Survive and thrive
July 2009
David Locke reviews IT transformation in troubled times
Facing the recession it would be easy to adopt the view of the character, Private James Frazer, the dour coffin maker on the BBC television sitcom Dad's Army with his catch phrase ’we're all doomed, doomed!’ Alternatively we see this time as an opportunity to get our heads down, get stuck in and make sure that when the upturn comes our organisations are in good shape technologically to not only survive, but thrive. We need to have the courage and vision of the late Sam Walton. When asked for his opinion of the 1991 recession, he said: ’I’ve thought about it, and decided not to participate.’ Within only two years Wal-Mart’s share price was up 200 per cent.
What is happening to IT activity during the recession?
Recent surveys show a decline in IT expenditure but not a total collapse. An Office for National Statistics survey concluded that there was a 9 per cent reduction in investment in hardware and software during the first six months of 2009 [1].
In contrast the Harvey Nash survey (June 2009) of 1,300 European IT Directors indicated that 40 per cent of organisations are spending more on new IT projects and 86 per cent have been asked to focus on technology innovation that will provide a competitive advantage ready for the upturn [2].
There are three themes that should be considered if your charity is to use IT in a transformational way during the recession to be ready for the upturn:
- Project evaluation. How should new IT projects be evaluated?
- People matter. How should the IT team be looked after and managed?
- Prospective technologies. What technologies should be on your radar in 2009?
Project evaluation
Large cost benefits are likely to be achieved through reducing processing costs or enhanced revenue streams. When evaluating a new project proposal the costs and benefits over the total life of the investment (the Total Cost of Ownership or ‘TCO’) should be carefully calculated. Below is an example of a proposal used to gain approval for a new fundraising system at BMS World Mission. It was prepared so that we could show the trustees the impact upon the bottom line of the SORP charity accounts of ‘with and without’ the proposed new project.
In addition, as Gartner Group helpfully puts it, this is also the time to cancel any ‘Zombie’ projects. You may have an IT project that has been limping on for some time – costs continue to go on the clock and the benefits are looking shaky. Time for decisive action. Stop it, don’t waste time in ‘witch hunts’ but learn the lessons and move on.
So are there circumstances where a project should get the go ahead even when the cost benefits are difficult to evaluate? Such benefits could include improving internal communication, enhancing staff development, promoting the brand and reducing carbon outputs. At BMS an example has been our investment in the intranet.
Initially the investment was justified on the basis of improving internal communication as we have staff in over 35 countries. It was difficult to articulate the precise financial benefits at the outset but the improvements to our internal communications have been vast and real benefits have emerged (e.g. reduced paper costs, automated holiday booking system). There will also be times where computer equipment is simply old and worn out. Staff performance and morale can decline rapidly with old and faulty equipment and it can be a false economy not to replace equipment on a scheduled basis.
People matter
This is a time when we need to look after our key staff as we expect them to deliver more with less. For a transformational performance we need transformational people who are fully motivated and focused.
Retaining and motivating key individuals
One of the first tasks is to identify who your key performers are. Talk to others in the organisation about how they view your IT team members. Even in the current difficult job market, able staff will be the first to move if their conditions are not appropriately supportive. You may have limitations on salary levels but as seen below pay is only one factor in motivating your staff.
Providing a training budget, for example, for your IT staff to continue developing their skill sets as well as flexible home working arrangements are all critical parts of the package.
A culture of innovation
It is critical to allow some time and budget for innovation. Leadership need to clearly communicate the message that they expect a continuous stream of ideas and innovation from the IT team. I love the story about the ubiquitous yellow Post it Notes. Dr. Spencer Silver, a 3M scientist, discovered the formula for the sticky stuff back in 1968. But it was Silver's colleague, Art Fry, who finally came up with a practical use for it.
The idea struck Fry while singing in the church choir. His bookmark kept falling out of his hymn book, causing him to lose his page. Fry used a portion of his working hours to develop a solution to his problem.
Now the world is singing the praises of his pet project: Post-it Notes. We need to take a leaf out of Fry’s book and make sure we give space for the creative talents to flourish. At BMS we provided this space and one of our team developed BMStv where our supporters can access our charity videos. It’s been a terrific success and a year ago we hadn’t even thought of the idea!
Setting priorities
John Harvey-Jones observes: ‘ With the best will in the world and the best strategic plan in the world nothing will happen unless everyone down the line understands what they are trying to achieve and gives their best to achieve it.’ [3]
At BMS we break the strategic priorities down onto a single A4 sheet of paper which summarises by calendar quarter each of the main IT initiatives that need to be delivered and by whom. Items that require board approval or a report are specifically highlighted. At BMS this sheet of paper has been printed in bright colours and put up on the wall – everyone understands what needs to be done.
Prospective technologies
A small selection of some of the technologies that your organisation can consider in 2009 are outlined below:
- Windows 7. On 22 October 2009 the latest version of the Windows operating system is being launched. It has been hailed as a better system than Vista and has some potentially helpful features (e.g. ability to run old Windows XP applications). At BMS, subject to positive results from our evaluation machine, we are planning to purchase desktop replacements with Windows 7 in the summer/autumn 2010 - i.e. when we are sure any bugs are fixed!
- Software as a service (‘SaaS’). SaaS means that instead of an organisation hosting its own systems (e.g. email, office suite) you remotely access services from a service provider. The advantage is that you no longer have the hassle of managing servers on your own premises and the solution is scalable – you only pay for what you use. Gartner estimates that SaaS will move from providing 1 per cent of the commercial email market to 20 per cent by 2012.
- Online data backup. In the last few years there has been a growth in online data backup solutions. Overnight the data from your servers is transferred to a solution provider who supplies all the logistical arrangements for backup and storage of the data. The IT team get to go home on time and the organisation get to know their data is safe.
- Video conferencing. For organisations on multiple sites there is always the goal of reducing travel so as to reduce wasted time and carbon outputs. Video conferencing can help as part of the solution. Options available range from solutions such as Skype to more expensive dedicated solutions (e.g. Polycomm). At BMS we are using a mid- range web based solution (Megameeting). We have calculated that if we can reduce our travelling by ten journeys per year between our Birmingham and Oxfordshire sites then a positive pay back will be achieved.
- VOIP. This is voice over internet protocol. It delivers low cost phone calls by using the internet for communication. One example of the flexibility that such a system provides is the ability to integrate voicemail on the phone with your email system. Voicemails are stored on your email inbox in the form of sound files and if you want to make a call back then simply click your mouse and the computer dials the number for you.
- Building and energy management systems. The latest hi-tech electric and gas meters can constantly monitor energy consumption and collate this data online. Using this information at our training centre we have reduced our energy bill by 10 per cent. Modern buildings have complex heating and cooling systems. Optimising the way that these systems interact and work can involve multiple sensors and valves. Last year I visited the Salvation Army International Headquarters where the facilities manager can control climate control systems from a PC and optimise energy usage – definitely 21st century!
- Document Management Systems (‘DMS’). Using DMS, paper documents are translated into an electronic form for processing within the organisation. The advantages are that processing is more efficient and less office space is required for storing documents. At BMS we started about two years with a small scale project where we now store our gift aid forms electronically and they are stored against each donor’s record on our fundraising database.
- Apple Macintosh (‘MAC’). Our creative colleagues love their MACs but a few years ago supporting both PCs and MACs was a real challenge… two different networks to support and MACs couldn’t run Windows software. Now that has all changed. MACS are ‘dual boot’ i.e. they can run Windows and Apple software and can run using the same network server. The KASE study of 1,000 IT professionals indicates that over 30 per cent of organisations are now considering Apple Mac systems. At BMS we see in terms of having ‘the right tools for the job’– if a staff member is costing £20,000 a year and operating a MAC is an extra £200 per annum (in the extra depreciation and support cost for a MAC) then this represents 1 per cent of their costs. This may be a small price to pay for a better motivated staff member.
- Virtualisation. This (vendors include VMware and Microsoft) offers the capability of running more than one system at a time on the same server. BMS is reducing our server number from seven to five without negatively impacting performance. This approach saves money, means expensive equipment is not standing idle and reduces energy consumption. In the Think Ecological survey of 275 business professionals (January 2009) 47 per cent of the respondents are planning to use Virtualisation this year as one of their top ecological plans to reduce carbon footprints.
- Network infrastructure. Your network is only as good as the weakest link…whether that is poor wireless coverage or security weaknesses. Colleagues are now frequently used to broadband and wireless access in their homes and there is a risk that the services they can use at home exceed that which they find in the office. If in doubt get a network health check and the experience for your users could be transformed.
- Social networking. Twitter and Facebook are examples of social networking sites that have grown over the last three years. Market Research firm Neilson have said that, based on their data, 67 per cent of internet users access social networks compared with 65 per cent who use email. So what should charities do? Leaders should try these social networks for themselves. At BMS we are finding that social networking offers a great way for our alumni to stay in touch and when there are specific interests we can help by setting up groups and updates.
- Outsourcing and strategic partnerships. At BMA our data backup, disaster recovery and IT hardware maintenance arrangements were split across three suppliers. We have now negotiated a package with one supplier for all these areas and, as a result, have improved the response time of our service level contract. If we are to grow, we need our suppliers and strategic partners to bring ideas to the table as our futures are interlinked. We are looking for win/wins; in other words extra revenue for them and innovative solutions with definable cost benefits to us. Solutions are developing fast – in recent years, for example, CAF developed a specialised team and innovative back office systems whereby income processing (including tailored responses to individuals and gift aid recovery) can be outsourced.
Sector support
In the charity sector we have some wonderful friends and specialists who are happy to share expertise and knowledge. Making site visits to other charities is an invaluable way of comparing notes and seeing if there are technologies or different supplier arrangements that could be of value to your own organisation. CFDG has an IT advisory team made up of sector specialists that can also point you in the right direction.
[1] www.statistics.gov.uk/pdfdir/bi0509.pdf
[2] www.harveynash.com/itleadershipcentre/publications
[3] Making it Happen: Reflections on Leadership, Sir John Harvey-Jones, Profile Books, 2003
[2] www.harveynash.com/itleadershipcentre/publications
[3] Making it Happen: Reflections on Leadership, Sir John Harvey-Jones, Profile Books, 2003
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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