Time for IT to lead from the front

The IT department exists to support business objectives, right? Well, not necessarily. In a world where technical possibilities...

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."

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