magazine article hype about the latest technical fad and conclude that the firm lags the competition. There is a danger, however, that much of this technology is still immature and risky to install. Technology systems crash at the most inopportune time. Technology projects are complicated and often overrun both time and costs. True value is difficult to measure and even more difficult to predict. Security breaches, viruses, and malware pose constant threats. Good IT managers and directors with relevant industry experience and well-rounded management and technical expertise are hard to find and expensive. How can this environment possibly be managed?

This chapter discusses how to manage IT in the professional services firm covering the key topics of IT strategy, architecture, organization, standards, operations, projects, budgets, and governance (steering committee / relationship building). Each of these is important for the success of the IT department within a professional services company.

Why This Topic Is Important

Managing IT in the professional service firm is critical to the core business of providing service whether the firm is a law, accounting, consulting, or other firm. If the firm cannot receive e-mails, then it is likely that critical communications are not being received, and one of the main mechanisms for exchanging documents and other work products is hindering the firms ability to produce revenue. Not only can IT be a hindrance to produce revenue, but it can also greatly increase productivity. Firms that use technology wisely can obtain competitive advantage in the market place by servicing customers more efficiently and effectively. From a financial perspective, IT drives the most significant capital expenditures in a services organization and is one of the largest overhead costs for a firm. It is important to carefully manage IT to ensure the highest returns on this invested capital. From a management perspective, IT is generally not a core competency of any of the principals of the firm, and thus it can confiscate billable time when they have to spend significant time managing or dealing with unfamiliar issues and investment decisions. While the principals in the firm are not good managers of IT, it is also difficult to find reasonably priced and qualified IT directors. For example one firm we worked with hired three IT directors in 36 months. Two of the IT Directors were overcompensated for their market value while the third, a victim of the predecessors failures, was significantly underpaid. Undermarket pay drove the third IT director to depart on her own volition to pursue a more lucrative contract after six short months. Finally, managing strategy, budgets, personnel, human resources issues, and varied systems are all activities that must be performed by the CIO; however, rarely is one person trained well enough to handle the wide-ranging duties. This chapter will address the foregoing subjects and discuss how the professional services firm can manage this function on an ongoing basis.

In many cases, IT personnel will grow up in the department. They can ascend through one of two routes. In some cases they will be heavily application and software focused and in other cases they will have significant experience in the infrastructure areas of networking, e-mail administration, or desktop support. Rarely has an individual been given the proper training while on this ascension to properly manage an entire IT department. To exacerbate the issue, the manager will be given decision-making authority for large budget items with little practical experience or formal training in making such decisions. When a large investment in technology goes bad, the senior firm managers finally take notice and begin making management changes. It is imperative for both firm managers and IT managers to learn the basics of good IT management. This chapter provides some insights into proper management practices. We have also borrowed heavily from our previous book, The Executives Guide to Information Technology (John Baschab and Jon Piot, New York: John Wiley & Sons, 2003). After reading this chapter, if you find that you need more detailed information on a technology subject, you will find the Executives Guide very comprehensive.

Strategy

We are all in the gutter, but some of us are looking at the stars.

-Oscar Wilde (1854-1900), Lady Windermeres Fan, 1892

Everyone talks about strategy, but we often mean different things. Gartner provides a simple definition: A strategy takes a vision or an objective and bounds the options for attaining it. 2 A technology strategy provides the bounds to guide what the firm is trying to accomplish from a technology perspective. It is not as detailed as a road map, but it is sufficiently detailed to describe what major roads can be used to meet the objective. It is used for budget planning and to control project selection and implementation. It must be aligned with the firms strategy as described in the firms strategic plan.

Dividing an enterprise into domains for purposes of organizing and aligning strategies can be helpful. A domain consists of a group of related business processes that share a common, identifiable goal. Keep the number of domains addressed to a minimum to avoid complexity and redundancy. Different domains can and do trigger different strategies.

Examples of domains are production, financial, risk management, marketing, and infrastructure. The production domain includes systems that the professional uses to serve clients and conduct substantive work. The financial domain includes all financial systems from time and billing through reporting. The risk management domain includes conflict checking systems and business continuity. The marketing domain includes the intranet site and, potentially, client relationship management systems. The infrastructure domain includes the pure technology that underlies all other domains.

Different domains can and should have different strategies. For example, the strategy behind the financial domain and the infrastructure domain could be to reduce and control costs through consolidation and process improvement. At the same time, the strategy behind the production domain could be to innovate by introducing new systems aimed at better service.

The technology strategy should be cross-referenced to the firms business strategy and core competencies. What are core competencies?

A core competence is a root system that provides nourishment, sustenance, and stability. 3 It is not a product; it is experience, knowledge, and developed leadership. It is the organization of work and the delivery of value. It is something unique that distinguishes one firm from another. Many firms call their core competencies service lines.

Exploiting core competencies allows a firm to deliver end products. In the legal field, for example, end products are the specific legal services. Given the diversity of practices, most firms sell various end products. Each lawyer likely provides several different end products, oftentimes reinventing the end product for the particular client. For example, an attorney who has intellectual property litigation experience (end product 1) may consult with a client on how to minimize the risk of copyright litigation (end product 2). The attorney may also accept an engagement to register a copyright (end product 3).

Between core competencies and end products are a firms core products. Core products are the components or subassemblies that actually contribute to the value of the end products. 4 Law firm core products may include complex litigation, high-volume personal injury, medical malpractice, cross-border mergers and acquisitions-the list is virtually endless. In a properly aligned organization, core competencies are used to create core products. Core products are the building blocks to end products.

Identifying core competencies is critical. As budget pressure and technology costs increase, the number of noncore competencies must be minimized through standardization. For example, in a multioffice firm, what is the benefit of having one office run Microsoft Word and the other run Corel WordPerfect? While efficiently creating documents may be a core competency, doing it on a particular system is not. Setting aside religious preferences and absent a compelling client- or locale-driven requirement, the firm should standardize on one package. Standards provide economies of scale and resulting leverage to better negotiate license and maintenance costs. They allow development of expertise and training in fewer packages. They allow the ability to share work product. Whether or not standards make sense to the attorneys who have to shift to the new standard, unless the diversity serves a core competence or core product, standardization should be forced. Technology strategy should reflect and allow development of core competencies. Taking this approach allows a focused strategy and minimizes the watered-down effect of a shotgun approach.

Most corporate strategic plans will describe key goals that the company is striving to achieve as well as key metrics targets (e.g., backlog, pipeline,