CIOs should have a prominent voice in every organization's budget talks—that was the theme of a recent webinar from Gartner Inc. “Every Budget is an IT Budget” featured Michael Smith, vice president and "distinguished analyst" at the Stamford-based research company.
The types of technologies that fall under the umbrella of IT are expanding, said Smith, to include digital marketing, operational, information and infrastructure (e.g., information security, data integration, data quality, information sourcing and life cycle management), as well as the Internet of things. Companies spend an average of 2.3 percent of total revenue on IT operational budget, said Smith, citing Gartner data. That figure, he said, is likely to double this year due to an increase in marketing technology (e.g., hardware, software and analytics).
Smith's premises were amplified by three members of the legal technology community.
In law firm environments, “it is critical for CIOs to have a seat at the table for budget processes,” said Scott Christensen, (left) director of technology and information security at Edwards Wildman Palmer. The international law firm has 600 attorneys in 16 offices in Asia, Europe and the U.S.Christensen said. “It comes down to the importance of strategic planning for the firm, and how technology can be an enabler to accomplish the strategic goals of the firm,” he said. If IT is not involved in budget decision-making, it would be “relegated to a maintenance function and unable to meet the important business goals of a modern law firm,” he said.
“Without a CIO/IT director present to articulate the current state of the technology environment, it becomes difficult for a board of directors to evaluate how much investment might be needed," said Ted Theodoropoulos, president of Charlotte-based Acrowire, a legal technology consultancy. “It is paramount that someone from IT leadership participate in budgetary discussions in order to inform decision makers on when, where, why and how much investment should be made into the firm's technology environment.”
IT professionals at the budget table should use appropriate terminology that all participants can understand, he suggested. (The underlying message for IT: learn leadership's jargon). For example, expect that technology programs will be discussed in context of return on investment, Theodoropoulos said. Another term to use is "technical debt," which refers to the consequences of a poor system design, can be used to highlight infrastructure gaps.
“There is little doubt that technology is becoming more strategic to the way in which law firms operate and IT professionals will become more relevant in budget discussions as that trend continues to accelerate,” Theodoropoulos said.
A well-designed IT budget will help law firms run more effectively, said Susan Keno, vice president at Keno Kozie Associates. The Chicago-based company provides IT design and support services to law firms. "IT is increasingly important given the current mantra of doing more with less," she said. "Critical to effective technology plans is how the required investments will be prioritized and funded."
"The IT budget can and should be used as a planning document that will help the entire firm prepare for future technology needs and communicate to its partners the priorities that those needs will support," said Keno. "In short, it ensures that scarce resources are appropriately aligned with the strategic vision of the firm. A poor IT budget can create a disconnect between the IT department and all other departments leading to failed technology implementations—and to technology purchases that might not be a best fit for the firm,” she said.
"However, law firms can implement many steps and processes that improve IT budgeting. Most of these have less to do with the actual budget development and more to do with how decisions are made in the organization regarding IT investments," said Keno. "The first step in developing a sound IT budgeting process is to develop a governance structure for IT," she said. "IT governance specifies the decisions, rights, and accountability framework to encourage desirable behavior in the use of IT."
"Also, incorporating this structure into the IT budgeting process can ensure that future IT investments are based on performance of past projects, help manage risks, optimize resources, and foster the exploration of possible benefits of technology investments," she said.
Mark Gerlach is a staff reporter at LTN. @LTNMarkGerlach