The importance of having a Technology Strategy for your startup cannot be underestimated. To choose wrongly could prove to be an enormously costly mistake that only becomes apparent many months later. Before a line of code is written, having the right Technology Strategy in place will save you time and money.
What is a Technology Strategy?
If you are a non-technical executive or new to startups, you may well be wondering what a Technology Strategy is. Wikipedia explains it comprehensively, and summarises it as follows:
Technology strategy is the overall plan which consist of objective(s), principles and tactics relating to use of the technologies within a particular organisation. Such strategies primarily focus on the technologies themselves and in some cases the people who directly manage those technologies. The strategy can be implied from the organisation’s behaviours towards technology decisions, and may be written down in a document.
For the early-stage startup, the Technology Strategy is a section within the business plan which outlines the technologies the business will leverage to deliver the results the plan forecasts. For a Tech Startup, the level of detail in the Technology Strategy would typically far exceed that of a traditional offline business.
As with any business, the further ahead your plan attempts to forecast, the less accurate it is likely to be, none more so than a startup with no trading history. Your Technology Strategy should forecast as far ahead as the other projections within your plan, however, the more distant the forecast, the thinner the detail will be. It is however, important to demonstrate to a potential investor that your business understands what sort of technologies and infrastructure that may be required to support the level of business you are predicting. This in turn will help you forecast your operational costs, and also shows that you have actually thought things through as opposed to the regretfully popular ‘wing it’ approach.
Doing it wrong
I’ve recently worked with two technology startups both suffering similar pains from having a poor or absent Technology Strategy. Although these are two very different technology businesses, they both managed to secure funding that enabled them to outsource their product development. In both instances, they chose UK agencies, and more or less spent their entire cash investment on having their products developed. This should instantly set off some alarm bells:
- A failure to foresee the sort of problems outsourcing your product development can bring
- A failure to follow lean startup principles, and disregarding the need for a minimum viable product, instead shooting straight for a feature rich enterprise solution
- A failure to spend sufficient time on marketing their business to ensure that they can start building traction before the product is ready
These are three serious oversights that stand to jeopardise the future of the businesses, but is beyond the scope of this article. Instead I want to look at the Technology Strategy of both of these businesses.
It may not surprise you to find, that before outsourcing the product development, neither of these businesses had a Technology Strategy. This was a conscious decision as they lacked technical expertise within the company which also led to the decision to outsource the product development. The chosen agency would not only be building the product, but would be expected to fulfil the mental technology deficit that existed within the company – they would define the Technology Strategy.
Now I don’t know what the nature of the discussions were that took place between these companies and their chosen agencies prior to commencement but neither company ended up with a clearly defined Technology Strategy. Instead they had products which in themselves dictated key elements of any emerging plan. Both agencies did what they do best – they worked with the companies to produce the products they wanted, as efficiently and effectively as they could and within the budgets supplied. A good agency excels at this, and they both duly delivered.
What clearly didn’t take place was any sort of discussion about what technologies would be used in producing these products, and whether those choices represented the best interests of the companies concerned. Instead, the agencies simply used the technologies they were most familiar with. Both companies ended up having large swathes of their Technology Strategy designed incidentally and adopted by osmosis.
The cost of these decisions (or lack of) did not fully materialise until they realised the folly of their other mistake in not building an MVP. Many of the assumptions they made about what their customers really needed turned out to be incorrect. Further work was needed on the software in order to deliver value to their customers, but they had spent all of their budget – they could no longer afford to use the agencies to build what their customers need, and didn’t have a product capable of retaining customers and generating revenue.
It’s usually at this point that the importance of a CTO becomes apparent, and that an outsourced development team can be complementary, but is never an alternative. Not only were these companies in need of a CTO, and work carrying out on their project, but they were out of money. They needed to convince a CTO to come on board for sweat equity, but also needed them to be familiar with the technologies their products were built with. Normally the CTO would have been the person determining the choice of technologies, but instead would be having the choice of technologies dictated to them.
Finding a CTO who will work for sweat equity and some vague promise of a future salary is very difficult – you need to be able to convince them that you have what it takes to deliver and you’ll find yourself fishing in a very small pool. If you then discover that the choice of technologies used to build your product are obscure, new, unusual and anything but run-of-the-mill, then that small pool shrinks to the size of a puddle, as did happen in both of these examples. In one case the developers had been extremely keen on adopting new, cutting edge technologies – some unproven. While this might sound good for your product, it is anything but. Their product gained nothing from the use of such emerging technologies, and when trying to find people familiar with them they were coming up short. In the second case, the agency had seemingly evolved from having previously built Windows Applications, and where possible had stuck to the same technologies when undertaking web development. Again, nothing inherently wrong with this for the product, but when trying to find staff who can do this, there are a lot less of them, and they are typically far more expensive than web developers.
You cannot grow a technology startup without having a coherent and well thought through Technology Strategy. As both of these examples show, it is not just about picking the right technologies to do the job but more importantly, recognising it as a commercial decision. If you pick new, obscure or little known technologies as part of your strategy, the number of people available to work with these technologies are chosen from a smaller pool. If such people are indeed available, you can almost guarantee that they will cost significantly more than would have otherwise been necessary.
People who are excited by technology are always keen to try out new technologies. This is good for your business, they will have an open mind to new ideas and will not be afraid to try something new and alien. As a business executive though, you need to make the right commercial decisions for your business, and if there is no commercial driver to adopting suggested new technologies then they are best avoided – it will cost you time and money.
If you are in the fortuitous position of having funds to outsource your software development, ensure that your company owns its Technology Strategy. You cannot entrust these decisions to the agency producing the software as there is a clear conflict of interest – you could not be certain that they would be making decisions that are best for them rather than best for you. If you don’t possess the skills in your startup team to produce a Technology Strategy then consider drafting in an independent person on a temporary basis who can. They can work with your chosen developers to produce a strategy that will work for your company both now and in the future, and if the agency aren’t able to work within the bounds of your chosen strategy you are free to choose other agencies that can.
Get this right from day one, and your chances of success will increase immeasurably. You will appear more investible, you and your stakeholders will have a better understanding of what you are trying to achieve, and you are mitigating against a potential future crisis.