3 Big Ideas to Improve Your IT Strategy
I recently presented at a Microsoft conference on the topic of developing your IT Strategy. This is a challenge that many IT Leaders face, yet there is surprisingly little guidance available.
To aid you we will shortly be releasing our IT Strategy Toolkit which provides the methodology that we created and follow ourselves, along with various tools, templates, and guidance. We’ve also included notes from the field that detail our own experience and the things to watch out for.
Whilst I was presenting at the Microsoft/Lawnet seminar I put forward 3 Big Ideas to improve your IT Strategy. These are:
- Remove Innovation Spend from the IT Budget
- Immerse IT in the Business
- Engage the IT Team with the firm’s clients
Let’s take a look at each in turn to explore where they can have a major impact on the value of your IT Strategy.
1. Remove Innovation Spend from the IT Budget
In most organisations the IT budget covers both on-going ‘keep the lights on’ costs, and innovation spend. The industry average is an 80/20 split between keeping the lights on and innovation. On the web you’ll find guidance and wisdom which suggest that you work hard to get this ratio closer to 50/50, which is about the maximum that you could ever achieve. However I believe this is the wrong approach.
Whilst the IT team will always be innovating internally within IT, looking for tools and approaches to improve the world of IT and the business, these are typically business-wide improvements. Or they are improvements focused on IT operational processes only, with little tangible impact upon the business. The real innovation value will come from the business, working in partnership with IT. The business case to make change should reside with the business, and therefore the budget for any IT costs as part of that innovation should also come from the business.
Innovation spend may result in on-going IT maintenance costs which will need to be added to the IT budget for future years. But in the first instance it is a business project and a business cost. This will ensure the business takes responsibility for IT spend. To determine an innovation budget, it can either be set at a central level to be called upon by the different business units, or each business unit may be apportioned its own innovation budget.
When the innovation budget sits within IT there is a risk that some projects may not to be done due to lack of budget, and others that perhaps should be skipped, are being done so funds can be used up to avoid reducing future budget. Also, if the IT budget is being maintained at the same level, or even reducing, this could have a negative impact on business innovation.
This alternative approach would leave IT to focus on driving down the cost (as a percentage of revenue) of keeping the lights on, whilst not compromising on business innovation.
2. Immerse IT in the Business
We recently conducted a survey on IT Strategy Maturity. What’s really revealing in the survey results is that the IT leadership team rarely engages with people within the business units to seek their input to the IT Strategy. Business unit leaders were the second highest people consulted, but the actual team members doing the work were only consulted by 11% of organisations. I think this results in a lot of missed innovation opportunity.
PWC recently recognised this opportunity. They launched an app that allows employees to suggest innovative ideas that could help the firm’s clients. They have received ideas that have benefited both clients and internally too, reporting direct savings in the 100’s of thousands of dollars. If you think about it, this is little more than a modern take on a ‘suggestion box’, but it is certainly powerful.
A related challenge for IT is what I call ‘The business syndrome’ which is where people in IT see themselves as separate to ‘the business’. This is of course most obvious by the language they use. In some respects IT can blame itself. In the quest for centralisation, IT departments have made themselves islands from the business. Of course, its not just the fault of IT. I was recently speaking with a large global law firm where the Business Services functions are being moved out of the main building to be homed in different buildings. That hardly helps to work as one-team.
A way in which I recommend the IT team can become more integrated with the business is to position members of its teams within the various business units. This can be either on a permanent basis in a decentralised model, where IT staff are positioned within business teams with a matrix reporting structure. Or it can be more fluid through the creation of an innovation team that moves from department to department. Either approach will help both with the becoming one team, and with the chances of spotting innovation opportunities.
We should be living by the mantra that there is no such thing as an IT project, only a Business project. In becoming more integrated with the business, the benefits to the IT department include:
- Reduced instances of shadow IT
- Reduced costs of ‘keeping the lights on’
- Supports centralised IT control, whilst enabling and encouraging distributed innovation
3. Engage the IT Team with the firm’s clients
Taking the idea of engaging with the business one step further (note that I’m also in the habit of referring to ‘the business’!), I recommend that when developing your IT Strategy you seek to engage with customers and clients of your firm. No-one knows more about how it feels to work with your firm than its paying clients!
Interestingly, in our IT Strategy Maturity Survey, just over a quarter of organisations are already engaging with their clients to seek input to their IT Strategy. This is a particular growing trend in some sectors, such as healthcare where customer engagement is key to identifying opportunities to innovate.
There are a number of different ways this can be done, from shadowing of fee earners, directly asking clients, and seeking feedback through surveys, to name a few ideas.
If you would like to discuss how these 3 Big Ideas might work in your firm, or if you’d just like some advice and guidance on developing your IT Strategy, please get in touch. If you’d like to be kept up to date on our freely available resources and new articles posted on our blog, subscribe to our newsletter below.