Some miths and truths related to IT as a strategic asset inside companies.

1. IT: a corporate analysis Gianpaolo Tepedino Peluso

2. Killing myths

3. As long as companies see IT as supporting function they are doomed to see opportunities as spending only, instead of looking at them as investments. What companies need to understand is that the simple fact of acquiring technology is not enough to create competitive advantage. Companies that procure technology for the sake of having cutting-edge toys in house can find themselves with high spending, and with assets that are only a burden to them. Look at Friendster back in 2003, trying the latest server technologies, but failing to provide their customers with a good user experience. I agree with what Tod Nielsen said referring to the fact that for years executives were trying to get IT to be discussed in the boardroom, whilst now boards are focus on how to minimize spending on IT. The problem here is not about how much should be spent on IT, but about how to get the best out of this investments. For those institutions that failed to understand the value that IT could provide them by aligning initiatives in this area with the organization goals, by making IT part of the business itself, they should stop for a second and re-draw their strategy. They should focus on the transformational power IT has to enable collaboration between the people, fostering innovation, and by making available tools that allow for more informed decision making. IT is nothing more than a supporting function…

4. Two things that I found quite interesting are shadow IT and the percentage of money that is spent in maintaining and operating the organization systems and equipment (MOOSE). Shadow IT can provide small departments with the ability of putting in place software, or equipment to help them carry out specific functions whose impact would be limited inside the organization in a faster way. This flexibility will enable people to be more responsive and to get the best of IT also in smaller initiatives. Having said this, is also important to check that shadow IT is kept at certain level in order to foster larger/lasting projects with a longer term vision of the company’s goals. This supervision can help identifying projects that could be implemented across the company, taking advantage of the synergies among departments. The concept of MOOSE force people driving IT decisions, to be aware that their choices today will have an impact in the company’s future ability to assign funds, and invest on innovation rather than in keeping the existing stuff. When thinking about MOOSE and shadow IT, it becomes evident how agility, as well as flexibility are two must have characteristics in your company. Shadow IT & MOOSE: MUST kills in your organization!

5. In the past I helped the family business in upgrading the software and hardware, and I have to confess that I truly believe in the fact that putting in place the technology is the easiest part. The problem comes when you try to foster adoption, and people are reluctant to change the way they work. The common question that I got from my family at that time was: that thing is only slowing down our activities, why do we need it?. Only once I showed them what was the real impact: time saving, money saving, and supporting the internal processes they were a bit more open to the idea of change. As mentioned during the class, ROI and NPV are only a start if you want to measure success of IT initiatives. Innovation and processes (operations) transformation were boosted thanks to the way the software was asking them to input the information. Once I trained them in the tool, they were trying to mirror in real life what the application was telling them to do. Amazing. If you need technology (HW, SW) you go and you buy it; to make technology and people work on the same side… is by far the toughest part. IT: technology is the tough part.

6. Lot’s of people, including me a few weeks ago, think that the concept of first movers advantage applies also to the way companies procure technology. The truth is that it makes no sense to take so many risks: - Financial: when technology is first introduced tends to be more expensive. - Operations: products tend to behave awesomely good while they are tested in the development labs, but when they are launched and exhaustively used by customers, then problems start to arise. When you combine the two types of risks mentioned above, you get a major threat to the company: what if, in addition of loosing money because the technology you bought is not performing as expected, you start providing your customers (internal or external) a crappy service? Productivity going down, synergies not being tapped, customer service/support going crazy, frustrated employees. Let’s be honest, we want the good aspects of technology but we want it free of risks, and the truth is that we can have it. Let’s wait for early adopters to try it, make mistakes, and once is it becomes a robust platform (and prices have gone down) then we can decide if our company really needs it. Is not about first movers advantage, is about successful planning & execution. Design the IT function in business terms IT is like picking a girlfriend: the last one gets the ugliest one

7. Building on top

8. As any other essential area of companies, IT requires planning to ensure that the organization is able to carry out relevant initiatives to achieve their objectives, and also to better prioritize the projects inside their portfolio. By initially assessing the current scenario inside the organization, and understanding the goals of the company, a gap analysis can provide IT decision makers with the necessary insights to overcome internal deficiencies, and put in place the required tools and human resources to get them closer to the achievement of their objectives. IT Governance, and IT planning are disciplines that go hand-on-hand in the process of creating transparency, ensuring internal commitment, and paving a clearer path to success. IT a tool to better control & monitor the org. But who controls IT?

9. This is not the first time I hear this discussion, and the simplest answer is that, it depends. No absolute answer can be given, depends on the context, the organizational culture, and in the end it all goes down to finding the right trade-off between level of responsiveness vs. internal complexity. By centralizing the IT you are able to get a broader picture of what is currently happening in the company, how it is performing, and are able to reduce fragmentation (people, IT systems, efforts) and better align objectives with initiatives. By decentralizing, people feels more empowered, divisions “owned” their IT and have a saying in the decision making of what is the role of their systems on their daily tasks. This feeling provides them with an ability to respond better, and faster to changes in what the market is asking from them. Neither white, nor black… something in between. The most important thing I learned when making a decision between these two, is that mirroring your organizational culture is a good start, and most probably the final answer would be to go for centralizing some processes/data/people, while keeping others decentralized. Centralizing Vs. decentralizing: mirroring the org. culture.

11. Suppliers become strategic partners, they actually run part of your business. So if you spend years finding the right wife, spend sometime also reviewing your supplier credentials and see if they are the right ones. A great advantage of outsourcing derives from the fact that make costs explicit. This help to convey the message inside the organization that “nothing is for free”. This can be a starting point for “charging” your divisions (pay-per-use models) from the projects they want to carry out. Outsourcing: getting married with suppliers

12. With the advent of the “cloud”, and specifically with the fact that “SaaS” and “PaaS” are becoming widely spread offers, is getting quite clear that once again the role of the CIO/CTOs is about to change. Even though I have heard extreme people saying that this role will disappear in organizations, I disagree with them. This is a very similar concept as outsourcing, you might move out of the company certain tasks, but still you need somebody to control this suppliers and the service they provide. Moreover, also mentioned in one of the articles from www.CIO.com, CIO/CTOs will be the people in charge of understanding how data can boost revenuesand be used in smarter ways (name it business intelligence, processes optimization, choose the label you think best fits but we would be referring to the same thing). Even if HW and SW are offered as “services”, companies will still need IT policies, IT Governance, and IT planning. Commoditization of the technology in my opinion, will not hinder the strategic value that IT can bring to companies, because as we have said, IT is: Technology + People + Processes. CIO/CTO former managers of technology: time to focus on data

13. Hope you enjoyed IT. Gianpaolo Tepedino Peluso