The IT department exists to support business objectives, right?
Well, not necessarily. In a world where technical possibilities
lead to business possibilities, there's a growing view that IT
should be setting the business agenda, not just following behind.
In its May report
Vendors' Guide to Europe's Tech Recovery,
Forrester Research observed that "the vast majority of European
CIOs report to the finance department, thus rarely gaining the
opportunity to take bold steps that drive innovation with
technology. But as companies grow IT spending ahead of headcount
and rely on fewer, but more highly skilled, staff, Europe's CIOs
will become more like technology innovation labs and less like
helpdesk farms".
Get in at the start
When US Web site CIO.com recently
listed its top five tips for chief information officers, "don't
start with the business plan" was number one on the list. "The CIO
needs to participate in the creation of that plan rather than
waiting for it," it advised. "CIOs play a crucial role in
counselling executive leaders about new business possibilities
opened by technology."
The idea of using IT to achieve a competitive edge has been around
for some time now, but it still isn't being reflected by the level
of IT representation at board level.
"Clearly there are examples of organisations that have
significantly changed what they're achieving through use of
technology, but they're still quite rare," points out David Feeny,
head of the Institute of Information Management at Oxford's
Templeton College. "It's hard to determine whether they're rare
because not many businesses have such opportunities, or because not
enough CIOs are stepping up to the task."
He believes, however, that for CIOs willing to grasp the strategy
nettle, the time is now: "As technology invades every corner of the
business, chief executives are more open to a relationship with
someone they feel they can trust on technology issues. There's much
more of an open door now for able CIOs than there was 10 years
ago."
Should you get involved?
The argument against IT
professionals getting involved in setting business strategy is
twofold. One, they know nothing about business. Two, they're liable
to wildly oversell the benefits of an IT-based approach in order to
be able to add the latest bleeding-edge technology implementation
to their CVs.
David Evans, a partner with consultancy Berkeley Partnership,
doesn't mince words when it comes to the question of IT setting the
business agenda. "Often if there's a vacuum in business strategy,
IT departments step in and start to set the business direction," he
says. "Overwhelmingly, they're no good at it and simply waste
shareholders' money."
But Feeny believes that criticisms of IT overselling technology are
unfair. "If you take the dotcom boom and bust, for example, the
villains of that era were often not technology leaders but the
media, which gave the board the idea that the future of their
company was at stake if they didn't embrace new technology, he
says. "Often, the CIO was bypassed and a new e-business division
set up because IT was thought to be full of old dinosaurs who only
understood mainframes."
Don't believe the hype
John Plumpton, senior business
consultant at consultancy Valtech, believes that IT departments can
provide a valuable reality check when strategy is being formed.
"Too often, unrealistic business objectives are set because
uninformed people have believed the hype about a new technology and
think it can change their business overnight - WAP and broadband
being cases in point," he says.
Even Evans acknowledges that "what IT brings to the table is ideas
and a knowledge of what is technically possible, plus an analytical
approach to problem-solving".
The increasing trend towards outsourcing of non-strategic IT
functions could free up the IT department to concentrate on adding
value through strategic technology consultancy.
"The IT department is increasingly pushing out functions like
payroll and e-mail that have to be there but don't add value to the
business," says David Kilpatrick, marketing director of consultancy
Edenbrook. "As a result, the role of the IT team will, I believe,
be redefined to focus on two elements: managing external suppliers,
and looking at how IT can add value to the business."
Talk up the benefits to the business
Yet in order to do
this, IT professionals need to find a way around the communication
problems that have so far prevented them from playing a more active
role in business strategy. Computer scientists aren't necessarily
good at explaining technical concepts in terms business users can
understand - let alone translating technology features into
potential business benefits. "Some software developers have PhDs in
arrogance - they've expected managers to learn their language,"
says Ian Graham of consultancy Trireme.
No CIO is going to get very far in influencing business strategy,
says Feeny, without first building a strong relationship with the
executive team and in particular with the chief executive.
But to gain credibility at board level, IT professionals first need
to gain the business skills that will enable them to talk the
board's language. "Executives won't really invest much time in
discussions with someone unless they have some kind of value to add
to their thinking, some sharp questions to ask, who can provide
some kind of high-level analysis of the context the business is in
and of alternative options and strategies," Feeny points out.
Few CIOs get formal business training, and few have business
qualifications such as MBAs, but Feeny argues that by adopting an
outward-looking attitude they can easily pick up a wealth of
business know-how along the way.
"Successful people have understood that being in the IT function
gives you an excellent platform for learning about the business,
because in helping develop systems to support the business they
have an opportunity to understand how each function works" he says.
"Being in IT actually offers someone who's alert to the opportunity
a way to get a real education in business."