IT savings to fund advisory services
With the potential for intelligent business systems to release up to 10 per cent of annual turnover, we now have the cash flow to help fund business advisory and financial planning services from accountants and other consultants. This will assist businesses to grow over the next decade, addressing burning issues like business risk, funding and succession planning. Proactive public accounting firms, in particular those with a reasonable depth of medium-sized businesses, are ideally positioned to provide high-value client services. This has also seen an upsurge in business valuation tools which enable the setting of ‘growth goalposts’. Intelligent business systems help provide real-time reporting to measure progress towards these goals. This is critical, as you can’t manage what you can’t measure.
What does an IT-savvy business look like?
IT direction, value and strategic vision are driven by the business owner. They have too many other duties to take sole responsibility, but they govern this area just as they do with other key business strategies, and let others drive success. Smart business operators don’t abdicate responsibility for IT to someone who isn’t qualified for the task – they take charge. They encourage honest discussion about their business, then use IT to empower staff and improve customer satisfaction. They use IT systems to define an operating model that brings integration and standardisation to the business. They set targets, such as reducing debtors and stock by 15 days over the first two months, and provide rewards for achievement. They don’t try to implement everything at once – rather they build knowledge and processes over time. And they understand that a good IT partner takes the IT journey with them, but cannot take the journey for them.
The bottom line is that IT-savvy businesses run more efficiently. This helps improve their cash flow today and increases the future wealth and value of the business.
A standard you will like
Few people know about the new standard ISO 38500 Corporate Governance of Information Technology, which provides broad guidance for top management. While voluntary, the standard applies to organisations of all sizes. Its adoption by businesses involves both a stick and a carrot. The stick is that you must keep on top of IT to remain competitive; the carrot is that it assists you to become IT-savvy. ISO 38500 also touches on both the supply and demand sides of IT. On the supply side, IT specialists like talking ‘technical’, but without a genuine business purpose IT is nothing more than a tool. On the demand side, business leaders must define the business purpose for IT just as they do for any other major investment.
A guide to being savvy
ISO 38500 provides six principles to assist you. These are:
- Responsibility: Top management define the purpose of IT as part of business planning. Be very clear about who makes decisions and performs IT tasks, ensuring they have the authority, time and skill to do what is required.
- Performance: Ensure your IT handles the workload, provides the right results, satisfies all stakeholders, helps you compete in your market and the investment is worthwhile.
- Acquisition: Allocate the right amount of ongoing IT operational spending. For new IT, ensure the investment will deliver well-defined business outcomes that you know are important.
- Strategy: Have adequate plans and capabilities to ensure that IT serves you now and in the future, considering developments in your industry and the market generally.
- Conformance: Follow the rules including tax payments, security, record-keeping, relevant regulations and ensure staff are aware and follow your rules regarding IT.
- Human behaviour: Take people into account as you develop and implement your plans and continue to operate your IT-enabled business.
