By Ben Piper
Dec. 13, 2012
Both CEOs and CIOs are wrong about Information Technology’s (IT) value and its purpose in the organization, and it’s costing them dearly. IT’s only value is in achieving and sustaining valuable business goals at a substantial return on time and money. But IT can’t meet business objectives effectively with technology if it’s doing anything else - including “innovating” and fulfilling service requests.
The CIO sees IT as a strategic business partner that drives innovation, whether that means improving existing business operations, developing new products and services, or identifying and capitalizing on new opportunities. Consequently, the typical IT organization doesn’t focus exclusively on using technology to effectively achieve business goals. Instead, it focuses on making improvements that offer vague benefits to the business. For example, IT may increase the performance and stability of its systems, reduce costs, achieve an industry certification, or upgrade software and systems to enable new features. But if these improvements don’t meaningfully contribute to a specific business goal while delivering a healthy return on investment, the business will not perceive the value because it’s simply not there. Value is always in the eye of the person paying for it.
It’s not enough for IT to simply make improvements and come up with new ideas. The CIO who doesn’t understand this thinks that IT is providing tremendous value but that the rest of the business simply doesn’t understand it. Consequently, the CIO tries desperately to “communicate IT’s value” by offering up silly and arbitrary metrics like system utilization and uptime, total cost of ownership, compliance with industry standards, or projects completed. The rest of the business doesn’t care because those metrics don’t speak directly to business outcomes. Quite often, such metrics are a smokescreen to conceal the fact that IT is spinning its wheels.
Both the CEO and CIO see IT as a provider of technology services. But what neither realize is that much of IT’s waste comes from the very thing that they both consider to be a fundamental tenet of IT’s mission - fulfilling service requests from the business. The problem with IT blindly fulfilling service requests is that many of them cost the business countless hours and dollars without yielding any return. Even worse, no one really knows just how much time and money is wasted on such requests. Yet the CEO expects IT to fulfill them all the same without requiring any tie-in to measurable and valuable business goals. This really isn’t surprising. After all, you don’t share your goals with a service provider. When you order natural gas service for your home, you don’t tell the natural gas company that you’re going to dry clothes, cook pizza, and heat your water. Why should you? It makes no difference.
This is why the CEO views IT as a cost-center. The CEO doesn’t expect IT to show an ROI, let alone a great one. Having been entrusted with protecting the business’ financial interests, the CEO tells the CIO to “do more with less.” The IT organization tries to “squeeze” out more value by pushing its people and technology to the limit. Ironically, this results in worse performance and increased waste, and renders IT’s infrastructure less flexible to adapt to future needs. As IT’s perceived value continues to diminish, the CEO continues to tighten the screws. I call this phenomenon the Misalignment Cycle, and I’ve seen it occur in organizations of every shape and size. The very behavior that’s intended to fix the problem is the behavior that’s causing it! Fortunately, there are things CEOs and CIOs can do right now to start realizing real, tangible value from IT.
Tips for CEOs:
- Share business goals and strategies with the CIO, and make it clear that everything IT does should be in support of those.
- Don’t accept “innovative” ideas from IT, no matter how good they may seem, unless they contribute to business goals and deliver a healthy return.
- Encourage IT to say “No” to requests that don’t meet the above criteria.
Tips for CIOs:
- Don’t blindly fulfill requests. Always ask, “Why?” to get to the specific business goals behind every request.
- Don’t try to “communicate IT’s value” with arbitrary metrics. This is a waste of time. Instead, communicate IT’s contribution to tangible and intangible returns on investment. If the return isn’t there, just say so.
- Stop doing things that don’t make a substantial contribution to business goals.
- Avoid doing more with less. Squeezing every last drop of usefulness out of your technology may reduce costs in the short term, but it makes your organization slower and less flexible over the long-term.
Ben Piper is the President of Ben Piper Consulting, a consulting practice that helps grow businesses at the speed of light. He has helped organizations intelligently leverage technology to increase revenue, improve customer and employee retention, boost productivity, and execute their goals faster. He can be reached at 678-561-4236 or [email protected].
