Technology Management Alternatives in SMBs

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While the traditional large company has a CIO (Chief Information Officer) with responsibility for IT, small and mid-sized organizations (SMBs) can rarely afford a full-time experienced CIO. A CIO provides expertise on:

managing IT staff and vendors;
aligning the IT strategy with the business strategy; and
leading projects such as software selections, acquisition due diligence and integration, technology evaluations and office/data center relocation.

At the same time, SMBs are often experiencing the same challenges as their larger counterparts, but with fewer, less experienced resources. Here are some alternatives we've seen with their benefits and challenges:

Hands-on IT Director. Often a promotion from within, hands-on IT Directors may come from the applications or infrastructure side of IT. They continue to do hands-on work such as programming or server maintenance.

Benefits: They typically have a deep knowledge of the organization and often the current technical environment. If they are ready and receive appropriate coaching, the Director role can be a great career opportunity.

Challenges: A lack of leadership experience and tendency to avoid change makes it tough to help take the SMB to the next level. Comfortable with the current technical solutions, they tend to take ownership rather than identifying ways to improve. They often avoid getting expert consulting help.

Existing non-IT Executive. Typically a CFO or COO who have had IT report to them in the past, this executive takes on the IT direct reports. We also see company owners who have previously managed IT in this role.

Benefits: For a small IT department, there is no additional management cost.

Challenges: Executives often focus first on their primary area of responsibility, with the IT area receiving less attention. The organization may not take full advantage of IT or may focus on the executive's projects to the detriment of other business units. Executives who managed IT in the past may have outdated technical knowledge which adversely influences their decision making.

Managed Services Provider. Often seen when a company wants to delegate IT, all or most IT functions are usually outsourced to the MSP. The MSP markets itself as taking on all IT responsibilities for the organization.

Benefits: An MSP allows the company to focus on core business operations, which can be a good fit where IT is not a competitive advantage and the company uses standard software packages. The MSP often has a large staff which can provide backup for vacations and sick staff, as well as technical expertise unavailable to small organizations.

Challenges: MSPs focus on the day-to-day and what might affect their systems and/or staffing. They don't focus on the strategic CIO level so your company may miss strategic input and opportunities. Actively manage your MSP so you don't end up with underperforming resources. Pay attention to capacity planning and software upgrades, and make sure the MSP gives you reports showing data on your tickets, hardware, software and projects.

Retained CIO. Also know as an Outsourced CIO, consultants with previous CIO experience provide CIO level services. Working at the management level, they are not hands-on. While the Retained CIO role is newer, it is common for CFO consultants to provide retained services to SMBs. The Retained CIO manages internal IT resources and vendors, including MSPs and other outsourcers.

Benefits: Having managed larger IT organizations in the past, Retained CIOs bring best practices and give strategic input on making the best use of IT. They help manage projects. Organizations have flexibility to contract for couple days a month to several days a week. In addition, once IT is running smoothly, the company can reduce hours as appropriate.

Challenges: If your organization has a large IT group or heavy acquisition strategy, a part-time CIO may not be sufficient. If the primary goal is to save money, this probably isn't the right solution. The cost may be comparable to an IT Director, but the benefit is bringing experience and strategic expertise to the table.

Do any of these scenarios apply to your IT organization? If you are experiencing some of these challenges or are unsure which structure will take your company to the next level, consider an IT Assessment to get input from an outside consultant. We recommend assessments that cover people, process and technology as all contribute to a successful, proactive IT organization that improves efficiency, reduces costs and helps organizations grow.