[IMGCAP(1)]I’ve heard it said more than once that “accounting is the language of business,” but as some of my colleagues who work in technology departments for their firms know, accounting and tax services can, at times, seem worlds apart from software and systems.

After all these years of firms building out advanced, integrated technologies to help them deliver services to clients, the relationship between a firm’s IT department and the rest of the firm, including practice and other non-practice departments, still, at times, seems divided.  Like referees in a football game, the IT department in many firms is only noticed when something goes wrong. This reality leads to the perception that IT is not much more than a necessary cost of doing business.

Changing this perception boils down to one word: management.

Managing a firm’s IT is just like anything else in the firm: you have to lead people and manage everything they produce, including creating and designing processes, and implementing and evaluating systems. You also have to create value and communicate that value to the rest of the firm in business terms everyone can understand.

The misperception of IT’s value is often due to two factors. First, there is a language barrier: “IT doesn’t understand business and business doesn’t understand geek-speak.” At a minimum, the firm’s CIO should be able to speak as fluidly in business terms to the CEO as the CFO or COO would.

The second factor focuses on value: “The rest of the business does not understand the value provided by IT.” This is often due to IT not communicating its value in a way that makes sense to the business. As a result, the rest of the firm views IT as a cost center instead of a “value center.” 

Creating and communicating this kind of value is a two-step process:

Step 1:  Compile a catalogue of all the services you provide and then categorize each service as either a commodity or a differentiator. A commodity is a service that is required to keep the lights on. In IT, this might include, for example, email and file storage. A differentiator is something that gives you a competitive advantage, such as a system that reduces production and delivery time of your core client deliverables or increases client engagement.

Step 2:  Manage the services so you shift the investment of time and money to differentiators and away from commodities. I think of this as managing two separate businesses. You want to manage commodity services like you would a mature company by focusing on reducing cost and increasing efficiency. You also want to manage differentiating services like you would a startup or high-growth company by focusing on innovation and staying ahead of the competition.

Over the years, it became apparent that too much time and money was being spent on purchasing, maintaining and managing servers – a commodity. About seven years ago, we decided to minimize our spend on hardware, space and utilities, as well as the time and effort spent managing physical servers by going virtual. In addition to saving the firm money, this move has allowed our network engineers to focus more of their time on value-added services.

While commodities are pretty standard across most industries, differentiators really vary industry by industry and even company by company. Which IT services give your firm a competitive advantage often depends on your firm’s niche within its industry. For our firm, that niche is servicing the alternative investment fund industry, which comprises more than 70 percent of our business. Consequently, we invest heavily and constantly in our K-1 production and delivery system. This is an area where our IT department constantly provides value, relying on institutional knowledge gained by refining and extending the platform for more than a decade.

Applying this style of disciplined management makes it much easier to convey IT’s value to the firm – every executive is fluent in the language of cost reduction, increased efficiency, innovation and competitive advantage!

You may be reading this, scratching your head and thinking that I’m WAY overcomplicating the scenario with this kind of perspective, but I absolutely believe that unless you break the management and value creation down into bite-sized parts anyone in the firm can understand and adapt to, you’ll always be viewed as a cost center, overshadowing your contributions that provide your firm advantages over the competition.

Chad Poplawski is a senior manager in information technology for Rothstein Kass in Roseland, N.J. He is also an active member in the Information Technology Alliance. Contact Chad at cpoplawski@rkco.com.

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