Making IT count
David Locke uses his experience at BMS to lay out a roadmap for IT efficiency...
We live in a world where there seems to be only one constant and that is change. One specific area that is always undergoing this constant change is information technology (IT). As leaders in our different organisations we have two options – face it or flee. In a recent publication and conference presentation for the Charity’s Finance Directors Group I shared some personal perspectives about how in 2008 we as leaders can ‘make IT count’. In doing so we can see significant value added to the organisations where we are involved and also enrich the lives of the people with whom we work and serve.
Leading
When I joined BMS I was greeted with an excellent and experienced management team. The finance manager said: ‘We have been managing alright but we have been waiting for someone to take us forward.’ The question all leaders have to face is ‘are we leading IT or is IT leading us?’ As leaders we are called to set a direction, to be the ‘architects of change’ for a better tomorrow. And to direct effectively we need to articulate a vision, a better way so that our colleagues feel able to commit to the path that we lay before them.
To ‘make IT count’ there needs to be an effective IT strategy that pulls together the different strands of an organisation’s life: people, processes and technology itself. People. If the right people are not in place and trained, then goals will not be met, projects will fail and they will not have the competencies to use the technology to meet the hoped-for objectives. Process. No point in putting in new technology to put in unnecessary layers of bureaucracy – the objective is to reengineer the processes, streamlining them for maximum efficiency and making sure the technology supports this approach. Technology. People need tools to do things and that is where technology comes in.
If any of these are not in place, then any attempt at IT strategy will potentially be unformed, mistrusted, disliked and misunderstood.When it is all brought together then there is the potential to bring about transformational change that can take an organisation to the next level. To reinforce these views then, it is helpful to quote the evidence from a survey conducted by the Kobler Unit into the relevance of an IT strategy.1 The survey found that, for example, where an IT strategy is in place the incidences of having to undertake major rewrites of software falls from over 60 per cent to nearer 20 per cent. The overall conclusion of the research is simply this – an IT strategy does not eliminate problems with technology but, done well, it certainly helps.
Strategy
So then how should we develop this IT strategy? The first step is to get hold of the charity’s overall strategy and future plans (see figure 1). In some organisations this can be in a state of flux and may not be available. It is still in this situation advantageous to have an IT strategy but it does mean that extra time will be involved in meeting with other directors and leaders to lock down their strategic requirements. If the IT strategy is done in isolation from other parts of the organisation, a huge opportunity is missed – it becomes the IT department’s document rather than something owned by the organisation and instead of bringing people together it can further divide. It is crucial that the whole of the leadership team sign off the strategy.
One of the extra bonuses of preparing an IT strategy is that it can help the organisation sign up to a number of specific deliverables over the next few years. Dreams and visions have to be articulated into process and informational requirements, resource plans and timescales. An IT strategy can be a catalyst for organisational change. Sometimes it will be time for move forward rapidly and at others time will be needed to make the best use of existing investments.
At board level it may not be appropriate to share the entire detailed IT strategy document but an executive summary. Copies available on request to board members will send all the right signals of inclusiveness. For the board it also acts as a signpost to future developments and helps manage expectations. If, for example they see in 12 months’ time a project to upgrade the central database is planned to start, then when the capital request comes to the board it comes within the context of an agreed overall strategic backdrop and so is much less likely to meet with refusal at this stage.
In figure 1 the strategy is developed from the overall charity’s strategy through process and system requirements into IT strategy and then finally into the selection and implementation of systems. Adopting this method works – not least because it is possible to trace every major new project back along an audit trail to the original strategic intent set out by the charity.
Spotlight on process analysis
One of the more challenging tasks can be how to consider interaction between processes and software applications.When preparing a strategy, we ask the following:
how important to our business processes are different software applications?
what condition are our current systems in and to what extent do they need further work and development? I have found it helpful to use a number of planning tools to help analyse this. One of them is illustrated in figure 2 and can be summarised as follows.
Business processes. The horizontal axis outlines the charity’s major business processes (e.g. fundraising, recruiting volunteers).
Software applications. The vertical axis details the various software applications that are already there and currently available to a charity to use. For example most organisations would have wordprocessing and spreadsheet packages. The software recorded for these applications is, unsurprisingly, MicrosoftWord and Microsoft Excel. However, you would identify applications that you do not currently have and that need to be on the radar. So, looking at figure 2, personnel/HR could be a major heading after ‘desktop’ and ‘accounting’ and specific applications under that heading could be ‘online recruitment’ and, say, ‘training’ and ‘sickness and absence’. This method helps to systematically produce a list of options where further automation or technology could be used. For example if, under HR, the systems are seen as having a potential high impact on recruitment effectiveness but there is no current use of software applications, this immediately highlights an area of potential improvement worthy of further exploration and evaluation within the IT strategy.
Impact of applications. To assess the impact of each application on a particular process, you would take one area, such as ‘recruit’ and then identify the software applications that have most beneficial impact on that process. For example wordprocessing is an important part of a delivering a quality recruitment process but the accounting system has very little direct impact. The potential impact from each application is rated as L, M or H (low, medium or high).
Systems status. The status graph shows the current status of the software systems as used by the charity at the moment – e.g. if there is no automated or web-based HR systems (because they are currently on a ‘wish list’ and not yet available to the organisation) then these items will be marked ‘0’ whereas desktop applications might use the latest version of Microsoft Office, for example, and be well advanced with close to maximum points (which would be ‘5’ in the example). IT strategy is only useful if it makes a difference. A report from the consultants McKinsey says that the applications that have been most successful are those that are ‘industry-specific, with direct impact on the core activities of organisations, and applied to large sectors and to labourintensive activities’.2 This is key – if you see a process which is labour intensive or pieces of paper are being passed around, the instinctive question should be: ‘would it be more cost effective or add value if we used technology to automate that process?’ The IT strategy needs to show ‘how shall we progress from our current position A to a future position B?’. The challenge for IT leaders is to be the architect of change and to break the journey into manageable sections so that the goal can be attained without losing the team.
Benchmarking
Inevitably as part of human nature we look at other people and organisations to see how we ourselves are doing.When it comes to benchmarking against other organisations, IT can be helpful in both assessing how your own organisation is doing and developing a portfolio of ideas and queries that can be incorporated and evaluated in a forward-looking strategy. Benchmarking can be applied to look at different perspectives and ask different questions of an organisation.
One of the first questions using benchmarking that is often asked is ‘how efficient are we in our use of IT?’ The national Computing Centre provides useful benchmarking surveys. Figures 3 and 4 comprise two tables that provide benchmark data to help evaluate efficiency – the first is the cost per user in different types of organisations (by industry sector) and the second is the ratio of IT users to IT staff. Good sources for further work in this area include the SayerVincent IS Bench learning survey3, National Computing Centre Annual Trends Survey4, Gartner5, and Forrester6. The question then arises how to interpret where you are on the scale and what this means. If a high user/IT staff team ratio means a sloppy service then that may not be a desirable outcome! One of the statistics that has been fairly consistent over the last two decades is the percentage of annual income that is spent on IT. For service-based organisations this has stayed fairly steady around the 2 per cent to 3 per cent level. A few years ago the National Audit Office completed a value for money review on a London council. They found that the council had spent ‘only’ 1.4 per cent (the average was 2.5 per cent)…and then went on in their official report to criticise the organisation for poor value for money.Why? Because the level of IT service was poor and there was underinvestment in IT. So benchmarking data needs to be carefully used and needs to balance the quantitative data with the qualitative measures such as the quality and level of services provided.
Benchmark data does not need to just look at cost or efficiency levels.When I arrived at BMS I found that one of most interesting exercises was to benchmark our website features against others in the charity sector. It led to a lot of questions and consequently options for further development such as online giving. From this list many of these options were put into a three-year development programme for the website. Benchmarking in this case was used to benchmark a customer/ supporter-facing programme.
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The IT operational scorecard
Before joining the sector I worked for a number of years in reviewing different IT operations. The ‘IT operational scorecard’ opposite was very helpful in carrying out a quick initial assessment and benchmarking the state of IT operations at different organisations. Try using it at your own organisation. If you have more than £10m annual income, you should expect over 95 per cent positive responses from the sum of all boxes; more than £5m, 90 per cent; and more than £1m, over 75 per cent. It goes without saying that spending time on careful analysis and benchmarking helps to develop a portfolio of IT options that address genuine strategic needs and opportunities. They can then be prioritised into an agreed timetable with the IT team.
Team building
Having a strategy that beats the competition is great but without the right team in place then it’s just empty words – IT won’t be counting.When you look at the IT team, you need to ask:
- what are the different people like?
- what are there strengths?
- what are their vulnerabilities? and
- what is their development potential?
To help I have found approaches such as the Myers Briggs and Belbin models useful. The Belbin team role model7 is particularly useful when pulling a team together for a major new IT systems development project such implementing a new website or database system. At BMS we were selecting and implementing a major new database system.We started identifying the team roles and some of the roles slotted in very quickly but we found that whilst we had the technical specialists and representatives from departments we lacked an individual who would make sure that every detail of the project was dealt with – an individual who would make sure that when, for example, liaising with a supplier, paragraph 36, line 3b had the correct description for the length of a alphanumeric field (this needed a Belbin ‘Completer Finisher’).We found this person working as a secretary in the chief executive’s office. She was transferred to the project and neither we nor she has looked back – she is a natural project manager and now when a new IT project team is gathered she is first on the list. She has a new career – and we have the surety that projects will complete and details will not get missed. The reality is that success in IT management is over 99 per cent about people – they ‘make IT count’.
Opportunities in 2008
To conclude, I have shared below some strategic opportunities and challenges that should be on the agenda for any discussions about IT in the current challenging environment, whatever the size and causal area of your organisation. With technology constantly evolving such discussions cannot remain one-off but should form part of your ongoing reviews.
Staffing (contractors/home working). Have we got in place the most costeffective balance of in-house staff, contractors and outsourced contracts for areas such as helpdesk, IT development and hardware support?
Support contracts. Have we listed and reviewed all our contracts? Do we need them all and is the scope right. Could we combine a number of contracts and go to one supplier to reduce costs?
Standardisation of systems. Do we have a standard software setup for our PCs, laptops and systems or are we creating extra work by supporting to many different combinations of systems?
Virtualisation. Why use three servers when one will do?With virtualisation one can run a number of different systems instead of one main system per server. Recent developments in technology mean that there is potential to rationalise the number of servers, reducing support costs as well not to mention the electricity bill.
Communications (VOIP/video conferencing/mobile). The oil price is making all travel significantly more expensive. Video conferencing (a popular version would be Skype) can help reduce travel bills while VOIP (voice over internet protocol) means the potential to use the internet for your phone calls, keeping charges to a minimum.
Outsourcing/partnerships/leasing. People want your business.Whether it is outsourcing key aspects of your IT work or joint ventures to run IT systems (such as Charityshare8), there are more options than ever before. If outsourcing major parts of your operations is not appropriate, consider specific areas of work, e.g. data backups and firewall management.
Software packages. Look at your systems. Are there either in-house developed systems that are high maintenance in cost or time or do you have packaged solutions where the annual maintenance contract is exorbitantly high? There are many packaged software solutions on the market and, while there may be an initial investment, changing to those with lower ongoing annual maintenance costs may make financial sense in the long run. Does your website integrate with your database and accounts system? Do you have a single view of your customer/supporters or do you seriously need to evaluate implementing a customer relationship management system (CRM)?
Small is beautiful. There is a lot of good technology around that is relatively cheap, has had billions spent on development and has been brilliantly executed. The mobile phone today has vastly more computing power than the Apollo guidance system used to land on the moon in 1969. Other examples include GPS navigation for mobile workers and the scanning facilities contained in many standard photocopiers. Are you maximising the cost benefits on offer from these developments?
Thin client. If you want very high efficiency ratios both in terms of energy consumption and IT staff ratios, then the use of a thin client technology such as Citrix orWindows Terminal Services has terrific potential. It means that instead of running high-powered PCs on every desk you have a low-energy workstation (40 rather than 250 watts). All the applications (e.g. spreadsheets, word processing, accounts) run off the server rather than on each PC. The advantage is that as well as energy saving, the IT staff member has to only update one server rather than, say, 40 individual computers when there is an update to an application.
1 Controlling IT investment: strategy and management, Kobler Unit, 1991
2 US Productivity Growth 1995 – 2000, McKinsey Global Institute October 2001
3 www.sayervincent.co.uk/Asp/ uploadedFiles/File/ISBenchlearning.pdf
4 www.nccmembership.co.uk/ research_articles/Benchmarks_intro.asp
5 www.gartner.com/4_decision_tools/ measurement/where_you_stand/ survey_overview.html
6 www.forrester.com
7 www.belbin.info/team_role_summary.htm
8 www.charityshare.org.uk
Author: David Locke
David Locke is finance director at BMS World Mission, covering finance, law, investments, IT and human resouces. David is a trustee of NCVO. He is also a trustee of the Charities Aid Foundation. He is a Fellow of the Intitute of Chartered Accountants, a Certified Information Systems Auditor and member of CFDG
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