The Ten Commandments of SMB IT Strategy

Other than applications that face the customer and impact your competitive advantage, there is no business case for developing software from scratch. If you have active software development projects where you are coding the application, stop! Stop even if the development team tells you they are 90% done. While they may truly believe it, chances are good they are not that close and your investment is just unfolding. Most everyone has seen the graphic of the software iceberg representing your true investment in software development. Most of the cost is hidden below the water line. My favorite statistic is that about 80% of all software development projects fail, even in the largest companies with nearly unlimited resources. By fail I mean they do not come in on time, do not come in within budget, and do not deliver the desired functionality. Software development for non-customer facing applications is a no win situation. Save your efforts for the right projects.

This is an all too common trap. You buy a package and right away you find it is missing functionality that someone in the organization feels they cannot live without. Stop, don’t do it! Don’t modify it! One of two things has happened. One, you have bought the wrong package (and this is by far the leading case). Or two, you are trying to force the software to fit your internal business processes instead of modifying your processes to meet the capabilities of the software. Both of these are traps. If you do a sound and thorough job of software application selection and you are flexible in modifying your businesses processes, you can find a package that works. This trap leads to being out of step with your vendor and unable to take advantage of new releases and new functionality. It ties you to the package at a weakened version. It also forces you to take your eye off the external customer. Keep your efforts on your customers, not on internal systems.

For any SMB, infrastructure technologies should be just like utilities. Infrastructure should work like your electricity works. You flip the switch and the lights come on. You don’t think about coal, power generators, and relay stations. It just works. So should your infrastructure! When you use the network you should not have to think about bandwidth, security, file sizes and transmission speeds. You should simply be able to use it. Period! You need to get your infrastructure properly sized and built, preferably by independent external integrators. Have one person manage the relationships and delivery of services, and forget about it. It should just work. Infrastructure is a "me too" proposition. You either have it and you can do business, or you don’t and you can’t. It really does nothing for your competitive position with your customers.

Just like infrastructure, this is a cost of doing business. Back office applications to me includes things like accounting systems, payables and receivables, financial reporting, sales force management, payroll, commissions, and e-mail systems. These are basically all of the predominantly software based systems and applications that you need to do business. These too should just work and work as purchased with standard configuration "out of the box". If you have to customize or tweak them, you bought the wrong tool. You need to get your back office applications in place, preferably by outsourcing delivery to independent software integrators. Have some one manage the vendors, relationships, and delivery of services. One of the biggest problems in any IT organization is buying the wrong packages. There are ways to insure you buy the right technology by doing a thorough job on requirements. These applications have all been built by someone else and built better than you could. You don’t want to sacrifice your time, energy and opportunity cost by reinventing the wheel. As with infrastructure, these applications need to just work and provide the required functionality. Again, just like a utility, there is nothing here that benefits your customers that the competition is not already doing. Look outward, not inward.

Most of us have not taken the time to document our business model, but this can be a very galvanizing exercise. You can depict your business model in a simple one page flow chart showing your business flow. It starts with the marketing and sales processes, moves through delivery of products or services, and culminates with receivables and revenue. Most businesses have strikingly similar business models. You can then map your technology model over top of your business model and thereby identify the technologies that are critical and relevant to your business. A technology model is simply a view of the software, hardware, and networking components of your company. It is the way your IT team has constructed their technology solution to meet business needs. By comparing these two models, you can draw some startling conclusions. You can see where you have misalignment and bottlenecks. More importantly, you can identify the broad group of technologies that should be your focus. There is a commonality of business processes among businesses. Foundational building blocks of software applications to support these processes have already been built. You need to purchase these components and integrate them to support your business model. I am talking about technologies like work flow, document management, call center technologies, and distribution applications. This is where I back up my statements about not doing software development. You need not build software from scratch. You need to buy components or building blocks and configure and integrate them in creative and unique ways to meet your specific business needs.

This is critical. Your strategic areas of focus are the core technologies that you identify when you map your technology model to your business model. These are the fundamental building blocks of all your customer facing applications. You must identify and document them. You can build on them and do the right technology projects as a result of this identification exercise. They are the tools and applications that you will buy and integrate to deliver your product or service to you customers. Without knowing this basic information, you are at the whims of technology trends for your technology investments and you will not invest in the right technology. With them you can select from the proper technologies and identify which projects can be done and what they will contribute to the business. You will no longer be doing the wrong projects. Strategic areas of focus give you a fresh perspective that you have not had before and that can get you and keep you on the right technology track.

Within your strategic areas of focus, you must have rules and regulations about how you select your technology solutions from the myriad of choices. These are the guiding principles for technology selection. Without strategic drivers you have nothing to use to evaluate your options or select solutions that fit with your long term strategy. A good example of a strategic driver would be a statement like this. "Due to our company focus on customer service our technology and systems will be flexible enough to enable customization based on the specific needs of each customer. We cannot afford to take a mass production approach because our customers require different solutions based on their particular circumstances. It is expensive to acquire and maintain customers, so we must guard them carefully. Our competitors are customizing. In order to be competitive we must also customize." So, one of your strategic drivers becomes customization for each customer. Each solution will then be weighed against this and your other drivers which clarifies the selection process. These drivers will guide you in selecting technology and provide a yardstick against which you can measure your selections. The right drivers lead to the right choices.

IT strategic teams are teams comprised of business leaders and IT professionals, managed or chaired by a business leader. You can not leave the management of technology or technology projects solely to IT. There are no IT projects, just business projects that have a huge technology component. At the very least you need a business owner and an IT owner with the IT person reporting to the business person. These strategic teams are generally responsible for one strategic area of focus (as previously identified) like work flow or call center technologies. The team is tasked with project identification, project selection, project scoping, project sequencing, and executing the projects that fall out of the strategic area of focus. The strategic team is comprised of the subject matter experts and the owners of the business segment being addressed. The strategic challenge is to deliver on the focus area and assure that the technology dollars are spent on the right technology. The tactical challenge of the IT strategic team is delivery.

An IT council is responsible for seeing that the overall strategy gets implemented. The IT council brokers and provides direction to the IT strategic teams. Once you have a strategy you need a group of senior executives who understand and can implement the strategy. The business needs to manage and control IT and the IT strategic teams. The IT council needs to be firmly entrenched in the decision making process and needs to select appropriately from all the candidate technology projects that need executed. The council needs to set the priorities, manage to the milestones, evaluate the deliverables, and make the corresponding tough choices. The council needs to fund and support all initiatives. Without an IT council, there are few constraints on IT or the process and, pardon the analogy, the inmates are running the asylum.

Given successes with strategy execution, growth is inevitable and you will face different fundamental challenges. You will need to elevate your game and focus on the strategic trilogy. These are the three broad focus areas that will challenge you the most as you grow:

a. Process
b. Organization
c. Architecture

From a process perspective, you will grow to the point where your technology will not be an impediment but you processes will. It will become necessary to develop a process focus. In your IT organization, you will have the wrong IT organization structure with correspondingly cloudy roles and responsibilities. You will have overlap and confusion. Your IT service will be lousy with even the simplest requests not being handled. Your IT processes will be broken and you will need to revamp them. You will need an improved organization structure. From an architecture perspective, you will be taking a narrow view of you technology and will need to focus on the bigger picture. You will need to get into architectural considerations and how best to structure your larger solution sets. You will need to refocus your technology considering an architecture approach. This strategic trilogy will become critical.