You’re the owner and CEO of Allright Widget. You founded Allright in 1981, and over the past 10 years Allright has grown from the ground up to become a $15 million business that makes Widgets for commercial and military use, with a building you own in Chatsworth. Like most business owners, you’re often overwhelmed with pressures from employees, vendors, customers, sales representatives, and regulatory hassles and the constant question in your mind: “could Allright be doing significantly better? And if yes, why aren’t we?” Assuming you have the desire to improve your business, why don’t you? Easy answer, perhaps: you’re not able to focus ON the business despite being IN the business. In this series of columns, we explore some real pains that Allright-like businesses face, and provide strategic solutions that can improve the business, with the commitment from you, the CEO, and your management team but requiring that you focus ON the business, even for a short while. We’ve divided the strategic solutions to various challenges into the following three areas of emphasis: – Financial control and reporting – Information technology management, and – Big-picture strategic planning. This column emphasizes IT management: the Achilles heel: Many of you have experienced this in some way. Poorly executed IT can cripple, sometimes materially, the success of any business. Some common scenarios that are applicable to Allright and many businesses like it, include: Your business can’t deliver the information to others when mandated to do so: Allright was recently served with notice of a Federal law suit against Allright, and, consistent with the revised Federal Rules of Civil Procedure, was demanded to provide the opposition with copies and a list of the location of all electronic files and data related to the matter under dispute. In short order, you realized that your IT staff had no plan or mechanism to effectively isolate all pertinent electronic information, including emails, documents, spreadsheets, and drawings in time to satisfy the demand thus you risk giving the opposition too much (or damaging) information, as well as risking sanctions for taking too long to deliver the requested discoverable information. Inability to survive a systems-crippling disaster: One weekday last summer, Allright’s plant in Chatsworth lost power for a few hours. No generator or backup power was available to keep production going. Allright’s computer systems were damaged beyond repair by the power surge that occurred when power was restored, leaving the business without the ability to manage production activities and transactions. Resurrection of systems operations, and data, took weeks, and Allright lost customers, and large amounts of money. Lack of foresight for prospective systems needs: Allright was presented with the opportunity to do business internationally two years ago. Only just this month did the first transaction occur. Why did it take so long? They did not have an inventory and accounting system equipped to timely provide electronic order and shipping information required by the larger international customers, nor did they have the ability to record transactions in multiple currencies. Inability to get good information when, and where you and other staff members need it: You recently joined a CEO advisory group. It was your turn to present to the group, and you were to help the others understand the key factors to what makes your business successful. To do so, you were asked to bring details about your business, including data and analysis regarding financial position, production efficiencies, sales effectiveness, customer retention, and the like. You’ve been using QuickBooks for over 8 years to perform the accounting and reporting function for the business. You realized that because QuickBooks is simply not a robust software tool that helps manage and capture manufacturing and production transactions, nor manage the sales process, for example, you had your staff spend weeks to prepare your presentation, and by the time you received the information they provided, you knew that you still didn’t have the depth of information needed to illustrate how your business performed. How embarrassing. How could each of the above have been avoided? Clearly, by taking a more strategic approach in determining how IT and information should serve the business. We call the result of such strategy a Strategic IT Plan. Nothing like this existed at Allright. A disaster preparedness plan? Not available. A well-thought out implementation of accounting and financial reporting software? Nonexistent. An information “plan” making sure that all key information is delivered to authorized users, when and where they need it? No, again. Why? Like most growing businesses, Allright has hobbled along, using its network “administrator” for all its IT needs. This administrator has no depth of experience beyond building PC’s and performing basic networking which he has learned on the job. He’s also the cousin of Allright’s VP and has job security. Too bad he has no strategic value. Without strategic IT planning, businesses DO face the kind of scenarios above more often than you may realize. With prudent, strategic IT planning, these topics are addressed BEFORE they become crippling: disaster preparedness, information availability and depth, an appropriate mix of software tools to manage the business’ transactions, network infrastructure requirements, information security, and many more. When should this strategic IT planning occur? On an on-going basis but most importantly it should be performed as part of the business’ overall strategic planning. IT must support the business plan, with solutions to address the business’ growth plans, and other strategic needs. Ultimately, it is the overall business strategic plan that drives IT but more often than not, IT is not considered in the overall plan (perhaps with the exception of being a line item in a budget or projection) until it is too late. Robert (Bob) Green, CAP.CITP, is a partner in SingerLewak’s Enterprise Risk Management Services practice group. SingerLewak is a leading accounting and consulting firm with 7 office locations in California. Bob can be reached via email at [email protected] or 818.251.1359