2020 was the year the world changed. Paradigms shifted, long standing assumptions were overturned. Business plans were disrupted, and competitive positions were realigned.

New Environment, New Challenges

Businesses were heavily impacted by change. Some were advantaged, others disadvantaged by the disruption. For example, a company with technology to facilitate staff working remotely is better positioned than a company with staff tied to the office. No matter, each is faced with the challenge to evaluate opportunities and threats and take steps to preserve and create value in this new environment.

Mining for Value with Technology

Accelerating digital transformation is a strategy many businesses are taking to build and safeguard value. Changing demands from customers, the work force and all participants in the supply chain are driving investment in and adoption of technology. Advances in technology tools, capabilities, and processes are fueling digital transformation. The pace of technology development is ironically demonstrated in the negative where microchip scarcity is shutting down production of mid-level vehicles to feed the chip requirements of higher profit, top-of-line cars.

Gartner forecasts the overall, worldwide IT spend for 2021 to increase 8.4%, rebounding from a 2.2% decline in 2020. Much of the increase will reflect the adoption of cloud and other (X)aaS technologies. The proliferation of data and investment in analytic tools, artificial intelligence and machine learning will allow businesses to derive actionable information from raw data, gain competitive advantage and increase their value.

The use of these technologies will change from the tactical, IT supporting business processes to the strategic technology as core components of the enterprise. Data will become a value bearing asset.

The Strategic Value of Cybersecurity

Digital assets are not the only source of increased value for an enterprise. Technology and globalization have created an exposure that is an existential threat to businesses of all sizes. Attacks have become daily events as major companies, institutions and municipalities are targets of cybercrime and disruption. Ransomware, phishing in all its forms and similar attacks drain billions from businesses each year. Another class of attack threatens the basis of our societies’ undermining principals of democracy, clouding many aspects of our lives with misinformation, conspiracy theories, “alternative facts”. etc.

In this environment businesses that can build a robust cybersecurity defense increase their value and safeguard their future. Much like the technologies used to leverage data, cybersecurity needs to become a core component of the business, incorporated into all areas and activities. The value of strategic cybersecurity is the responsibility of everyone who comes in contact with the enterprise. Planning and implementing an architecture of cybersecurity will take into account customers (future and active) and all points on the supply chain (not just vendors but all providers of professional services). All staff should know that cybersecurity is valued as a key asset of the organization and the role that plays in the work they perform. All leadership in the organization should provide example of their understanding of, and adherence to, cybersecurity practices. The higher the leadership the more clearly demonstrated the commitment to cybersecurity.

Strengthen and Increase Resilience

PricewaterhouseCoopers (PwC) conducted their Global State of Information Security Survey (GSISS) for 2021 last summer. They surveyed 3,249 C-level executives, worldwide, across a range of industry sectors. The survey confirms that cybersecurity is no longer the sole purview of the IT department. “Although tech is very much in the picture—security leaders are working closely with business teams to strengthen and increase the resilience of the organization as a whole.” 50% of responders say that cyber and privacy will be baked into every business decision and plan”, up from 25% in the previous year’s survey. “Fifty-five percent of executives plan to increase their cybersecurity budgets, with 51% adding full-time cyber staff in 2021 — even as most executives (64%) expect business revenues to decline.”

With businesses, in their entirety, embracing the need for cybersecurity. executives want increased testing across a wide range of scenarios so they can anticipate attacks, plan, and take steps to ensure their critical business function will stay up and running. “It is not possible to forecast the future, but it is possible to plan to address imaginable scenarios.” Disinformation attacks and threats sponsored by nation states are among the scenarios identified as concerns in the survey.

Cyber Assets Future Proof the Business

This cyber threat environment demonstrates the real value businesses can create by developing a broad and deep cyberdefense strategy encompassing all areas of the enterprise. Such a strategy represents a lasting asset, safeguarding the future of the business. This is value, equally as important as intellectual property, new products, research and development, and a loyal customer base.

Develop a Cyber Secure Architecture but Don’t Ignore Infrastructure and Technical Debt

New technologies can increase the value of a business, but it is important to not overlook the infrastructure that supports the business. Obsolescence of hardware or software generates vulnerability and can undermine the efforts and progress made to create a new class of assets. Servicing tech debt by strategic updating, maintenance, and retirement of systems and equipment that is out of date is an essential part of preserving value. Strategies for recognizing and managing tech debt are covered in the book, “Tech Debt 2.0®, How to Future Proof Your Business and Increase Your Tech Bottom Line”, published by the IT Ally Institute in April 2020.

Value for the Future

Investors understand that the value of a business is based on its ability to thrive and deliver returns in the future. Preparing a business for the future in today’s environment depends on assets that promote speed, flexibility and resilience. Emerging technologies can prepare a business to meet future challenges and safeguard against evolving threats.

Michael Fillios is the founder and CEO of IT Ally Holdings, a diversified holding company that provides IT and Cyber advice and consulting to family owned and private equity backed small and medium size businesses (SMBs) and Credit Unions. As a former Fortune 500 global CIO, small business CFO, technology entrepreneur and management consultant with more than 25 years of experience, he is responsible for driving the strategic vision and growth of the IT Ally Holdings companies including IT Ally, CU Ally, fraXtion and the IT Ally Institute.

This article was originally published on Architecture and Governance.

Open-heart surgery prepped my SMB for the ultimate future proofing.

As a young executive, I received some sage advice from a career coach when discussing the topic of “work life balance.” The advice was simple, but the impact was significant and lifted a burden I was carrying for quite some time. My coach said, “don’t try to come up with a magic formula that allocates a percent to the time you allocate to work, family and yourself, but rather put 100% focus into anything that you do.” In other words, be fully present and commit to those areas individually and you will never feel the burden of work / life balance ever again. He was right!

The Mindset

This gave me a unique perspective and more importantly a mindset that I have applied ever since. This mindset was recently tested when I decided to become an entrepreneur again when I launched IT Ally in 2017. My first tour was 10 years during the 2000’s when I was Chief Solutions Officer at BTM Corporation. So as the saying goes, this was not my first rodeo. As my fellow entrepreneurs know, in the early stages of a starting your business, 100% of your success fully depends on the actions of the entrepreneur. You never feel you are doing enough, there is always more you want to accomplish, and it can never happen fast enough.

However, one additional shift in this case from my role as a Fortune 500 CIO, was on the personal side. Yes, I always worked hard regardless of the job or role I had, but as an entrepreneur, I knew exactly what it is was going to take, the sacrifices I needed to make and how that increased time would impact my work / life balance. With my career coach’s advice in mind, I made sure to apply the 100% percent formula. Being an entrepreneur, outside the structure of the corporate world, there was another dynamic – that is, there truly isn’t a bright line defining what is business versus personal time. My fellow entrepreneurs know this all too well – that line is never clear and tends to shift continuously. In fact, in my experience, it is in most cases nonexistent.

Open-Heart Surgery

In early January 2021, this struggle to define and separate business and personal was “big-time” tested when I learned that I needed to undergo open heart surgery to correct a known defect that afflicts about 1% of the population. The realization hit me when my cardiologist strongly recommended, I address this issue right away, when in my mind, I had about another ten years! Coming off of a record-setting 2020 for IT Ally Holdings and our operating companies, navigating the pandemic and the usual entrepreneurial stresses in an early-stage company, I worried about the impact this would have on my business, my personal life, my health, and my family. I also knew that I would need to apply a different plan and playbook to navigate this process, especially with a relatively compressed timeline of about two weeks before my surgery. I could not, for example, just go out on short term disability and let my corporate HR and benefits take care of the rest. So, let’s just say, we had more questions than answers in terms of getting prepared, not to mention major surgery that was looming!

Needless to say, I treated this situation like many others that I have done before, and became hyper focused on detailed planning and flawless execution at least for the pieces in my control. Oh did I mention, that I managed to schedule my surgery at the top cardiac hospital in the country, the Cleveland Clinic, so I knew that I would be in great hands for my procedure.

Personal Affairs

Although my surgery went as planned and I am in midst of my recovery process now, I wanted to share some of my experiences and lessons learned from a business and personal perspective that might be relevant to other entrepreneurs and business owners and in my case as a husband, father and grandfather, which again reinforced the blurred lines that exist from what is a business versus personal situation.

Getting your personal affairs in order. Having surgery thrust upon us so quickly, it was a great opportunity for my wife and me to update our legal and business documents such as wills, trusts, beneficiaries, insurance coverage, health care proxies, banking and investment portfolio. Having three kids over the age of 18, also meant that our conversations with them would need to be thoughtful and detailed, but hopefully without creating any major sense of panic. Fortunately, we had many of these documents in place, but our personal /business circumstances had changed since their creation and therefore required some significant updating and alignment with my newly formed businesses and financial situation.

Business Affairs

Getting your business affairs in order. Having created and launched 4 operating businesses and a holding company since 2017, it was important to revisit all operating agreements with our corporate attorney. We basically wanted to ensure that these agreements reflected our current ownership structure and aligned with the trust we established to ensure the assets were protected, estate taxes were mitigated and that the business had a clear path forward should I no longer be able to operate it. Although I had these conversations in my mind a thousand times, the process this time around was much more real and, in some cases, required difficult decisions to be made, but once addressed, felt like a major burden was lifted. Not to mention, I knew that my family and my business would be protected and we had a plan to operate from should the worst scenario play out.

Communicate

Communicate, communicate, communicate. We knew that we needed to communicate my situation, but wanted to be thoughtful and deliberate in terms of our message and timing for when and who to deliver it to. Like many transformational or significant projects that we assist our clients with, we needed a plan to manage this process and the various business and personal communications. As we contemplated the plan, it turned out to be a fairly comprehensive list that included my team, current and potential new clients, partners, children, family members, and close friends. Armed with this list, we defined, sequenced and executed a communications plan within the two week window and got the job done.

Trust

Trust your team, trust the process. Since the formation of IT Ally in 2017, I always viewed this as a scalable business rather than one that was centered just around me. Because of this strategy, I created a business and operating model to achieve this vision. In fact, one of our first podcasts, Inside the IT Ally Business Model, explained more about this.

Having to leave the “business office” for this surgery and with a lengthy and somewhat uncertain recovery period to follow, I was able to test or perhaps retest and validate this model given the reliance needed on my team to sustain our operations during this period. For example, our Monday staff meetings that we instituted some time ago, meant that the team was highly informed and aware of all current clients, new business opportunities and key strategies that we were pursuing.

From the beginning, I had also been very disciplined about taking a product management mentality in the way that we deliver our services. This enables repeatability, consistency and scalability of our services as well as a way to manage quality control over our deliverables. By having a defined set of packaged, and tool enabled services, we are also able to make our proposal pricing and client agreements more standardized and use these templates to streamline and simplify our client acquisition process.

Key takeaways

Having navigated this harrowing experience for myself, I realized the lessons I’ve learned extend to my business and to SMBs who are my current and future clients. In many of our IT due diligence engagements, we often come across the topic of key man risk which in too many cases, highlights the dependency on one or a short list of a few key resources that have deep knowledge of the business, systems and typically a long history with the company.

Needless to say, whether this is the owner, executive, manager, or your administrative assistant, having a game plan for key members that you can’t live without” needs to be understood and comprehended in a plan. The plan should be formalized and communicated to those who are involved and should include documentation of passwords, procedures, practices, responsibilities, and confidential information essential to the business. Below are a few others to consider regardless of whether being brought on by a major surgery in my case or because you want to take stock in your business and personal affairs.

1. You can never be prepared enough, but need to be aware of the implications and burden as an entrepreneur and the blurred lines between personal and business.
2. You can’t do it all alone, rely on and trust your team and communicate with intent to all key parties including essential staff, clients, partners and other key stakeholders.
3. Don’t underestimate the legal and tax side of things. This input and expertise are extremely valuable so make sure that you have trusted partners on your side.
4. Don’t wait for a crisis to validate and pressure test your business and operating model. Plans should be subject to periodic review and adjustment
5. Identify your “key man” risks as it relates to your business and put in place a contingency plan to prepare for the unexpected.

[Originally published on itallyllc.com]

Search for quotes about debt and you will find this from American businessman and author, Robert Kiyosaki, “10% of the borrowers in the world use debt to get richer – 90% use debt to get poorer.” The glaring takeaway here, avoid debt at all cost. But wait a second. Can debt make you richer? Can debt be a good thing?

2020 has turned the world upside down. Small business owners are among the hardest hit. The pandemic and resulting economic disruption have challenged SMBs, undercutting established business plans and negating processes leaders have developed and relied on for the health of their businesses. Managing technology, where SMBs are typically at a disadvantage to large enterprises with greater resources, needs to be reevaluated. When disruption resets the score in competitive markets and everyone is, more-or-less starting over, there can be opportunity in reassessing strategies and assumptions.

Technical debt is a concept in technology management that is similar to financial debt. It is the backlog of work and support needed to correct errors and shortcomings in a product built by cutting corners and with other expedient measures to speed release to market. In effect the developers borrow time that would be spent on complete, error free design and development to get product to market early. The interest on that borrowed time is the added effort to work down the backlog that could be directed at new projects. The difference between technical debt and financial debt is that the interest is not paid to a bank or outside entity but is paid with the internal resources of the business.

Technical debt (Tech Debt 2.0®) can be unintentional (poor practices, inexperience), evolutionary (aged infrastructure, obsolescence) or intentional, a deliberate choice to borrow time for competitive advantage.

The disruption in today’s environment, given new customer needs and desires, the constraints on customers and providers brought on by the pandemic have created new market opportunities that will be lasting and lucrative. Timing is essential and the new market’s requirements are emerging and not clearly defined. An SMB could benefit with the assistance of a design and developer partner with an insider’s perspective.

In my research on Tech Debt, I interviewed a consultant who worked with a firm developing a mobile application for retail sales in the floral sector. The product had good prospects and the enthusiastic backing of investors. The development team however, were reluctant to release anything but a product complete with the full functionality they envisioned and superior performance and reliability. Projected deadlines were established and repeatedly missed as the team added feature upon feature and subjected each version to rigorous regression testing. Weeks turned to months as investors lost patience and interest and similar products began to surface in the market. Perfect had clearly become victor over good and an opportunity had wilted away.

Our interview then led to exploration of intentionally incurring Tech Debt via a design strategy known as Minimal Viable Product (MVP). An MVP strategy invites technical debt by borrowing the attention of the potential customer base to act as a partner in the design and development of the application. Careful and deliberate priority is given to the customer who is presented with an application pilot containing valuable but minimal features. The internal developers formalize a hypothesis about the value the pilot contains for the customer. The customer benefits from that initial valuable functionality and provides feedback as to how the pilot should evolve to provide the next incremental value.

From here on, developers follow the customer’s lead modifying the hypothesis, effectively testing the stream of high-fidelity feedback from the user community as the product evolves. It is important throughout this process that the developers concentrate on the needs of the customer and are not distracted by the underlying technology or changes in the technology environment. That focus on the customer is now the “interest” being paid to service the tech debt. If you pay down this debt and the application becomes a success in the market you will have successfully incurred tech debt and gained a return greater than if you had remained debt free. Likewise, if the potential customer base fragments or the requirements diffuse beyond capabilities to the point where your return on investment diminishes, you will have early warning and can disengage and apply resources to other projects and initiatives.

This example demonstrates how a business can use tech debt to their benefit. This is especially so in an unsettled environment where there is opportunity to strike out on new ground and leverage new factors in the marketplace. Similar to financial debt however, intentionally incurred Tech Debt needs to be carefully monitored and managed.

Here are some pointers to help when using intentional Tech Debt as a strategy for product development.

• With the customer driving product development, you will build a significant backlog of work that needs to be completed. That means you need to carefully scan and monitor the customer base and market.
• Formally identify the size of the initial opportunity you envision. Document the size and timing of the revenue opportunity.
• Track the participation and input of your development partners. Be aware of fragmentation or of one or more segments developing the need for specialization not shared by the general population. (Adobe Inc. encountered this as high-end commercial customers developed sophisticated graphic requirements not shared by desk-top-publishing consumers).
• Even though the customer is driving development, be wary of scope creep that could lead to requirements outside the bounds of the target opportunity.
• Monitor your Tech Debt backlog and make sure it is in proper balance with the market growth opportunity. Make sure your potential upside is worth more than your debt obligation.
• Avoid the temptation to capture the last marginal dollar. Obsolescence and advances in technology will add to the Tech Debt backlog and block new opportunities.

[This article was originally published on databirdjournal.com.]

Years of experience working in finance and technology at large, mid-sized, and small businesses have taught me that business leaders face real challenges managing the technology their company needs to operate effectively and stay competitive. This is especially the case for small and mid-sized businesses (SMBs), which typically do not have the resources available to large enterprises. The challenge has grown significantly in recent years as businesses have adopted technologies to meet the expectations of their customers and to compete for advantage in the digital world.

The challenge is not necessarily in deploying new applications or platforms but in managing investment in technology and balancing that investment with other business priorities. Striking that balance means recognizing and managing technical debt.

Technical debt is similar to the financial debt a business can incur through salary and benefit commitments, plant and equipment payments, and loans. But there are critical differences. Unlike financial debt, technical debt is not paid to outsiders: It is debt a business owes internally that needs to be paid with internal resources such as time, diverted funding, market opportunity, and competitive standing. Also, unlike financial debt, technical debt is not clearly identified by the reporting built into a business’ financial and accounting practices. Unless it is routinely monitored and measured, it can accumulate unchecked and become a destructive threat to the future of a business.

Initially, technical debt was defined as defective code released to rush a product to market. Today with the widespread adoption of technology, the expanded definition of tech debt, or Tech Debt 2.0®, includes any liability incurred in the development, acquisition, use, and retirement of technology, from hardware and software systems to the skillsets needed to support them. Just like the evolution of technology over the past several decades has occurred from mainframe to client server to the internet and now the cloud, Tech Debt 2.0 has steadily grown smarter, stealthier, and more sinister.

Tech Debt 2.0 can be broken down into three main types:

Unplanned Tech Debt is unintentional. It typically stems from flawed practices, such as insufficiently trained code developers using overly complicated, undocumented, and unsupervised coding techniques. Poor communication between parties in preparation of requirement specifications and unforeseen changes to product requirements can also be factors. Unplanned tech debt often occurs in the beginning stages of a project and, if recognized, can be corrected without overhauling or scrubbing a project.

Creeping Tech Debt is sneaky. It may initially be non-existent in a new application or piece of hardware infrastructure. Over time though, obsolescence takes its toll. Changes to the needs or size of the user base reveal weakness in the design. Performance issues begin to increase. Increased incidents of downtime and time spent on maintenance drain the productivity and morale of technicians and engineers. At the same time, CTOS and CIOs face an uphill battle convincing the C-Suite to invest in replacing an infrastructure that has worked in the past and continues to work, if not optimally.

The way to combat creeping tech debt is to highlight the creep and its costs. Track time spent on staff performing rework, doing maintenance, and fixing the same issues over and over again. Track the time this work takes away from progress on new projects and product development. Measure the number and duration of failures. Communicate the effect of these incidents on customers to departments throughout the business. Correlate rework time and downtime to staff turnover and productivity measures. Benchmark technology performance and investment against industry best practices. Periodically review application and equipment portfolios. Know and communicate the life cycle status of the business’ technology. Include phone systems, physical plant and electrical components.

Intentional Tech Debt has the potential to be good for a business — if approached with balance. There is a constant tug of war and tension between marketing and technical development. Marketing product managers want to move product to customers as quickly as possible. That is key to capturing market share and gaining competitive advantage. Technology developers want all the time and information necessary to design, build, and test products of the highest quality with all the performance characteristics and capabilities a customer could envision. Give developers their way and the “perfect” product might well be late to market and just one of a number of similar products among leading competitors. Oh, and in the time it took to build and exhaustively QA that product, customer requirements might well have shifted.

A middle ground addresses time-to-market considerations while delivering customers a minimally viable product, with full disclosure that it lacks certain desirable features or may contain “bugs.” Accepting intentional tech debt has let the product get to market first or, at least, early. It has let customers benefit from the initial product capability and has given them a powerful voice in the product’s evolution, letting their user experience refine further requirements and priorities. Intentional tech debt has recruited the customer as a key part of future development and freed the technology developers to concentrate on evolving features instead of trying to discern from afar what the customer might want next. Tech debt deployed in this manner places the technology developer in the perfect position to exercise the agile methodology.

Different kinds of Tech Debt 2.0 lurk in all kinds of businesses, and even the most brilliant among us can miss what’s right in front of us. Like other business disciplines, technology departments require monitoring, measurement, and management. Implementing a comprehensive diagnostic provides unique insights into the causes of Tech Debt 2.0 and highlights areas that need improvement. The results reflect your company’s level of technomic health:

• Excellent: Tech Debt 2.0 is being proactively managed jointly by the business and the tech team with a strong focus on innovation and customer experience while maintaining operational excellence.
• Good: Tech Debt 2.0 is proactively managed jointly by the business and the tech team and shows little or no negative impact on business performance.
• Fair: Tech Debt 2.0 management is a mix of reactive and proactive, is led by the tech team, and shows some signs of negative impact on business performance.
• Poor: Tech Debt 2.0 is reactively managed by the tech team and has significant impact on business performance.

Beyond any specific technology or group of technologies, Tech Debt 2.0 is about awareness of the role technology investment plays in determining the viability, success, and existence of an enterprise. Effective Tech Debt 2.0 management enables reaching a balance of investment and prioritization over time and in response to the dynamically changing environment — a priority for not only the CIO but all C-Suite occupants and stakeholders.

[This article was originally published on builtin.com.]

Michael C. Fillios believes that every business leader, and particularly leaders of small and mid-sized businesses, needs to be well-informed and actively involved in managing their company’s investments in technology. As a  consultant, he brings his extensive experience as a global business and technology leader and entrepreneur to advise his clients on leveraging state-of-the-art tools, taking cybersecurity seriously, and avoiding escalating debt. We recently sat down for a brief interview. Here is some of our conversation.

Tell us your name and a little about yourself.

My name is Michael Fillios. I am the founder of IT Ally, an IT and Cyber Advisory firm serving the C-Suite at small and mid-size businesses (SMBs), based in a Cincinnati, OH.  In 2020, I also founded the IT Ally Institute, a nonprofit organization that provides SMBs access to knowledge, research, and practical tools to improve their tech bottom line. My new book, Tech Debt 2.0®: How to Future Proof Your Small Business and Improve Your Tech Bottom Line, leverage my 25-plus years as a global business and technology leader in multiple industries, including manufacturing, pharmaceuticals and banking, as well as a startup entrepreneur and consultant. My passion is serving privately held and family-owned businesses by helping them to grow, be secure, and to maximize the value from their technology investments.

What exactly does your company do?

Our fundamental purpose and mission at IT Ally and the IT Ally Institute is to play a significant role in future-proofing SMBs. Until very recently, SMBs comprised 99.9 percent of businesses and 47.5 percent of private-sector employment in the US. Sadly, SMBs have taken a tremendous hit in 2020, with the COVID-19 outbreak presenting unexpected obstacles to their success and survival. How SMB owners and C-suite leaders have deployed technology is turning out to be a major factor in how, or if, their company will survive those challenges. Therefore, we leverage our amazing experienced team of advisors, deep subject matter expertise, and our proprietary diagnostic tools, research, and thought leadership to assess the effectiveness of an organizations’ IT and Cyber capabilities and provide leadership services to bridge the internal gaps that often reside in the C-Suite.

What were the biggest challenges you have faced and how did you overcome them?

My biggest challenge, and one that defined the trajectory of the rest of my personal and professional career, was navigating my childhood and teen years growing up in the Bronx, New York, during the late 70s and 80s.  Don’t get me wrong—I wouldn’t change this experience if I had to do it again, as it provided a master’s level education on being street smart and reading people and situations around me. However, in many cases, the path for my peer group was one that led to drugs, crime, or careers that did not require education beyond high school. As a result, I defined a unique path that was grounded by sports (hockey), a rigorous work ethic (from my dad), and a desire to achieve a better life than my parents and generations to come. This began with my decision to attend an all-boys Catholic high school rather than the local public school and working to help my parents pay tuition, while not being Catholic; I was born Greek Orthodox! Many years later, I still attribute this to the biggest course correction in my life, which I credit for being in the position that I am in today.

What piece of advice do you wish someone had given you at the start of your career?

Life experience matters. Education is important and necessary to get in the door in many professional careers, but it doesn’t define you. As time goes on, people generally value your experience, including how you managed your failures, and these accumulated events will provide unique perspectives that cannot be taught. Also, risk-taking is expected if you want to have an impact in life, personally and professionally. Embrace it, learn from it, and run towards it with eyes wide open should you be given the opportunity. And finally, consider your legacy objectives much earlier in your life and make decisions that keep you on a path to achieve them.

Follow him on social media:

Twitter: https://twitter.com/mcfillios

LinkedIn: https://www.linkedin.com/in/michaelfillios/

[This article was originally published on kivodaily.com.]