This blog tells a cautionary tale of what NOT to do when investing in new tech and how to avoid buying at the wrong time in a product’s hype cycle. Here is the short version of a sad tale:
It was late in the planning and budgeting cycle. The CEO and management team were under competitive pressure to improve efficiency and, most importantly, raise fill rates. The team evaluated several AI based candidate screening and job matching technologies that could work with the firm’s ATS. One solution stood out. Using AI, the tech promised hands free resume screening and auto matching to the open jobs in the ATS. Knowing that staffing delivery services comprised well over 50% of their firm’s operating costs, the vendor’s promise of 20% improvement in fill rates with a 15% reduction in delivery costs made this vendor the clear choice for transformative technology.
Importantly, leadership was not naïve. They’d been burned before and knew the process of selecting and implementing technology was full of potential pitfalls. They thought they were safe from the Shiny Object Syndrome.
To address this risk, the CEO, CFO, CIO and the delivery teams had committed to using a rigorous method to evaluate and implement tech investments. The team was confident that their Tech Investment Policy, listed below, would guide them to make the best decisions for their firm and most importantly, realize the benefits of their new technology.
- Create a Detailed Needs Analysis: Before committing to new technology, the firm shall complete a thorough needs assessment involving all stakeholders. The analysis will ensure that the new technology addresses the core business needs of improving efficiency (costs/output) and delivery KPIs (fill rate, time to fill, etc).
- Build a Rigorous ROI Model: the financial model will include all costs (initial, operational, opportunity) and take a conservative approach to estimating savings and efficiency gains.
- Set Performance Benchmarks: Establish clear, quantifiable performance metrics for the new technology that include regular checkpoints to measure progress in the first 24 months.
- Manage to strong Implementation and Change Management Plans: Create comprehensive plans for the technology’s rollout (design, build/config, test, deploy) that includes staff training, reporting, system integration, and process modification. Cross-functional team shall meet regularly to manage these changes and provide continuous support. Projects shall be led by experienced project managers with executive level Steering Committee oversight.
- Strong Vendor Accountability: Vendor agreements shall include clear Service Level Agreements (SLAs) that outline the expected performance metrics and include consequences if they are not met.
What Happened?
- The firm completed the needs analysis, ROI model, set appropriate performance benchmarks, and negotiated a competitive contract with strong SLAs with the tech vendor.
- Leadership created a Steering Committee, internal implementation and change management teams. These teams were staffed with the right people; solid project management was hired.
- The project failed to realize the promised benefits.
Why?
‘Shiny Object Syndrome’ blinded leadership’s judgement and led the firm to invest too early in the tech’s hype cycle. Leadership succumbed to the pressure to ‘keep up’ with the competition and made these critical mistakes:
- The needs analysis, ROI model and change management efforts fell short. After implementation, actual use of the new technology was significantly below expectations. Management had assumed that their team would welcome use of the technology. Change Management overlooked the fact that 40%+ of candidate screens and matching had been happening outside of their ATS. The needs analysis and ROI models assumed that the email folders that carried candidate profiles, the desk level spreadsheet candidate lists and Slack threads used to manage matching would just ‘go away’. When the new tech came online, the delivery teams only partially committed to use it. The old methods continued. While the ATS eventually got updated, it only happened at the client submittal stage because client submittals were a KPI that impacted producer performance ratings.
- The complexity (costs and method) of integrating the new software to their ATS was underestimated. “We have an open API” and reference calls were taken at face value. The complexity of building an integration to their ATS resulted in design compromises that made use of the new system difficult which contributed to the delivery team’s reluctance to use the new system.
How to ‘inoculate’ your firm from these mistakes
- Don’t go into the transformation process alone. Hire expert advisors ‘who don’t have a horse in the race’. Get outside advice before you make the decision to invest. Hire strategy advisors from firms with domain knowledge relevant to your firm. In staffing, that list is short and Newbury Partners is at the top of the list. Too often, we aren’t at the table with our clients when the decisions are being made. We show up after the contract is signed and our scope is restricted to implementation. In some situations, the mistakes were already made.
- Add Change Readiness to your Investment Policy. My friend and colleague, Amy Yackowski talks a lot about Change Readiness in the webinars she is hosting. Check them out. In the example above, acknowledging that 40% of fills were happening outside the ATS and answering the question of how might that change with the new technology should have been thought through before the investment decision.
- Test your team’s self-awareness. Understand the common mistakes we all make in decision making. You will save a lot of money and maybe your job if you and your team think through these biases before signing up for a transformation project that has a low likelihood of success!
- Specifically regarding AI hype, AI will eventually remake our business processes, but that day is in the future. Listen to the experts today who predict only 5% of jobs will have a 30% productivity improvement from AI. Some staffing jobs are in that 5%, but not all. In the case of my example above, had the firm done the hard work of running authentic pilot programs with a cross section of their delivery experts, the firm would have not missed “I don’t use the system” issue.
If your staffing firm is looking to avoid the mistakes described in this post, improve strategy, streamline the tech stack, or optimize for 2025-2026, contact Erin MacKenzie, VP of Client Services at erin.mackenzie@newburypartners.com to learn how Newbury Partners can bring the right advisors into your decision making process.
Tim Jackson is a senior consultant for Newbury Partners with 20+ years in the staffing business managing delivery, technology, and finance for professional and healthcare staffing firms.
About Newbury Partners
Newbury Partners brings years of experience as technology advisors to the Staffing Industry. We specialize in providing tried and true best practice methodologies through every consulting, implementation, reporting and analytics, development, and strategy engagement. Our commitment to our clients is to provide honest and transparent communication to create lifelong partnerships.
For more information, visit www.newburypartners.com.
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