If there’s one thing Phil Go knows for sure, it’s this: A technology plan created by the IT department alone will fail — no doubt about it.
That’s because in order to drive greater productivity, address strategic growth issues and tackle problems, a successful technology plan requires the input of the company’s business units in conjunction with the IT department, says Go, CIO of Barton Malow.
“An IT strategy is not about technology, absolutely not,” explains Go, whose Southfield, Mich.-based construction services firm is in the midst of developing a new technology plan. “It’s about capabilities for the organization and trying to figure out what capabilities we need in our business units in order for us to be successful by whatever metrics you measure success — and typically it’s profits.”
Aligning IT with business objectives is a challenge faced by businesses large and small. To help companies achieve this goal, IT and line-of-business managers must partner in integrating technology into the overarching business strategy. Growth-oriented companies in particular need to regularly assess the risk and effectiveness of IT spending to ensure they’re properly staffed and getting the most from budget dollars. Experts also caution small businesses to create formal IT budget and planning processes that will allow them to adopt proactive approaches to tackling problems as well as growth opportunities.
In the end, experts like Go say, it’s the business drivers that dictate an organization’s IT strategy, paired with insight into how success is measured — in terms of profits, new business acquisition, depth-of-product sales or customer retention.
Take a Proactive Approach
While it’s clear that both small and large companies should be proactive and build technology plans that align with business goals, a reality of the world is that the smaller the business, the more reactive it tends to become, says Michael Speyer, an analyst at Forrester Research in Cambridge, Mass. “Because they tend to be more cash-strapped, when they look out on the horizon they’re not really thinking about whether or not they have the money to make a major investment,” he says. “But by [building in] an IT budget, they can be proactive about how they’re going to spend their money.”
To get out of the reactive stance, James Aviani suggests that companies start by understanding how the business is positioned for future growth, as well as how it makes money currently.
“You have to talk to the sales channels; you have to understand how the product is sold, what the features and benefits are for the consumer, what the bargains are for the product — the whole process from order to cash to fulfillment,” says Aviani, CIO of Move.com, a Westlake Village, Calif., company that provides consumers with real estate information. “You have to know how it really operates as opposed to how somebody thinks it operates.”
Typically, IT is caught between doing what’s necessary for the here and now and doing the important stuff for the future, Aviani explains.
But to achieve success, IT must adopt a future-oriented stance.
You have to know the pressure points for the business, Aviani says. If certain systems fail, if certain things don’t work, where are the screams the loudest? Then, he adds, you have to figure out what the future holds for the company. The tricky part is blending those two, he says.
To do that you have to have really good partners on the business side, the finance side and the marketing side, Aviani says.
“If you have friends in all those places, then you can usually triangulate the truth of the business and understand correctly how to align your team with the business,” he says. “Then they need to distill their most important functions — and how they want IT to help with those functions — down. If I can’t get them down to three things, I haven’t done my job.”
Shadow and Identify Pain Points
Laura Buckley, chief technology officer at People’s Community Bank in Sarasota, Fla., gets to the heart of the business challenges and how IT can address those concerns by shadowing stakeholders as part of the process for developing the bank’s strategic technology plan.
“I meet with all the business units and discuss what they would like to see happen in the next year and the struggles that they might be facing. Some departments don’t tell you that something is not working, so they limp along doing it the difficult way,” Buckley says. “Once per year, we shadow different groups to get a better feel for what their needs are and how IT is or isn’t working for them.”
Yet Buckley’s shadowing process doesn’t apply just to internal stakeholders; she takes the same approach with outside technology vendors. “We’re thorough in our due diligence even if we know the vendors well,” she explains. “Talk to people who are using the product just like you do in your business. There is no magic trick to vendor due diligence other than taking the time to cover all the bases.”
As a financial institution, People’s Community Bank is required by the Federal Deposit Insurance Corp. to develop its strategic technology plan in accordance with Federal Financial Institutions Examination Council guidelines. Like Buckley, Brian Clancy also seeks input from all departments and all employee levels, not just the executives. Clancy is an MIS manager at Michigan Blueberry Growers Association (MBG), a blueberry-marketing cooperative of more than 300 growers in Grand Junction, Mich.
A couple of years ago, MBG crafted a technology plan aided by a local firm that helped provide the framework for developing the plan, Clancy says.
“We did it through surveys and speaking on an individual level to each department to find out what it was that would make their jobs easier and more efficient,” he says. “And some of the ideas that came from the employees, not the executives and managers, led to the greatest efficiencies.”
When Barton Malow developed its last IT plan about six years ago, Go says he put together a core team of six people — only one from IT — from the company’s various business units. The group then discussed the firm’s goals for the next five years and how technology could help achieve those goals and contribute to Barton Malow’s success.
Go says the company is again in the process of collecting that data for its new IT plan. “When we did it in 2000–2001, we had a dozen things we wanted to do over the next five years, and we did probably nine out of the 12 and decided not to do the others,” he says. “The core group helped me prioritize the [initial list] to the 12 action items. You cannot have a 50-page document with 250 projects. That’s not going to work. At the end of the day, it’s the business units that drive the priorities.”
Assess What Works and What Doesn’t
When it comes to major technology investments or major upgrades, experts agree there has to be a clear understanding of how those investments or upgrades will align with the business objectives.
“Keep the scope as narrow as possible — things that are far-reaching, high-impact but very quantifying,” Go says. “Then you can have snippets of success here and there. Success is a good thing and people want to do more of it, as opposed to doing a 10-year project where people lose interest in the first nine years.”
Just by reaching out to all departments, Clancy says MBG figured out what areas the technology needed to address, and figured out what was and wasn’t working.
“We started to standardize and use technology that we already had to do things we didn’t know it could do,” he says. For example, MBG soon realized that people in multiple departments were collecting the same sets of information. Clancy addressed that issue and created a single point of data entry.
At People’s Community Bank, Buckley and the technology committee review accomplishments annually to see whether the bank is using certain applications effectively and whether the tools in question truly support the business plan. “If [an app] doesn’t fit, we set up a timeline for reviewing whether it’s most cost-effective to move to another application or if we can work around the problem,” she says.
Craft a Budget
Two years ago, Aviani says, one of his biggest challenges in crafting Move.com’s IT plan — and one faced by CIOs everywhere — was how to do more with less, a challenge he couldn’t have tackled without having a firm budget in place.
“You’re told to keep your expense growth down, and by the way, you need to support these new initiatives,” Aviani says. “So you have to negotiate, which only really works if you have those relationships with the other business units and they trust you and they know you’re trying to do the right thing.”
Make sure to match your company’s scale to your IT capabilities, says Ryan Oliver, director of IT at Miami-based Zensah, a four-year-old company that develops functional sportswear based on innovative technology. “You can have the best technology in the world that could handle 1,000 orders a day, but if you’re only getting 100 orders a day, do you really need to spend extra for that?”
To ensure Zensah made the best decisions in terms of technology, Oliver says he had to create an IT budget before he could even think about spending money.
“You have to understand what the cost picture is going to look like,” says Forrester’s Speyer. “How much is it going to cost you for the life of the product — how much are you going to expect to gain from it, so you can start to understand what the return is on a particular product? It’s not easy to do. That’s the challenge — how to try to do it.”