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Better Process, Better Outcomes: Navigating Technology Investments for Family Offices and UHNW Clients


January 3, 2024

Maximizing Technology ROI through Strategic Selection

Want to get a better return on your technology investment? Having a better upfront selection process will go a long way in ensuring a better return on investment (ROI) for your technology spend.

Technology Selection vs. Investment Choices

Selecting technology is a lot like selecting a new investment for your client. You wouldn’t ask your golf buddies what investments they are in, get a couple of corporate pitches and then select the cheapest stock. Sadly, this is how many business managers and family offices go about selecting technology. They ask their peers, get some demos and go with the best demo and\or cheapest price.

Drawing Parallels: Technology Choices and Investment Strategies

Technology may not be a core competency for many accountants and family offices, but it is similar to the selection process firms use when making a new investment. For example, the investment selection process doesn’t start by evaluating specific managers; a lot of thought and analysis goes into the appropriate asset allocation and investment characteristics you want before evaluating individual investment opportunities. Also, it is a defined and repeatable process that has multiple stages and check points. The same holds true for selecting a new technology vendor.

Strategic Planning for Technology Selection

Before making your next technology decision, spend time upfront developing a plan and understanding what problems you have to solve. You have the skills, so stop treating technology differently. It will pay off to put the same rigor into these critical decisions for your firm.

3 Key Tasks You Should Perform Before Starting a Vendor Search:

1.      Define the Problem – The first step is the most important but often skipped over. Define what problems you want to solve and what it takes to solve them. It may sound obvious but having a clearly defined problem statement(s) will form your technology plan and act as a north star during the selection process.

When you start looking at potential solutions things can get convoluted fast. Vendors will present an array of impressive features and functions, but not all their functionality will help you solve your problem(s). Having a clearly defined problem statement and a set of requirements will help you filter out the cool, nice-to-haves from the must-haves.

Remember one vendor will not be able to solve all your problems, which requires you to prioritize. The hard part is not figuring out what to do, but what not to do when. This is where having a plan is critical.

2.      Create a Plan – Creating a technology roadmap is the equivalent of creating a financial plan for your client. When you create a financial plan, you want to understand their current situation as well as their future goals before making specific recommendations. Technology is no different. You need to make an assessment of your current situation and contemplate the future direction of your firm before you can determine what specific technology investments you should make. Bringing in outside technology consultants can really help during this process and see things that you might otherwise miss.

Your roadmap should reflect your firm’s priorities. Prioritization should be given to projects that will have the biggest impact on your business goals and should not be based on what is easiest or cheapest. A realistic plan should factor in resource availability and any systems inter-dependencies. For example, you may need to upgrade your servers before implementing a new phone system or you may want to consider implementing a new CRM before embarking on document management capabilities.

Your roadmap should be a living document. Don’t let the development of the perfect plan prevent you from making decisions. You may not understand all the system inter-dependencies or what the ramification of new legislation will be, but this should not avert you from taking action. Sometimes the greater risk is not taking risks. Your roadmap is about setting a strategic direction and helping define priorities vs. being a step by step guide. You can and should make changes to the plan as more information becomes available.

Taking this time upfront will pay dividends down the road by enabling you to make smarter decisions and better use of your limited resources.

3.      Define Success – A good advisor will have conversations with their clients about what success looks like and how can it be measured. Without this definition, how will you know if you are on track or off-track?

Before embarking on a major technology investment, spend time up front to define what success looks like and how success (or lack thereof) will be measured. Measuring success can be difficult, it has to be defined beforehand and it requires quantifying things that you may only have an intuitive grasp of. You know that the reporting cycle takes too long, but do you know how many hours of labor it takes to complete? Having a good grasp of your current total cost of ownership (TCO) will be an important benchmark when comparing potential solutions. Without this information how do you know if a outsource solution provider is too expensive? How would you know if this upgrade will generate an ROI?

The objective of any system search should not be to find the cheapest solution, but that provides the greatest ROI. Returns can be measured by economic value (i.e. saved $25,000 per year) and intrinsic value (i.e. allowed staff to focus on higher value tasks). Set realistic goals for your project that can be quantified and hold your people (and yourself) accountable.

You wouldn’t place a client in an investment without having an understanding of their goals and tolerances. Why should it be any different when it comes time for investing in technology for your firm? Applying the same planning skills you use with your clients to your next technology decision. It will help you can achieve a greater return of your investment and reduce the chances for failure. 

Illuminating the Road Ahead: Strategizing for Optimal Technology ROI

In navigating the complex realm of technology investments, the path to a better return on investment (ROI) is illuminated by a strategic upfront selection process. Drawing parallels between technology choices and investment strategies, the importance of a defined and repeatable process is underscored. Strategic planning takes center stage, urging decision-makers to treat technology decisions with the same rigor as financial planning for clients. As a roadmap is created, it becomes a dynamic tool reflecting firm priorities, avoiding the paralysis of seeking a perfect plan, and encouraging adaptability to system inter-dependencies. The critical tasks before a vendor search — defining the problem, creating a plan, and establishing success metrics — emerge as actionable steps for ensuring a technology investment's success. By aligning with the meticulous planning skills employed in client investments, these proactive measures promise not just a monetary return but a transformation in operational efficiency, maximizing the utility of limited resources and mitigating the risk of failure in the dynamic landscape of technological advancements.


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