Is IT these days just Electronic Data Processing?Is IT just a supplier and operator of a commodityHow much business does IT do?Does the CIO LEAD their organisation?
Most IT people do not see these words: “Without fuss”, “Involved” and “Appropriate”. For most CEOs these are the most important words.
IT’s delivery of the technology that runs the business is seen by CEOs as backroom, hygiene factor stuff. And this doesn’t ADD value – It might maintain value, but so does electricity, sewage, water, etc.
Business wants IT to help them increase their momentum.And on CEO said leadership is: New products, new markets, new channels – Full stopIs today’s IT involved in improving business results actively, and does IT help their organisation develop new products markets and channels?
One Managing Director asked us how much time IT was spending in each of these areas. (Not cost). Our research indicates…. (next slide)
IT is currently spending most of their time in delivering the technology.If there’s a challenge to this breakdown its most often that it is weighted too much in the IBR and IL space.But CEOs want a different profile of activity from their IT departments.
Making the change is NOT easy – It means new IT organisation, using different skills, and doing different things. It means resetting the function of IT – It’s role, posture in the organisation, mandate and funding priorities.
So today’s in-house IT functions seem to be technology focused. Not focused on business wants, on “I” not “T” and on the not on commodity of technology.I believe that IT needs to rebrand itself into ACT. The T = 20%, the A= 60% and the C=20%.CEOs want a different profile from Group IT functions as well: T=10%, A=40% (common cross organisational systems), and C=50%So the role of regional IT functions differs from the role of the corporate IT function as well.
Here are some ideas that I think will help IT move towards ACT.But fill in your own ideas as well.Once you’ve made the decision to move from “T” to ACT the opportunities present themselves.
Firstly IT can’t vote itself into the ACT role.They need to have the deep ‘no holy cows’ discussion about what business wants from them. And limit their ‘yes-but’ responses.Trust is NOT about delivering against SLAs. SLAs represent less than 30% of ACT’s commitment to their organisation.Have the discussion. I have put in a bunch of ACT principles – set in stone?
CIOs set themselves up for failure by talking costs. They give business only one topic of conversation. Talking costs does not talk to business wants. The use of IT or even the information element of IT. It drives the conversation back to commodity speak. Commodities are something you compare prices against. ACT is about use, Information, and about business results.One MD said to me: “You IT people act like librarians – you buy books, catalogue them, track them, store them, even fine us when we bring them back late…. But you’re damned if you’re going to read them”. Peter Drucker again? No I in IT.
This is the ‘crocodile graph’. If the crocodile’s mouth is open (the momentum and IT cost lines diverge) then IT is probably doing well in the cost domain. But the real issue is the business context in which the IT costs are incurred.One CFO told me that he had as much money as IT wanted. He just needed to understand what these funds were doing for the business. And his CIO seemed unable to tell him… So no funds available for IT. Sorry.
There is ‘white space’ in any organisation that IT can claim for themselves. I also call this the latent strengths – for example IT is great at mapping processes, but what happens after the system is delivered. Who tracks process change, who optimises processes? Also IT is at the centre of information flow in their organisation. What are they doing with that information – just processing it for the business?IT can play a role in driving business measures – but they need to start with defining IT in terms of business performance.
Leadership is about managing meaning: E-mail might mean great things to the average organisation, but it is the kiss of death to post-office. In the same way Ipads, and Kindles may be the death-knell for paper producers.However just identifying a technology that means something to your organisation is pointless unless you can manage the organisation’s attention. You need to conduct impact studies, feasibility and pilot projects to get the attention of business. Also if you don’t manage ACT in a business-like way, then don’t expect business to pay attention to you – you’re a bystander department.And I’ve talked about managing trust.
This slide is deceptively simple. To get the “without fuss” bit right, IT has to rethink everything about how they deliver technologies.
The next series of slides talks to the completeness of IT’s perspective. We often present one month’s data, or even one year’s data. We need to track all system’s life-cycles for the entire life-cycle.What also often happens is that we allow business to cut development costs, but the on-going cost burden is high. By cuting development costs, we often skimp on testing, documentation, and move functionality into phase two. This is likely to result in a much higher operational cost over the life-cycle of any system that we put in place.But who shows their business this view?
This is a cumulative view – and we’ve added the benefits (or expected benefits)
However benefits realisation is often patchily implemented – hard political decisions have to be made, change management has to be implemented….
…..And we seldom get all the benefits that were postulated…
Add the ‘cut costs during development’ view…
And put it all together – costs cut during development + delayed and incomplete benefits means that IT doesn’t and cannot add value.
Moving from IT commodity supply to ACT means that skills and competencies change dramatically. ACT manages the IT supplier, they don’t deliver the technology.
If you outsource – the IT supplier – then your role changes. Go for service and risk reduction as well as possible cost efficiencies.You can ‘import ‘ IT maturity. But you need to test for this maturity before selecting your supplier. The cycle for securing IT should be sourcing the service on demand, or buying an off the shelf product. And only when all avenues have been exhausted should you build something. (Even then, get someone else to build it for you).
Business will only respect and trust IT (therefore IT can only move to ACT) when IT runs themselves in a business-like way.So ask the ‘not holy cows’ questions as to what is the business of the IT department.
What to do?Choose something to do (explore all options, and prioritise), then do it well. Don’t try to do everything – you will fail.Also realise that business has its priorities and imperatives – they won’t wait for IT to get its act together – they’ll just bypass the IT department (Remember the bystanders?) And this is even more likely in today’s world of SaaS, off the shelf, and mobility.It’s almost too late for IT… You have to think radically differently about yourselves if you are to catch up, let alone get ahead of the game.
We have an IT initiative prioritisation model that puts the decisions into business hands – they can make decisions with confidence using this model.The model obviously goes much deeper than this – simplified yes, but not simple.
If IT doesn’t talk finance, they might as well be mute. Notice I don’t say talk costs. Talk finance… in all its forms
We haven’t time to go through the concept of IT intensity – but understand that it’s the business perception of how much technology business needs to: Run the business, or to thrive, or to bypass competitors. If business wants to use IT competitively, then they must fund IT appropriately. “You can’t cut costs to greatness”.BUT IT MUST EARN THE FUNDING!
These are all the principles stated before. On one slide.