For most SMEs, if IT hits the board’s agenda, there is a major problem. Over the past decade as IT reliance has increased, the majority of organisations have downgraded IT to a middle management function. As a result of this lack of strategic IT direction, businesses are failing to budget for new IT solutions or to exploit fast emerging technologies. Instead, IT decision-making is reactive, based more often than not on IT failures or vendors withdrawing product support.

Mitesh Patel, managing director of IT managed services provider Fifosys, believes that SME organisations that outsource their IT and, most importantly, their director-level management and reporting, enjoy the luxury of never having to discuss IT issues in the Boardroom.

Utilitarian IT
As IT has become a fundamental component of a business’ sustained success, SME organisations have actually downgraded their IT focus. Paradoxically, rather than take a strategic approach to IT development and enhancement, with board level commitment and clear measurement of return on investment, the majority of SMEs now take a rather utilitarian approach to IT.

Financial Directors regularly sign off the IT budget with limited  idea of how it is being spent or whether it is delivering value. With key decisions left in the hands of inexperienced, mid-tier personnel and no justification of spend; organisations are actually wasting upwards of 70% of the annual IT budget. Worse, they are completely unaware of the level of business risk incurred on a daily basis through inappropriate IT deployments.

With this lackadaisical attitude to IT, it is little wonder that technology becomes a board level issue only as a result of a major disaster – from serious downtime to the theft of key customer data and business loss.

Abdicating Responsibility
Yet twenty years ago the discussion of IT at board level was a given. Organisations of every size recognised the importance of technology in achieving competitive advantage. So why has IT been downgraded? Why do so few SMEs have a dedicated IT Director or, at least, a board level representative prepared to place IT centre stage on a regular basis?

By failing to take IT seriously at a senior level these organisations are missing out on the continual technology improvements that can deliver clear business benefit from a management, administration and collaboration perspective. Furthermore, by relying on IT personnel who have often been promoted to a title that far outstrips their job description or experience level, they are failing to access new skills or understand market developments.

The result? An IT budget that fails to reflect the core business drivers and an IT infrastructure that contributes to significant business risk. Any member of the IT team can create a technology wish list, citing the opportunities to exploit new functionality or the need to improve business continuity. But who is cross checking this wish list? Where are the senior personnel looking to ensure that these technology investments will enable strategic direction or demanding proof that investment in business continuity is delivering a lower risk business model?

By abdicating board level responsibility SMEs are culpable – they are risking the business and wilfully wasting essential resources on unnecessary and unfocused IT investments.

Virtual IT Director
Of course it is the traditional role of an IT Director to set a coherent, affordable IT strategy and then manage its implementation and on-going delivery. The role requires broad skills and experience to oversee the procurement process, set realistic budgets, interpret the results and drive the business forward.

However, in any organisation with fewer than 250 employees it is hard to justify employing full time an experienced Director with the appropriate skills. Instead, where it exists, the role is likely to be filled by a long term member of staff who is still responsible for day to day support tasks and does not have the ear or appreciation of the board.

As a result, growing numbers of SMEs are considering the value of a virtual IT Director or outsourced IT Director function. Offering budgeting advice and director level business-based planning, this external resource should provide organisations with access to the latest skills, experience of delivering strategic IT direction across a range of industries and proven capabilities for overseeing successful IT implementation with quantifiable ROI.

Beware, however, of the virtual IT Director offering no more than a new IT strategic direction and a plan. An IT Director can have been in place for 25 years – but the experience is limited by technology exposure. Furthermore, these individuals are typically providing no more than a lengthy report advising on possible direction. There is no follow up, no ability to implement the strategy, facilitate procurement or measure the ROI.

Therefore, unless someone at board level is prepared to take full responsibility for implementing the recommendations, which is improbable, this will become an expensive exercise that delivers no real business value.

Measured Success
An outsourced IT Director function, in contrast, provides an organisation with access to a team of people, all with broad technology and industry experience. And it is this breadth of technology exposure that is key to creating a relevant strategic IT direction that truly maps the business drivers.

Furthermore, the role of the outsourced IT Director function is not simply to provide advice and guidance but also to support the business in achieving its technology goals. From creating the IT change management programme to overseeing budgeting, procurement and implementation, a key component of the role is proof of delivery. On-going measurement and reporting is essential to demonstrate the value of the investment and highlight any emerging areas of risk.

For example, why invest heavily in business continuity solutions without then testing to prove the business risk has been reduced? A virtual IT Director may recommend the company build in redundancy to ensure maximum downtime on the Exchange server is reduced from 24 to four hours. But without implementing and then testing that implementation to prove it works, where is the strategic value? It is by proving the IT strategy works that an outsourced IT Director function delivers quantifiable ROI to the business.

Conclusion
Too many organisations have taken IT for granted over the past 10 years. As a result, they have underinvested systematically, resulting in an IT infrastructure that is creaking at the seams, inappropriate for today’s business needs and creating significant risk of failure.

Taking a strategic approach to IT is not necessarily about spending more money. Indeed, in many cases much of the existing IT budget is being incorrectly allocated; while an outsourced IT Director function can cost as little as £30,000 a year. Nor is it simply an opportunity to appoint a corporate scapegoat to take the blame for any problems.

It is about leveraging strong IT Director skills to provide businesses with a clear understanding of the IT risk and to create a relevant IT change management programme for the next one, three, even five years to reflect business goals.

Critically, it is about putting in place an organisation that takes responsibility for both defining and delivering a strategic approach to IT that minimises risk and provides real corporate value – and takes IT off the board agenda.