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(David Vernon/iStockphoto)
(David Vernon/iStockphoto)

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Technology is a motor of growth Add to ...

It wasn’t the worst problem a business owner had ever faced. Larry Cox’s trucking business was seeing such colossal growth that his computers just couldn’t keep up any more.

Polaris Transportation Group had ballooned to 40 trucks from three in a decade. And the company’s hodgepodge of clunky old PCs had become a drag on growth.

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“Our computer systems were cracking due to the sales volume,” Mr. Cox says.

He decided to seek the advice of an outside consultant. With a $15,000 price tag, it didn’t come cheap. Nor was Mr. Cox entirely sure the money wasn’t being wasted. “I’m paying someone for their opinion?” he asked himself with some disbelief. “That was a chunk of money. It could have bought half a trailer.”

But that decision in 2004 changed everything for Mr. Cox and Mississauga-based Polaris. It led to far more than just a vastly improved computer network. It also transformed the company’s business strategy, allowing it to automate some order handling, trim costs and start offering real-time tracking of shipments to clients.

The technology investment helped Polaris more than triple sales to $40-million. Revenue shot up a whopping 28 per cent in 2009-10 alone. The company’s carrier fleet now boasts 100 trucks.

“I’ve gone from fear and trepidation about technology to embracing it. When you see the results, you become much more comfortable with it. If we hadn’t made this investment, our growth wouldn’t have happened.”

But this success story is far from the norm when it comes to investments in information and communications technologies (ICTs). When small and medium-sized businesses (SMBs) go shopping for technology, it’s more typical to hear horror stories of costly purchases gone awry.

For example, about 75 per cent of purchases of enterprise resource planning software — common project — don’t provide a positive return on investment for SMBs, says BDC consultant Rick Shaw, who advises Polaris. One-third of the systems don’t even go live.

“Companies will often buy the wrong system from the wrong dealer for the wrong reasons,” says Mr. Shaw, a Toronto expert on technology and operational efficiency.

ICT purchases go off the rails for lots of basic reasons:

  • They’re often made when there’s an emergency, not as part of a strategic plan.
  • They tend to be delegated to staff or external advisers who have no ICT expertise.
  • Alternative suppliers are not researched.
  • Entrepreneurs tend to see ICT as a cost centre, not a strategic tool.

And once burned, businesses often hold off on other needed ICT investments, leaving them without the technology they need to compete.

The stakes are high for both individual businesses and the economy as a whole. Canadian business productivity and innovation have fallen behind those of our key trading partners, and low private investment levels in ICT are contributing to this poor performance.

Entrepreneurs reluctant

Mr. Cox understands the reluctance of other entrepreneurs to invest in ICT.

“Businesspeople have difficulty spending money on something they aren’t familiar with. I have no problem investing in a new model of truck or trailer. But when I’m faced with technology that I can’t touch or feel, it’s harder to see the value in it.”

With a little planning, however, an ICT purchase can do much more than just satisfy basic business needs. It can more than pay for itself by boosting profits, enhancing competitiveness and reducing employee stress.

At Polaris, Mr. Cox says he has followed that kind of approach with great success ever since that first successful ICT consulting project six years ago. Polaris is going through another major ICT upgrade that will see better real-time tracking of shipments and full automation of order processing, including bar coding of freight.

It’s a huge challenge. Polaris needs to integrate data on shipments from all of its 13 U.S. and three Canadian partner carriers. The companies all use different technology.

This time, Mr. Cox had no qualms about calling in outside help. He hired Mr. Shaw to give strategic management advice on a BDC mandate. Mr. Shaw soon determined that Polaris’ skyrocketing sales had again left its outmoded computer system in the dust.

Mr. Shaw’s first step was to review Polaris’s operations, see what was working and what wasn’t, and find ways to streamline. “People think that if you buy technology, it will solve all your problems. You have to have the proper manual processes before you automate them.”

Mr. Shaw then put Mr. Cox in touch with a Toronto ICT firm that specializes in wireless solutions, including bar coding. It proposed a software and hardware package that promised to solve Polaris’s order-handling problems — and pay for itself in 15 months.

If all goes well, Mr. Cox sees sales more than doubling to $100-million annually in four years.

“But if we don’t do it, we won’t survive. If we do, we’ll have a big leap in our capacity to move freight."

Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.

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