Who calls the shots when it comes to starting new IT
projects in your organisation?
Does the IT department come up with all the good ideas and then
get the company management to rubber-stamp them? Does the IT
department just wait to hear what the company wants, and then
meekly try to deliver it? Or is the IT department tightly
integrated in the corporate decision-making process, consulted on
difficult matters, and generally seen as a vital partner to the
rest of the company?
If you can honestly answer that you fall into the last of the
three categories, then read no further, because this article has
nothing to teach you.
However, despite all the talk we hear about aligning IT with
company strategy, it seems that in many companies IT still ends up
as the dog's-body of the organisation. It is asked to perform
miracles against impossible timescales, and then becomes a
convenient scapegoat when things go wrong.
One man who has studied the problem is Michael Gentle, a
solutions architect with
Compuware. He says the rot started to set in when IT
departments became service departments whose function is merely to
deliver what the company asks for, on time, on budget and to
specification.
"The client/supplier relationship turns IT into an order-taker,
so the emphasis is on doing the project right, not on doing the
right project.
"That would not be bad if upstream there were a rational
decision-making process. But this is not the case. Investment
decisions are usually made on the basis of executive influence," he
says.
And by executive influence he means it is decided by who shouts
loudest (what he calls "decibel management") or is prompted by what
the chief executive has read in a business magazine or
newspaper.
"Far from being the rational and structured process we would
like it to be, demand management is a nebulous combination of
decibel management and organisational politics," he says.
Gentle says he has observed this in a variety of industries, and
bears the "scars and stripes" of real experience to prove it.
The trouble with the IT department acting as a supplier to the
business, is that it has little incentive to go beyond the
specification that it is given.
The rapid pace of technological change also adds to the problem,
because companies are tempted to try them out before they are
mature.
Gentle is critical of the return on investment (ROI) exercises
that take place to justify going ahead with IT projects. "The
business case for IT is subjective, it is in the eye of the
beholder. Every new project is new, so the benefits tend to be
over-estimated, while costs are under-estimated," he says.
"There is no requirement to monitor the benefits over the
lifecycle of the application.
The ROI is just used to launch the project. Once it is launched,
then the business case is shelved."
The answer, he says, is for IT to become a strategic partner or
trusted adviser of the business, not just an order-taker. Gentle
says bringing about such a change to the business can be "a tall
order".
But if IT can become a strategic partner, there can be instant
consequences. Instead of just delivering to time, budget and
specification, the IT department can share risk and rewards. The
business can provide the IT department with an incentive to ensure
the project continues to deliver after the system is launched.
"IT should not sit in its corner and wait for requests to come.
It should engage with the business, using account managers, client
managers, business-relationship managers - whatever you want to
call them - to manage the relationship with the operational
department," he says.
"So if you are in charge of sales and marketing systems, for
instance, you do not just sit back and wait to be asked. You have
regular meetings to understand what their business objectives are,
challenge what they want IT to do, and propose alternatives. In
short, arrive at a joint decision about which project requests are
going to be funded. That is a trusted adviser status."
Decisions also need to be taken out of the CEO's hands, if that
is possible. A proper investment committee, consisting of both IT
and business managers, can properly assess each new proposal in a
more rational way, and since risks are shared, both sides have an
incentive to make it a success. Each project is scored by cost,
benefit and risk.
Gentle also recommends a portfolio management approach to new
projects. This means seeing individual projects not in isolation,
but in context with other systems, and categorising them against
different business goals - such as cost reduction, revenue
generation, or
regulatory compliance. That implies a far more rational
advisory role for IT in helping to set priorities and ensure
projects happen in the most logical way.
And finally, he says projects need to be subject to continuous
performance monitoring. "At the moment, the business case is used
to launch the project then it is forgotten," says Gentle. "But the
business case shifts all the time - you have to monitor the
benefits as well as the costs. If you find an application is not
delivering benefits, you stop it and kick off something more
promising."
If the IT department is in a client-supplier relationship with
the rest of the business, and you decide to stop a project, he
says, then it means someone made a mistake, and their head has to
roll.
So how do companies match up to Gentle's vision? All companies
have their own slant on IT and do things differently, and much
depends on the style and type of organisation involved.
For instance, at Scottish law firm MacRoberts, IT director David
Murphy has a fairly free hand to launch new projects as he sees
fit. He supports around 270 desktops at two sites in Glasgow and
Edinburgh, and has an IT department of eight people.
But, as he says, the sole concern of the fee-earners in the firm
is to have their systems up and running and to be able to get at
information when they need it.
He has introduced
Blackberries to allow users to receive e-mail remotely and says
this will be extended to let them access company files as well.
"Most of the ideas come from IT, but we also have a lot of smart
lawyers too who talk to their peers. The trick for us is to stay
ahead of the game, so that we can tell them what is good and bad
about some of the ideas they bring to us."
The situation can be quite different in the public-sector. At
Hampshire County Council head of IT Jos Creese and his team are
required to help meet public demand for more interactive and
joined-up services, but with static or shrinking budgets.
"In a typical year we will deliver over 200 projects, and we are
increasingly looking closely at whether or not those projects
individually are delivering the maximum possible value, not just
meeting the typical project measures of 'time, quality and budget'
targets.
"Benchmarking with the public and private sector, for example,
has not shown any organisation with a lower cost base for basic
desktop IT services than we are delivering. We are also adopting
ITIL on the basis that a repeatable and consistent way of doing
things will increase productivity and performance," says
Creese.
IT and the business work together on assessing benefits and
cost, he says.
"All projects should be considered in the first place as
business projects with an appropriate assessment of costs and
benefits - indirect and direct. Where judgments need to be made
about the unquantifiable benefits, this should be done openly and
transparently and judged on a business, not a technology basis. ROI
more often than not needs to be harvested corporately not in
individual service teams, requiring a considered approach to
business change across the organisation."
That kind of close working requires skills that may not be in
abundance in many IT departments. As Michael Gentle says, IT needs
people to act as account managers who can work with the individual
business departments and help to interpret and manage their
demands.
And once a project is approved, a competent project manager
needs to be found, which is not always easy, according to
Ian Campbell, chairman of the
Corporate IT Forum and head of IT at British Energy.
"People with those skills are few and far between," he says.
"
Project management can be complex and wide-ranging with lots of
parallel work-streams going on. You need to know how to ask the
right questions, make the right forecasts and get the plans right,
in order to make the overall programme come together properly. That
is why you see a lot of this going out to the consultancies because
they are used to doing a lot of project-based work."
Campbell says the other big challenge for IT is managing the
demands of the business, especially where a go-live deadline is set
from the start.
"There is a disproportionate emphasis placed on launch dates.
People set a date for a project, and that can take precedence over
everything else, meaning that other things can be compromised. If
you allow it to go live on the date but not when it is ready, then
the project is tarnished," he says.
Again, this comes back to good project management, and skilled
forecasting and continuous review during the course of the project,
to ensure it stays on track.
As he says, "Boring is good in project management - it needs to
be well organised. You do not want to have to call in the Red
Adairs at the last minute to rescue you."