Implementing the right technology is as much the result of sound processes as it is about installing the right solution. In fact, without a good approach, a technology overhaul can have disastrous results.

The technology infrastructure in most family offices evolves incrementally-components are added gradually, as they are needed.  Practices sometimes reach a point, however, where major changes are needed to meet their burgeoning operational needs.

Technology changes can be inspired by a number of factors. Sometimes upgrades are needed to keep up with business growth and to maintain quality client service. Competition can also be a driver of change, forcing businesses to replace antiquated systems for technologies that are more efficient and less labor intensive. In the advisory business, changes in compliance rules can also be drivers of change. Or a practice may simply want to upgrade technologies in anticipation of future growth.

Whatever the reasons, it is never too early to start the thought process. What follows are some guideposts for advisors to use as they wend their way toward a technology transformation.

1. Develop the game plan.

To quote Yogi Berra, "If you don't know where you're going, you'll wind up somewhere else." A clear and manageable plan is essential to keeping you and the organization focused on the big picture, as well as the details that are critical for success. A comprehensive plan will be necessary, but first get your thoughts together with a map of where you are, where you're going and how you're going to get there.

Assess your "tech house."
The first step is to clarify what's working well and where the problems are.
Assess your mission-critical functions: general ledger, portfolio analysis, performance measurement, partnership accounting, reporting, bill paying and so forth. What's working and what's not?
Assess the overall system: Parts may work but the system as a whole may require too much manual intervention.
Where is the business going? Wayne Gretzky skated to where the puck was going to be, not where it was. Make a wish list. What's missing?
Prioritize the technological functions you need to run the business. Which are mission-critical and which are not? Which functions are needed to serve clients and grow the business? This will help you decide which areas to attack first.

2. Decide on your approach.
Now that you have a clearer view of your goals, think about how you will achieve them. Should you start fresh and replace your entire system or focus on isolated components of your infrastructure? Depending on your goals, business situation and funding, there are several options.

Strategic or tactical?

A strategic approach, which considers the entire platform in context of the business direction, is very comprehensive with far-reaching costs and benefits.

A tactical approach focuses on individual components and may yield the greatest short-term results but not necessarily position you for the future business environment. An example of this approach would be rebuilding the Excel integration between your core applications or replacing your general ledger system.

All-at-once or piecemeal?
Scope creep-the tendency of projects to grow bigger and bigger as you undertake them-is common in technology projects because individual components are so interdependent. You should make an early decision about whether you want to tackle the entire infrastructure or approach things one step at a time. Funding availability may factor into the decision.

A staged approach makes sense. For example, core portfolio and general ledger applications may be a logical first step, followed by ancillary applications such as advanced analytics and reporting. A building block approach can yield meaningful benefits and positions the platform and organization for the next stage.

3. Find the right solution.

There may be many solutions that fit your problem-perhaps too many. Which ones match your immediate and long-term needs? Which are affordable? Which ones will work in your environment? Narrow the field as early as possible so you can focus on the viable candidates. Some options to consider:

Best-of-breed or integrated solutions?

"Best-of-breed" refers to an a la carte solution in which multiple vendors provide the individual components. This approach gives you the luxury of handpicking the components that you want, allowing greater customization to your needs. You will, however, face the sometimes-daunting challenge of integrating the components so they work together seamlessly. You will also be forced to deal with multiple vendors for support.

In an integrated solution, you buy the complete package from one vendor. This solution should, at least theoretically, allow you to avoid the headache of making sure everything works together with a common interface. The downside to this one-source shopping approach is that the package may not have all of the functionality that you need.

In-house or outsourced?

Another consideration is the responsibility for running the system. Do you want an in-house staff to have complete control and responsibility for your technology infrastructure? Or is it in your best interests to hand off some or all of the work to a third party?

Evaluating and selecting a vendor for this type of service is an arduous process. It entails specifying your requirements, seeking and evaluating responses to a request for proposals (RFP), performing a case study and negotiating a contract.

4. Provide leadership.

Undergoing a technological transformation goes far beyond selecting and implementing the technology. For the project to be successful, the organization not only needs to be ready to accept the change-it needs to embrace and drive the change.

The business, from top to bottom, has to buy into the change. A change of this magnitude requires vision, leadership and persistence. Anything less and the project could end up delayed, over budget or flawed.
More specifically:

The project should have a leader who is accountable for managing the details and communicating with staff and the vendor.
Everyone needs to share in the project's successful completion. Consider incentives for extraordinary performance.
The project should be managed with clearly defined steps, goals and accountabilities. Each individual, including every staff member and vendor, should know what to expect and what part they play.
Everyone in the office should be kept informed about the project from beginning to end, including status updates. Staff should be encouraged to participate and to bring up problems and solutions.

5. Leverage the opportunities.

A technological upheaval provides an opportune time to evaluate operations as a whole, with the goal of weeding out inefficiencies. By implementing a new platform, you have a unique opportunity to change the organization's thinking. This may allow you to break old habits, kill some sacred cows and streamline processes. Some ideas to consider:
Adopt some "zero-based" thinking and evaluate how the operation should function given the new technological functionality. Better yet, seek ideas from your staff. They know the inefficiencies, workarounds and solutions better than you do. Invite them to challenge any existing processes, particularly those that require data re-entry or report duplication.
Rethink the organization and staffing levels. Upgrading technology will often require a more skilled staff and provide for more interesting and fulfilling jobs.

Modifying the operation simultaneously with the technology is difficult; but it is the easiest time to accomplish it. It's never too early to think about a technological transformation. With the right approach, you can ensure that you will get where you want to be. The steps are straightforward and logical: Develop your game plan, consider and narrow your alternatives and find the solution. Keep in mind that a successful project involves far more than selecting technology. It involves engaging your team and uncovering and leveraging the opportunities offered by the new environment.    

Ritch Gaiti ([email protected]) is a partner at Windward Advisory Group, a family office technology consultant in Princeton, N.J.