According to a recent article in CIO Magazine,
Clueless in the Boardroom, research
shows most boards don’t understand enough about IT to keep up. The research was done by Pricewaterhouse Coopers
and reveals that only 1% of directors have any technology background. Approximately 40% don’t even care about IT
and 57% rely heavily upon what they read.
The challenge of IT leaders and professionals is to better communicate
and educate these leaders. By doing so,
opportunities and strategic advantages are gained. From my experience these findings hold true
in most multiple partner accounting firms.
Few firms have a functional IT committee, spend adequate time on IT strategy,
and focus on innovation rather than IT maintenance. Too many firms employ a defensive rather than
an offensive strategy. This approach
increases stress and reduces the return on investment. Why and how can this be changed?
The research points out several challenges for
businesses and their IT leaders. Most boards or partner groups seek the counsel and reporting of their IT
professionals in brief segments (typically no longer than 30 minutes) and many
admit they really don’t understand what the IT leaders are saying. This is risky and generally inefficient. CIOs need to become leaders who teach other
C-Level executives and board members how to tell time and not how to build the
watch. A high level of trust in an organization
can reduce both time and the amount of the investment. Low trust produces the opposite effect by
increasing time and the investment.
Another challenge is how to integrate IT
strategy with the business strategic plan.
This is especially tough for firms and business that don’t have a
current strategic plan. From recent
research and polls at major conferences the majority of firms don’t have a
written strategic plan or IT plan. If
they do have a plan, often it isn’t shared beyond the partner group. Many simply operate from a budget and priority
project lists. The process of developing
these plans is as important as the plans.
It forces communication among the leadership, management and IT
professionals. Getting buy-in, project
champions, and focus are all results that come from the planning process.
The consumerization of IT has caused firm
leaders to realize they need to pay more attention to IT. Cloud computing, social media and mobility
are at the top of their lists. Apple,
the iPad and iPhone have greatly impacted the changing landscape during the
past few years.
Most boards are faced with time constraints
and a limited number of meetings annually.
Historically boards have focused on financial issues, risk management,
executive compensation, succession planning and growth. Today, most of these issues have an
increasing technology component - direct or indirect.
Firms can resolve their own issues and then
utilize their experience and resources as part of packaged services to
clients. We have seen tremendous
advancement of IT professionals who have been part of our CIO Advantage Program™. Several years ago we started this program
focused on improving communication, team building, project management, business
savvy, marketing/sales and leadership skills.
We have utilized Ignite presentations to hone communication skills,
introduced them to the Kolbe index for team building, Six Sigma for process
improvement and provided access to other leadership resources. The results have been exceptional for those
IT leaders who are committed and have the support of their firm’s CEO. Several have advanced to COO duties and one
is now the CEO of her firm.
Clients are experiencing similar IT
issues. They do not feel comfortable
speaking with an engineer or programmer.
They relate and prefer to communicate with someone who understands their
business and technology – the trusted business advisor. The cloud provides collaborative solutions
that allow firms the opportunity to efficiently capture transactions (Level 1 -
Compliance) as well as offer higher-level CFO type services (Level 2 -
Performance) and planning services (Level 3 - Strategic). When packaged, these services increase in
value and margins. Systems that
accurately capture transactions in real time rather than after the fact product
- Accurate and timely data reducing
workflow compression during tax season
- Time to focus on higher level services
such as cash flow, budgeting and business intelligence with automated reporting
- High value planning services such as
succession, strategic and IT.
Another opportunity is to standardize and
leverage the cloud-based platform and related ecosystem of related applications. This reduces the investment, training time
and implementation. Firms are having
fewer challenges finding a suitable cloud based platform and ecosystem than
they are of how to package and delivery higher value services. Too many firms are caught in the old paradigm
of compliance services and pricing by the hour.
Even though compliance margins are shrinking, it is often easier to
continue doing what you have been doing than changing behaviors to produce
higher value results in the areas of performance and strategy.
Today’s challenges call for a team rather than
a rugged individualist approach. These
unique ability teams create value through relationships (confidence), leadership
(direction) and creativity (new capabilities).
Businesses and firms that manage technology as
a strategic asset rather than overhead receive a much higher return on their
investments. They also focus a higher
percentage of their annual investment on innovative services rather than just
maintenance of core systems (tax and accounting compliance).
For the past 20 years, firms with excellent
management and technology leadership have outperformed those without these
capabilities. Last year, the average
firm spent approximately 6.0% of revenue and $10k per full time equivalent on
technology (includes labor, hardware, software, communications and
depreciation). Where this investment is
made is more important than the amount.
Remember that average is where the best of the worst meets the worst of
the best. Most firms view themselves as
above average. Factors such as multiple
offices, size of firm, and type of practice are important, but the investment
continues to rise as more areas of the firm leverage technology. Marketing and client services are now driving
a larger portion of the IT budget.
Plan of Action
- Establish an IT committee with
representation from all areas of the firm (Tax, Accounting, Consulting,
Administration, Marketing and etc.)
Limit the number of partners on this committee if you want the best
results. Several firms are utilizing
outside members to provide broader perspectives. I know of a few firms where their CIOs
participate on each other’s committee.
- Develop a strategic plan for your firm
and an IT Plan that integrates with the strategic plan. Each plan typically can be completed in a
couple of days with professional assistance and facilitation. Focus on strategies that will allow your firm
the ability to leverage the cloud and provide a secure collaborative platform
available from anywhere at any time.
This will provide efficiency and scalability.
- Participate in a peer group such as
the Boomer Technology Circles™ and The CIO Advantage™. These groups provide access to expertise,
leadership development and access to peers and best practices. They also provide IT management metrics and a
library of policies and procedures. Make sure your IT professional gets
training that focuses on communications, team building, project management and
marketing of their ideas.
- Utilize your CIO as part of your
management team. This will provide a
distinct strategic advantage to your firm.
Based upon the research done at PWC and our own experience IT savvy
leadership provides distinct advantages in the ability to retain and attract
Remember all progress starts with the
truth! Is your firm as technology savvy
as they need to be?