There was a time when many leaders of small- and medium-sized businesses (SMBs) viewed information technology as a utility that simply kept the business running. It wasn’t perceived as a potent source of value. Today, taking that view can cost you relevance and revenue. Technology is a versatile and agile tool that propels business objectives and levels the playing field. It’s one of the most valuable assets in your arsenal. When technology is leveraged strategically, it greatly contributes to a business’s ability to outperform competition, establish differentiation, and become future ready.  

Thankfully, more leaders are recognizing technology’s role in shaping their future success. According to the 2023 Celerity Digital Transformation Report, nine in ten organizations believe IT is key to their company heading in the right direction. But what exactly is the right direction? And how do SMBs ensure that they’re heading toward it at full speed? They need a contemporary leadership team leading the charge toward future readiness by creating Tech Equity.

What is Tech Equity?

I coined the expression “Tech Equity” as a financial term to describe the value technology adds to a business. Tech Equity is an asset, comprising key components of a company’s technology portfolio that drive differentiation and value creation.  

The components of Tech Equity are divided into two categories: Alpha and Beta. The Alpha components comprise the types of technology investment that create value and result in the greatest return on investment. Strong Alphas, including using data and analytics to glean powerful insights and improve customer focus, will increase company valuation and enable SMBs to outperform their competition.  

While the Alpha components provide the greatest investment return, the Beta Tech Equity components are essential for mitigating risk and volatility in an SMB. A company that hasn’t addressed Beta components, such as IT infrastructure optimization, is at risk for costly upgrades and is more prone to the volatility of outages than competitors that have maintained and modernized their Beta Tech Equity components.  

Tech Equity Influencers

We’re not talking Tik Tok, here. Tech Equity Influencers are the leaders who advance technology initiatives. Without them championing the value of Tech Equity, it’s unlikely Tech Equity can be created. Any existing Tech Equity will begin to wither.  

Tech Equity Influencers are leaders that think in contemporary terms and aren’t stuck in the siloed world where there’s a person for this and a person for that. They’re armed with a cross-functional component and are conversant and comfortable with modern technology concepts. For the most part, Tech Equity Influencers fall into one of four categories — the owner, the CEO, the CFO, and the IT Leader.

1. The tone-setting owner. Owners have a great deal of influence on the tone at the top. If their tone is all about cost reduction to the detriment of embracing technology, it will be difficult to achieve the company’s objectives. Rather than doing short-term, one-time cost reduction initiatives, technology can be leveraged to drive efficiency and reduce costs. For example, a business may be able to create efficiencies by automating its supply chain or introducing robotics into the workflow. Ultimately, these types of solutions will have a lasting impact. If the owner takes that path with intention, it can be a powerful way to make Tech Equity a part of the company’s culture.

2. The contemporary CEO. The CEO needs to be the influencer getting people excited and shaping the talent and culture. To do that effectively, SMBs need a CEO that’s a future-ready thinker. This is someone who’s been through technology transformations, who’s looked at ways to improve customer experience, who’s brought automation to the shop floor and who’s leveraged data analytics to drive real growth and profitability. Contemporary CEOs should understand talent and the importance of that talent being tech-savvy, while recognizing there are enterprise-grade tools out there available to them, including open-source options.  

3. The CFO that gets IT. CFOs that get IT realize that technology is ultimately going to create value. They need to have knowledge depth in technology — including cybersecurity, to recognize the new levels of risk that exist in their environment. The CFO needs to be able to manage investments in technology partners and be cognizant of the other players in the ecosystem that could potentially add value. They need to have new sourcing models for talent and to be thinking about fractional talent and not always going down the direct route.

4. The hands-on IT leader. Because IT leaders of an SMB often have a very lean team, they need to be hands-on but also need to have the ability to be strategic and communicate with the rest of the senior leadership. The hands-on IT leader makes presentations to the board and comprehends and speaks that language. They become a spokesperson for new technology and introduce new ideas from an outside perspective. Additionally, the hands-on IT leader communicates risk to the CFO, scales up and down, understands how to find, attract, and retain resources, and is entrepreneurial in their thinking. Rather than waiting for people to ask for something, they innovate and drive a service-oriented mentality, looking at emerging tech to help make their employees and end users more productive.

Leading the charge

With contemporary leaders like the Tech Equity Influencers leading the charge, SMBs will head in the right direction, creating Tech Equity to outperform their competition and become future ready.  

About the Author:

Michael C. Fillios is the founder and CEO of IT Ally, a business and technology advisory firm for family owned and private equity backed small- and medium-sized businesses (SMBs). He is a former Fortune 500 global CIO, small business CFO, technology entrepreneur and management consultant with more than 25 years of experience. His first book, Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line, was published by the IT Ally Institute in April 2020. His new book is, Tech Equity, How to Future Ready Your Small Business and Outperform Your Competition (IT Ally Institute, May 4, 2023). Learn more at itallyllc.com.