Yesterday I was reading a Reuters article describing the 3rd consecutive quarter of declining labor productivity. The article lamented how this is a multi-year trend and a big problem for growth. The article goes on to conclude that this decline has occurred largely because businesses have been reluctant to make capital investments – specifically citing IT. This assertion is just flat out WRONG. It is not only WRONG it really makes my blood boil.
Why the anger? Because this capital investment assertion is a business myth. Post-recession there has been a glut of capital investment (software included) but as the article pointed out there has been no information technology productivity bump. So we have recent empirical evidence that lack of capital is not the problem. The real reason why labor productivity is suffering is because of a lack of investment in USERS, otherwise known as EMPLOYEES, otherwise known as PEOPLE.
Businesses are just not spending enough on USERS to get the productivity gains they claim they want.
We have been asked many times why this is happening. Usually I group companies into one of two camps - companies that don’t get it and companies that don’t act. From our travels I think that more businesses are in the second category, in future blogs I will outline the various user investment personas out there, but until then here are a few further comments.
#1: Many companies are still locked in a back-office deployment mindset
Once upon a time the software space was dominated by back-office implementations that derived their value from transactional processing. As companies have moved to a focus on CRM, moved to social, moved to mobile, moved to analytics, Users have become the critical driver of value. But many companies didn’t adjust their implementation approach enough to support robust user enablement. Even when they did understand they needed to do more many still end their investment efforts at the point of deployment – ongoing user sustainment has not been considered.
#2: User spending hasn’t bounced after the Recession
In the midst of the global financial crisis companies were averaging approximately 8% of their budgets on end-users in terms of training and support. After the recession was over average spending lifted to 9% (2014). Not much of a recovery and not enough to support the shift in focus to user-centric software. This level of investment is also well short of the 12-15% we have historically seen (surveys and research) spent by organizations achieving abnormally high levels of user productivity and effective software usage – aka the top 10% of performers.
#3: Almost 50% of Users are not sufficiently trained
A recent survey by Michael Management Corporation of 1,300 SAP end-users found that 48% of users claimed they were not adequately trained to perform their job. WTH. This is not brain surgery, if users don’t know what they are doing software benefits will suffer and by extension business productivity will suffer. This survey resonates with my own experience, I am seeing situations where up to 30% of users are new to a company and the available training is several years out of date – a recipe for productivity losses.
So how much is your company spending on enabling end-users? I bet it is not enough. Companies are doing great, profits are up and the stock market is at an all-time high. We are essentially at full employment so competition for the best of the best is on. Come on Corporate America. The time is right, step up and invest in your USERS.