IT shouldn’t be a core competency for middle market companies

By - October 5, 2016

If you are an executive or manager in a middle market company, there is one important IT lesson that you can take from how Fortune 500 companies run their IT shops: the days of “IT as a black box,” are long over.

In the past year, I have been in a number of middle market companies because the CEO or CFO was wondering if IT can be improved in some way. Often, the reason for this conversation wasn’t that they necessarily saw anything that they wanted fixed in their IT organization, but rather they saw their own lives changing dramatically with the tsunami of mobile devices that they and their families use, pop up ads for hosting their home email in the cloud, signing official documents electronically, and even buying and selling their own home entirely through the internet. The answer is – yes, your IT organization can be improved, and it should be tied directly to the business that you run.

The first thing to think about is whether you are or are not an IT company – do you sell IT hardware, software, or services? If the answer is no, then remind yourself that, therefore, IT is not a core competency for your company. (Even if the answer is yes, this idea probably still applies!) So, having a relatively large and/or expensive IT staff to maintain servers, networks, the help desk, phones, and workstations is a dated concept, and you should consider outsourcing this “commoditized,” IT work. There are many companies, including RSM, that specialize in this work, and will – by design – keep the network available and robust around the clock, the Help Desk open whenever your offices are open, and servers and workstations with up-to-the-second security patches on them. And often the price is a large haircut from what you’re paying your staff to perform the work.

The second thing to think about is that IT should no longer be considered a “cost center,” for your company. Think about how the advent of an Uber has pushed taxis and even car rental companies to re-think how to connect with customers and how to drive these customers to your door because it’s as easy as pushing a button on their iPhone. If your IT leader is not offering up strategic solutions to drive more revenue, make customers proud to use you or easier to use you, or cut your business (not just IT) costs quarter over quarter, then you should re-think who you have running your IT shop.

Finally, IT is part of your business. If your IT staff cannot explain in business terms why they are doing something, then say no. For example, upgrading a server should always be done for a business reason: the server manages mission-critical applications or data (and they should tell you exactly what applications or data it is), and it is failing or no longer supported. If they are renewing a printer support contract, have they checked out alternative suppliers to get a lower bid? Do you really need three color printers, and if so, why? Can you outsource printing of invoices or paychecks for a lower cost? The time is right to bring IT into your core business and help them transform your company. To learn more about how RSM can assist you with your other business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.

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