20 Aug Supercharge business value with breakthrough IT
Early one mild July morning, the CEO of a large consumer products company had already been awake for several hours. After more than two years of hard work by hundreds of employees, consultants, and software vendors, the fruits of their labor were finally about to pay off.
They had implemented a massively complex suite of software packages to manage all aspects of the company’s business, from sales to finance. While several months behind schedule and faced with ballooning costs, the end was finally in sight. The CEO breathed a cautiously optimistic sigh of relief and then the phone rang:
“We can’t ship orders,” he was told.
Later that year, disappointed shareholders were told that the $150 million loss on the company’s books was largely due to their failed implementation and inability to complete delivery on hundreds of millions of dollars of seasonal merchandise.
International Data Corp. estimates that companies worldwide will spend over $1.8 trillion dollars on information technology every year, slightly more than the Gross Domestic Product of France or the United Kingdom. Much of this investment is in large, strategic IT projects: fixed-duration endeavors designed to implement new systems and processes to improve corporate performance. The companies that execute successfully rarely advertise that fact, other than a sentence or two in a press release, preferring to keep their new systems as a competitive “ace in the hole.”
The less fortunate corporations quietly write off their IT foray, burying the wasted expenditure in a note on their financial statement that obscures the squandered millions of shareholder’s investments. In extreme cases such as the one above, the results may push companies to the brink of financial ruin.
The fall out
The executives responsible for the success of corporate IT have a difficult role to fill. The Board of Directors and CEO regard any large IT investment with a healthy dose of skepticism after the boom/bust cycle of late 1990s. The CIO often is seen by peers as a glorified network administrator and not a visionary or executor of corporate strategy, while IT usually remains a second string player to the sales or finance organizations of most companies. Similarly, and all too often, IT regards the finance and executive arm as a bunch of bean counters and Luddites.
While reams of articles and books have been written on various IT methodologies, or the latest and greatest technologies, there is a dearth of knowledge combining implementation and the associated business strategy, from developing an organization’s project portfolio to ensuring each of its components delivers strategic value. This is knowledge that CIOs need and must focus on far more than “best practices” on how to run a help desk.
In a market dominated by outsourcing, and elimination of divisions that are perceived as cost centers rather than profit centers, the successful organization is the one that uses IT to generate measurable value to the corporation while focusing the minimal amount of attention on non-strategic ongoing operations.
Some of the keys to allowing CIOs to break through the perception of technologists, and drive measurable business value are to:
• Make a push to “sit at the table” with the CEO and CFO, and move from a technologists to an integral part of developing and delivering business strategy. Work to transition from a “conflict based” relationship between operations, finance, and IT to a value-focused relationship where IT is a tool to deliver business results, rather than an organization to implement the latest and greatest technologies.
• Seek to take a multi-disciplined approach to proposing, selecting and delivering large IT projects that generate the maximum return on investment, regarding these projects as components of a integrated “project portfolio,” rather than stand-alone and unrelated entities.
• Deliver a rigorous approach for controlling project costs and timelines, providing quantifiable value to the organization. These projects are huge investments and any CIO who can clearly articulate project risks and help control project expenses truly will save the corporation and its stockholders money.
The IT savvy CIO
IT is uniquely positioned within most companies as it touches nearly every business unit, and has a deep understanding of their processes and concerns therein. A savvy CIO will leverage this relationship and knowledge.
Breakthrough execution in this area will do wonders for the company, and the CIO’s career.
Previous articles by Patrick Gray
• Patrick Gray: Death by deliverables a project management pitfall
• Patrick Gray: With tech implementations, it’s NOT the methodology, stupid
• Patrick Gray: Fire your CIO? If he’s not implementing strategy, show him the door
• Patrick Gray: Five steps to buying the right package software
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.
WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.