<<

. 73
( 92 .)



>>

and certifications in procurement or purchasing management. The University
of Alabama”Huntsville is one: http://www.coned.uah.edu/procman.cfm, as
well at the California Institute of Technology: http://www.irc.caltech.edu
/courses/Strategic_Supplier_Management.htm.
430 The Back Office: Efficient Firm Operations

Templates and Processes
Many government purchasing agencies (federal, state, and municipal) post
online their purchasing policies and processes. These can be valuable sources
of information for the new purchasing manager or purchasing group. They
are easily identifiable using key words such as purchasing, procurement,
agency, or office in any Internet search engine.

Vendor Negotiation
There are a variety of good books and courses on this topic. A few of our fa-
vorites include:

Max H. Bazerman and Margaret A. Neale, Negotiating Rationally (New York: Free
Press, 1992).
Robert B. Cialdini, Inf luence: The Psychology of Persuasion (Quill, 1993).
Roger Fisher and William Ury, Getting to Yes (New York: Penguin Books, 1991).
J. Edward Russo and Paul J. H. Schoemaker, Decision Traps (New York: Fireside,
1989).
Richard H. Thaler, The Winner™s Curse (Princeton, NJ: Princeton University Press,
1994).


Vendor Selection
For an in-depth coverage of the vendor selection process see Chapter 10 of
The Executives Guide to Information Technology: John Baschab and Jon
Piot, The Executives Guide to Information Technology (Hoboken, NJ: John
Wiley & Sons, 2003).

NOTES
1. Vince Lombardi, “ Vince Lombardi™s Quotes about Teamwork,” available from
http://www.vincelombardi.com/quotes/teamwork.html (December 19, 2002).
2. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook
Handbook, 2004/2005 edition, Purchasing Managers, Buyers, and Purchasing
Agents, available from http://www.bls.gov/oco/ocos023.htm.
3. Cutter Consortium, “78% of IT Organizations Have Litigated,” The Cutter
Edge (April 9, 2002).
4. See note 3.
5. See note 3.
6. Benjamin Franklin, at the signing of the Declaration of Independence (July 4,
1776).
17
Information Technology
JOHN BASCHAB, CRAIG E. COURTER, AND JON PIOT


We used to have a lot of questions to which there were no answers.Now with the computer we
have lots of answers to which we haven™t thought up the questions.
”Peter Ustinov1




Love it or hate it”you cannot escape technology. Clients expect even the
most luddite professional to communicate by e-mail. Clients expect their
professional advisors to be conversant in technology related to their business.
Clients demand efficient operations and balk at excessive invoices where
time spent on their work surpasses their expectations. One of their expecta-
tions includes the efficient use of technology by professional advisors.
Clients are not the only ones demanding technology. New employees and mid
level professionals expect current technology tools to assist their practice.
The level of service required of IT by professional service firm employees is
extremely high as professionals do not tolerate downtime and technical diffi-
culties. If technology hinders the professional from completing their work,
costs and revenue loss begin to accrue and rapidly escalate with the passage
of time. There is tremendous pressure on IT to provide highly reliable sys-
tems that increase the productivity of the professional and decision-making
capabilities of management. The cost of downtime is exorbitant. In most
cases, management will demand a high level of reliable technology for effi-
cient operations.
Managing technology presents special challenges for nontechnical man-
agers, especially senior firm managers. It has a language all its own, often
used by wily technical staff as a shield against critical review. It is also diffi-
cult to determine the right level of investment. New possibilities arise con-
stantly, making it difficult to prioritize the new against the old. Partners read

431
432 The Back Office: Efficient Firm Operations

magazine article hype about the latest technical fad and conclude that the
firm lags the competition. There is a danger, however, that much of this
technology is still immature and risky to install. Technology systems crash at
the most inopportune time. Technology projects are complicated and often
overrun both time and costs. True value is difficult to measure and even
more difficult to predict. Security breaches, viruses, and malware pose con-
stant threats. Good IT managers and directors with relevant industry experi-
ence and well-rounded management and technical expertise are hard to find
and expensive. How can this environment possibly be managed?
This chapter discusses how to manage IT in the professional services firm
covering the key topics of IT strategy, architecture, organization, standards,
operations, projects, budgets, and governance (steering committee / relation-
ship building). Each of these is important for the success of the IT depart-
ment within a professional services company.


Why This Topic Is Important
Managing IT in the professional service firm is critical to the core business
of providing service whether the firm is a law, accounting, consulting, or
other firm. If the firm cannot receive e-mails, then it is likely that critical
communications are not being received, and one of the main mechanisms for
exchanging documents and other work products is hindering the firm™s abil-
ity to produce revenue. Not only can IT be a hindrance to produce revenue,
but it can also greatly increase productivity. Firms that use technology wisely
can obtain competitive advantage in the market place by servicing customers
more efficiently and effectively. From a financial perspective, IT drives the
most significant capital expenditures in a services organization and is one of
the largest overhead costs for a firm. It is important to carefully manage IT
to ensure the highest returns on this invested capital. From a management
perspective, IT is generally not a core competency of any of the principals of
the firm, and thus it can confiscate billable time when they have to spend
significant time managing or dealing with unfamiliar issues and investment
decisions. While the principals in the firm are not good managers of IT, it is
also difficult to find reasonably priced and qualified IT directors. For exam-
ple one firm we worked with hired three IT directors in 36 months. Two of
the IT Directors were overcompensated for their market value while the
third, a victim of the predecessors™ failures, was significantly underpaid.
Undermarket pay drove the third IT director to depart on her own volition
to pursue a more lucrative contract after six short months. Finally, managing
strategy, budgets, personnel, human resources issues, and varied systems are
all activities that must be performed by the CIO; however, rarely is one per-
son trained well enough to handle the wide-ranging duties. This chapter will
address the foregoing subjects and discuss how the professional services firm
can manage this function on an ongoing basis.
433
Information Technology

In many cases, IT personnel will grow up in the department. They can as-
cend through one of two routes. In some cases they will be heavily applica-
tion and software focused and in other cases they will have significant
experience in the infrastructure areas of networking, e-mail administration,
or desktop support. Rarely has an individual been given the proper training
while on this ascension to properly manage an entire IT department. To ex-
acerbate the issue, the manager will be given decision-making authority for
large budget items with little practical experience or formal training in mak-
ing such decisions. When a large investment in technology goes bad, the sen-
ior firm managers finally take notice and begin making management changes.
It is imperative for both firm managers and IT managers to learn the basics
of good IT management. This chapter provides some insights into proper
management practices. We have also borrowed heavily from our previous
book, The Executives Guide to Information Technology (John Baschab and
Jon Piot, New York: John Wiley & Sons, 2003). After reading this chapter, if
you find that you need more detailed information on a technology subject,
you will find the Executives Guide very comprehensive.


Strategy
We are all in the gutter, but some of us are looking at the stars.
”Oscar Wilde (1854“1900), Lady Windermere™s Fan, 1892

Everyone talks about strategy, but we often mean different things. Gartner
provides a simple definition: “A strategy takes a vision or an objective and
bounds the options for attaining it.”2 A technology strategy provides the
bounds to guide what the firm is trying to accomplish from a technology per-
spective. It is not as detailed as a road map, but it is sufficiently detailed to
describe what major roads can be used to meet the objective. It is used for
budget planning and to control project selection and implementation. It must
be aligned with the firm™s strategy as described in the firm™s strategic plan.
Dividing an enterprise into domains for purposes of organizing and align-
ing strategies can be helpful. A domain consists of a group of related busi-
ness processes that share a common, identifiable goal. Keep the number of
domains addressed to a minimum to avoid complexity and redundancy. Dif-
ferent domains can and do trigger different strategies.
Examples of domains are production, financial, risk management, market-
ing, and infrastructure. The production domain includes systems that the
professional uses to serve clients and conduct substantive work. The financial
domain includes all financial systems from time and billing through report-
ing. The risk management domain includes conf lict checking systems and
business continuity. The marketing domain includes the intranet site and,
potentially, client relationship management systems. The infrastructure do-
main includes the “pure” technology that underlies all other domains.
434 The Back Office: Efficient Firm Operations

Different domains can and should have different strategies. For example, the
strategy behind the financial domain and the infrastructure domain could be
to reduce and control costs through consolidation and process improvement.
At the same time, the strategy behind the production domain could be to in-
novate by introducing new systems aimed at better service.
The technology strategy should be cross-referenced to the firm™s business
strategy and core competencies. What are core competencies?
A core competence is “a root system that provides nourishment, suste-
nance, and stability.”3 It is not a product; it is experience, knowledge, and de-
veloped leadership. It is the organization of work and the delivery of value. It
is something unique that distinguishes one firm from another. Many firms
call their core competencies service lines.
Exploiting core competencies allows a firm to deliver end products. In the
legal field, for example, end products are the specific legal services. Given the
diversity of practices, most firms sell various end products. Each lawyer likely
provides several different end products, oftentimes “reinventing” the end
product for the particular client. For example, an attorney who has intellectual
property litigation experience (end product 1) may consult with a client on
how to minimize the risk of copyright litigation (end product 2). The attorney
may also accept an engagement to register a copyright (end product 3).
Between core competencies and end products are a firm™s core products.
“Core products are the components or subassemblies that actually contribute
to the value of the end products.”4 Law firm core products may include
complex litigation, high-volume personal injury, medical malpractice, cross-
border mergers and acquisitions”the list is virtually endless. In a properly
aligned organization, core competencies are used to create core products.
Core products are the building blocks to end products.
Identifying core competencies is critical. As budget pressure and technol-
ogy costs increase, the number of noncore competencies must be minimized
through standardization. For example, in a multioffice firm, what is the bene-
fit of having one office run Microsoft Word and the other run Corel WordPer-
fect? While efficiently creating documents may be a core competency, doing it
on a particular system is not. Setting aside religious preferences and absent a
compelling client- or locale-driven requirement, the firm should standardize
on one package. Standards provide economies of scale and resulting leverage
to better negotiate license and maintenance costs. They allow development of
expertise and training in fewer packages. They allow the ability to share work
product. Whether or not standards make sense to the attorneys who have to
shift to the new standard, unless the diversity serves a core competence or
core product, standardization should be forced. Technology strategy should re-
f lect and allow development of core competencies. Taking this approach al-
lows a focused strategy and minimizes the watered-down effect of a shotgun
approach.
Most corporate strategic plans will describe key goals that the company is
striving to achieve as well as key metrics targets (e.g., backlog, pipeline,
435
Information Technology

revenue, headcount, utilization rate). In general some of the following will
likely be included in a strategy document:

• Core values
• Targets (three- to five-year financial and business target metrics)
• Key Threats
• Key Opportunities
• Key Initiatives (goals)

It is then the responsibility of the CIO to interpret the firms overall strategy
and determine how IT can support the company in executing the strategy.
This would entail matching current initiatives to each key goal as well as rec-
ommending or evaluating new technology requests against each key goal to
ensure alignment. The ultimate arbiter of alignment will be the IT steering
committee, which we will discuss later in the chapter.
The CIO should annually create an IT strategy document that shows key
initiatives in IT and their relationship to business key initiatives. In general,
the IT strategy should consider all pieces of the business strategy and core
competencies. For example, if one of the goals of the firm is to increase uti-
lization rates from 76 to 83 percent, do any current IT projects get us there?
Do any prospective projects help? Perhaps by implementing a real-time-
hours reporting system we expect consultants to manage their time more
closely and to gain 2 to 3 percent increase in utilization with time manage-
ment. If another corporate goal is to reduce days sales outstanding from 60
to 55, perhaps a better collections system can help the company achieve this
goal. Similar to corporate strategy, the IT strategy document should include
the following information:

• IT Department mission statement
• Near-term goals/initiatives (and how they map to corporate strategy)
• Long-term goals/initiatives
• Challenges/risks
• Actions required for each quarter and for the year


Architecture
Form follows function.
”Louis Henri Sullivan (1856“1924), The Tallest Office
Building Artistically Considered

Technology architecture is a set of guidelines and standards used to direct IT
decision making and planning. It is the part of the firm™s technology strategy
that says how we will accomplish our objectives. Architecture:
436 The Back Office: Efficient Firm Operations

• Is broader than technology but usually handled within technology be-

<<

. 73
( 92 .)



>>