Tech Stack Insights: The Impact of the Tech Stack on Your Business
It is common among organizations to view the Tech Stack as individual elements each with a specific purpose. It can be thought of as the backbone that supports many business-critical operations. It’s very easy to get lost in the nuance and functions of any one part, but it can be much more than just the sum of its parts. Over the next few posts, we’ll examine what it takes to unlock the true potential of your Tech Stack.
When effectively integrated, these elements can unlock significant efficiencies and drive growth. Conversely, neglecting the Tech Stack can hinder progress and have material consequences for a business.
Definition of the Tech Stack
The Tech Stack, encompassing the software and services that facilitate the execution of a business vertical, plays a critical role in determining the success and growth of a company. The term originates from software development, where highly complex pieces of software are broken down into discrete functions and areas of responsibility. They stack on each other, increasing in abstraction and sharing data as needed. In this context, it’s not so much a stack; it is a collection of software and services that run a critical aspect of operations.
HR software like payroll processing and learning management systems are all part of an organization’s Tech Stack. Still, for the context here, we’ll refer to those elements involved in business operations. Some common elements in a business context include:
- ERP (Enterprise Resource Planning) & MRP (Material Requirements Planning):
Integrates core business processes such as inventory management, accounting, human resources, and procurement. It may also include production management. - CMS (Content Management System) & DAM (Digital Asset Management):
Facilitates the creation, management, storage, and modification of digital content. - CRM (Customer Relationship Management):
Manages interactions with current and potential customers, enhancing customer relationships and improving retention. - PIM (Product Information Management):
Centralizes and manages product information to ensure a single, accurate view of product data.
These components aim to deliver business value to their specific area of responsibility.
More of a Web Than a Stack
Elements of the Tech Stack should not operate in a vacuum, especially when aiming for scale and growth. Integration and connectivity between different parts are crucial. Much of the data complements each other and, when brought together, paints a clear picture of intent. PIMs, CRMs, and ERPs have their unique purpose and capabilities, but efficiency and scalability suffer when they don’t work in concert.
The idea of a “Single Source of Truth” suggests that there is one definitive source for all data within an organization. However, in reality, each type of data lives in the source of truth best suited for its function. For example, customer data resides in the CRM, while financial data is stored in the ERP. The key is ensuring these systems communicate effectively, reducing cycle times and improving data accuracy.
By minimizing manual data entry and streamlining data flows between systems, companies can free up their teams to focus on data that is consequential to the business rather than data that is a consequence of the business. This shift allows for more strategic decision-making and enhances overall productivity.
Scale and Responsiveness
A well-connected Tech Stack enables companies to scale operations and respond quickly to changing market conditions. For example, automated order processing can help manage limited resources more effectively in times of supply chain constraints. If an ERP system is integrated with a CRM, it can quickly adjust production schedules based on order history and forecasts to coordinate production and inventory levels.
Furthermore, a responsive Tech Stack allows businesses to swiftly deploy new processes and capabilities. This agility is crucial in the electronic components industry, where technological advancements and market demands constantly evolve. By leveraging an integrated approach, companies can stay ahead of the competition and capitalize on emerging opportunities.
Security and Compliance Concerns
In a previous post, we’ve addressed the reason for conforming to security and compliance standards. Many of the headlines regarding failures in security and compliance are not always a failure of the company in question but rather one of the elements in their Tech Stack. It is imperative that technology partners are just as concerned with data security and privacy as you are.
Building on What is Already There
In one of our engagements, a customer had many separate elements of the Tech Stack being managed by individuals who had to switch between systems frequently, often sending emails and waiting for responses. Quoting is a typical example involving interactions with part data, pricing data, and inventory data.
In an ideal scenario where data is clean, manually cross-referencing systems might work well, but data is rarely that clean. This often resulted in delays and errors in quote processing. They had all the elements but lacked crucial interconnectivity between the systems to scale and unlock lost value.
Connecting the relevant systems of record so that they share data seamlessly greatly minimizes quote processing time and improves accuracy. The groundwork was there, and industry-specific middleware was needed to bring it all together.
Conclusion
In the electronic components industry, a well-functioning Tech Stack is indispensable. It enhances operational efficiency, enables scalability, and improves responsiveness to market changes. Companies that invest in and effectively manage their Tech Stack are better positioned for growth and success. Conversely, those who neglect this critical aspect of their operations risk falling behind and facing material consequences. By understanding and optimizing their technology, businesses can unlock new opportunities and maintain a competitive edge in a dynamic industry.
In our next post, we’ll examine the necessary elements to look for as you start adding items to your Tech Stack so that you’re not stuck with something that doesn’t scale with the business or can’t conform to new technologies.