloud system? 

As the saying goes, “Time is money”, so calculate it as such. In addition to the price of the software if nothing else, figure in the costs associated with the full disruption of this project, from initial research to cost of training for future employees, by including the following in your calculations:

• how many people are involved
• rate(s) of pay (or a blended average)
• for how many hours
• over how many months
• plus lost productivity

2. If your updated calculation has a higher cost basis, how does this affect your business case/ ROI forecast? What level of user adoption do you now need to make sure you get the benefits you need to justify the investment? 

Many IT business cases fall down because they assume 100% user adoption.  But what happens if you only get 40% effective adoption? 60%? 80%?  Does your cloud investment still look attractive?  Think about adjusting the business case for different levels of adoption, over various periods of time and see if the business case still makes sense.

3. Do you have a comprehensive strategy that ensures you reach your target level of user adoption?  How will you ensure the highest rate of adoption possible? Do you have the resources, time, knowledge, skills or infrastructure to drive and sustain effective user adoption and achieve your ROI goals?  If not, how will you get what you need?

OBSERVATION

CONSIDER THIS

1. “Brainstorming Session”
2. “Implementation Planning”

• Ascertain and list the relevant topics for that phase of the UA plan (rely not only on the project plan and initial team discussions but also on your UA consultant/expert).
• Organize each agenda topic in a logical sequence to create a seamless and singular focus throughout the session.
• Place specific time limits for each discussion topic, and be realistic as to what can be accomplished, as brainstorming/discussions can take longer than expected.  Therefore do not attempt to overload the meeting agenda with too many topics. If needed, consider more than one brainstorming session vs. one long session.
• During the brainstorming session, ALWAYS include the predicted impacts to user adoption of each idea.
• Assign specific assignments to session participants with the due date set for the following meeting: “Implementation Planning”.  Typically, these assignments are data gathering/research in nature, which shall help the team determine the implementation plan.

• Revisit each discussion topic in the same sequence from the brainstorming session.
• Address the findings from the various assignments in order to decide how to best proceed.  Again, validate each decision based on predicted impact to user adoption.
• Agree to a specific series of implementation activities to enact your team’s decisions.  This must include primary ownership and enactors of activities, time-frames, resources required, leadership endorsement and support.

THINGS TO THINK ABOUT

RELATED RESOURCES

• Check out MyUserAdoptionPlan.com - an all-in-one User Adoption Portal
• Take the Tri Tuns User Adoption Challenge - a free online assessment tool
• Read: “Does Your User Adoption Methodology Remove Barriers To Adoption?”
• Read: “Design the right metrics to improve user adoption”

OBSERVATION

“Compliance” and “Sticks”  In its essence, this is negative approach focused on maximizing fear and punishment.  The underlying principle is, “if you don’t do what I say, you will suffer.”  Compliance driven motivation is:

• Based on consequences/punishment
• Only effective with rigorous enforcement
• Only works when people think you are watching
• Only drives minimum effort required to meet minimum criteria – there is no incentive to go beyond bare minimum

“Commitment”  Appealing to individuals’ commitment is a positive approach that taps into their internal drives and desires to achieve a shared goal.  The underlying principle is, “if we all pull together we can achieve something great.”  Commitment driven motivation:

• Is based on desire to achieve a goal bigger than oneself
• Is “Self Driving”
• Works without external monitoring
• Requires trust, relationship, shared values
• Encourages people to give discretionary effort above bare minimum
• Taps into individuals’ creativity to overcome obstacles and achieve goals

“What’s In It For Me” (WIIFM)  WIIFM appeals to individuals’ self-interests without regard to achieving a larger shared goal.  The underlying principle is, “If you do X you personally will get benefit Y – regardless of what others do.”   WIIFM motivation:

• Appeals to the selfish side of individuals
• Requires you understand the individuals’ actual goals, motivations and priorities.  Unfortunately, these vary from person to person and they change over time
• Ceases to motivate once the individuals’ self interests are fulfilled or there is no perceived marginal value for providing additional discretionary effort
• Encourages individuals to focus on their own interests and does not necessarily encourage them to work towards larger, enterprise goals

CONSIDER THIS

THINGS TO THINK ABOUT

• Do you focus on commitment, compliance, or WIIFM in your current IT efforts?  How effective has it been on driving user adoption?
• How do you increase employee commitment to achieving shared goals?  What are the skills and tools needed to increase commitment?
• Are your organizational leaders effective at motivating employees and driving commitment to organizational goals?  If not, what can you do to develop your leaders’ skills and abilities in this area?
• Have you clearly established the link between effective user adoption and its impact on achieving shared goals?  Do people believe that their behavior/IT adoption has a meaningful impact on achieving shared goals?