Dear {!firstname},

In this issue, you'll find information on Technology Management Alternatives in SMBs. We explore the benefits and challenges of four different IT management structures.

While we're at it, we share some thoughts on Acquisition Due Diligence and Integration.

Feel free to forward this to others who may find this newsletter helpful.

Sincerely,

Laura Pettit Rusick
OPT Solutions, Inc.
www.optsolutionsinc.com

Accounting Today's recent headline "Merge in Haste - Repent at Leisure" sums up the dangers of inadequate due diligence when acquiring companies. Consider these questions:

• Companies are used to focusing on financials, products and customers during due diligence. In addition, review the IT area. What is getting ready to break? Aging hardware? Backup systems? Is your current IT staff familiar with the target's technology?
• Are there custom applications? Are there applications that would be better than what you are currently using? It may make integration more difficult, but may also be the right answer, particularly if there are extra unused licenses available.
• Whether the IT piece of the equation helps or hurts the evaluation and pricing, understand the impact on integration. If systems are very different or very customized it can be much harder to integrate the acquisition target and begin gaining efficiencies.

We've seen organizations learn these lessons the hard way, with integrations planned for 90 days and ending up at more than a year. All of a sudden that acquisition may not look as interesting, or at a minimum may carry a different valuation.

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 Read More >>>

Copyright © 2009 by Laura Pettit Rusick.

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