05 Mar Mark McDonald at Fusion 2008: Shift focus to distinctive IT solutions
Mark McDonald has delivered this speech before, but this time it had a different urgency.
One of the leading advocates of IT as a driver of business growth, and CIOs as business leaders rather than IT leaders, McDonald energetically led off the Fusion 2008 Symposium with a call to abandon generic IT in favor of distinctive technology – solutions that contribute to an organization’s competitive advantage.
McDonald, group vice president and head of research executive programs for Gartner, Inc., has defined “generic IT” as technology that results in no competitive differentiation.
Generic versus strategic IT
In what he jokingly called an opening tirade, McDonald posed the following question: what is the opposite of generic? Try strategic, McDonald said. Over the past four years, the IT industry has, in effect, deregulated. There was no formal announcement or Congressional hearings – it simply happened. Four or five years ago, when a business was looking to do something relative to technology, where did they turn? They had one choice, McDonald said – the captive IT department.
In contrast, we now face an environment of unparalleled levels of choice – software as a service, platform as a service, outsourcing, and the like. “The opportunity to get capital-intensive resources relatively quickly has completely transformed IT,” he said.
Referencing a 2007 Gartner survey of CIOs, McDonald said they identified three top challenges – rising costs associated with inflation, government regulation, and slow economic growth. McDonald said the world is not going to remain stable, yet too many IT organizations and the business peers they work with have rewarded generic IT. They put technology considerations associated with cost, quality of service, and risk ahead of business value. Generic IT is not necessarily about buying commercially viable software and services, he said, it’s a vanilla mindset of “we can’t do that.”
One of the things that has to change in the IT profession, McDonald said, is the view of IT executives and business executives that information technology is an issue of control, stabilization, and consolidation. It’s one of the reasons why IT departments have been ranked ahead of corporate counsel as the “deal prevention unit,” McDonald said.
Barriers and non-alignment
CIOs have to put distinctive solutions and the business value they create ahead of purely technical concerns, but there are barriers to overcome. Among them: the probability that the business case management process in 90 percent of companies is “hideously broken,” McDonald said. He challenged CIOs in the room to create metrics such as “business value created this month,” “business value expected next month,” and “business value year-to-date.”
Such metrics shift the discussion from the creation of technology solutions to more of a benefits realization process. These pieces of data are changing the conversation away from a generic model to a source of distinctive solutions that can drive business growth. McDonald called the push toward distinctive solutions the path forward in a new world of choice.
“CIOs have to focus more effort on driving some of these distinctive solutions,” he said.
Gartner also asked CIOs about what the business is expecting of them. Number one was improving business processes, number two was attracting and retaining new customers, and number three was helping to create new products or services. There is no direct IT in those responses – data protection and privacy was number 19 – because the list is externally focused. The notion that a CIO will manage 80 percent of the time for stability and 20 percent of the time on strategic considerations is not aligned with 2008 business expectations, McDonald said.
Gartner also asked CIOs about their major strategic thrusts, and found that the top responses were linking business and IT strategies, delivering projects that enable business growth, and attracting, developing and retaining IT personnel, which are common to the majority of business organizations.
Making a difference
To craft distinctive solutions, CIOs must have enough business acumen to understand why customers value their product and services. What is it that customers can recognize and use as a means of choosing your business? CIOs that know the answer to that question, McDonald said, know how to make a difference.
“The reason customers choose you is the difference,” he reiterated. “It does not require a written strategy. Do you know the reason customers choose you? What is part of the differentiation? What are you doing differently?”
There is a strong connection, he added, between IT effectiveness and business effectiveness, and the good news is that companies are starting to make a commitment to distinctive solutions.
“For the first time since we’ve been looking at this issue, enterprises are willing to invest in distinctive solutions,” McDonald said, and they are putting more money behind transformational projects as opposed to generic activities.
Fusion factor
Among the questions every CEO should ask, and every CIO should be able to answer, is “how is the business managing the full scope of its initiatives?” This includes the management of business process transformation. The extent to which they do this will determine whether the initiative is viewed as a business project or merely an IT project, McDonald indicated.
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