How business leaders minimize risk when investing in tech

This article is a part of our Risk + Reward series. Capital One Business and Inc. partnered to survey 314 business leaders in November of 2024 to explore the factors that affect how they weigh business risks and rewards in navigating modern business landscapes. View our key findings and other articles in this series.

Many business leaders face a technology conundrum. Invest in the right solutions and unlock transformative advantages in efficiency, productivity, and service. Choose the wrong tool and risk disrupting processes, wasting money, or even incurring reputational damage. Technology choices have become so critical to a company’s trajectory that 50% of business leaders call digital transformation their toughest challenge, according to a study by Inc. and Capital One Business.

“Technology is both an opportunity and a risk,” agrees Michael Ly, founder of the bookkeeping and accounting services business Reconciled. “Technology helps companies enable their workforce, helping [them] be more productive, connecting people, removing friction between vendors, customers, and employees. That's an amazing opportunity. But I feel like the opportunities in technology are moving faster than we as human beings can catch up.”

However, there are a few ways entrepreneurs and executives can overcome common hurdles to keep up with technological advancements and maximize the results of their investments.

To get digital transformation right, it’s important to start with the company’s goals and processes, including workflows, before looking at software and other tools. This approach worked well for Ly when he needed a tool to increase productivity and streamline internal processes. He moved forward methodically, evaluating six internal workflow tools. He asked each vendor a series of questions, including:

• How long has your company been around?
• How long have you been offering this particular solution?
• How many clients do you have?
• Have you worked with clients in my industry?
• If my team or I need help, to whom do we reach out?

In the end, Ly chose a cloud-based tool designed specifically for accounting firms that has had a huge impact on his business. He knew exactly what he hoped to achieve from the technology—an increase in productivity—so evaluating his return on investment (ROI) was simple. “The tool increased the productivity level of every employee using it,” he explains.

When Ly assesses a solution, he considers the potential benefits and downsides of adopting that tool. He also considers the impact of not adopting the tool, as failure to keep up with evolving capabilities can lead to a competitive disadvantage. According to Inc. and Capital One Business’s survey, 49% of business leaders believe their biggest tech risk is being too slow to adopt new technology. On the other hand, moving too fast is risky, too. To keep up with web development trends, Kyle Dennis, president of 5Boys Apparel, a family-owned and operated screen printing and embroidery company, greenlit a new website vendor. “We've probably spent over three years and $40,000 to $50,000 on trying to build out a custom website that just never worked. That was an example of a really bad investment,” he says.

From the experience, Dennis learned how to approach the vendor vetting process. “You have to take control over those preliminary discussions, steer the conversation with the correct questions and don’t allow, essentially, somebody to just sell you on something,” he advises.

Technology won’t help your business if your employees can’t use it, so business leaders should consider user experience (UX), meaning how simple and intuitive a solution is, before rolling it out to employees. Should company adoption, or any part of your plan, not go as expected, be prepared to make a change, and fast, suggests Lisa Larson-Kelley, founder and CEO of the marketing firm Quantious. “Sometimes, we have to make fast decisions to invest in a platform to keep moving. But in doing so, don't close your eyes to other platforms or options that might offer more benefits. Always be open to pivot and change. Don't let that sunk cost, in money or time, put the blinders on and keep you from adopting something better," she says.

Technology utilization requires a balancing act, but business leaders can make smart, efficient decisions that improve internal processes and create a competitive edge. The key is to remember your business objectives, ask the right questions, and prepare to change course as needed.