CIOs spell out strategies for success

IT directors need to focus on five key areas if they are to convince the board to continue investing in IT.

IT directors need to focus on five key areas if they are to convince the board to continue investing in IT.

A panel of chief information officers spelt out how to make IT more business focused during the Economist Conferences' Chief Information Officers' and IT Directors' Summit in London last week.

Involve the business in IT decision-making
Ann Neidenbach, CIO at Nasdaq Europe emphasised the importance of an IT leader understanding the board's objectives. IT people are prone to over engineering, but if an IT enhancement does not meet the business' objectives it is irrelevant. "Don't build a house when all the board wants is a tent," she said.

To ensure objectives are met Neidenbach said, "Make sure the business is involved in your decisions." To prove the value of a project enhancement she advised CIOs to use cost/ benefit analysis.

Distinguish between discretionary and non-discretionary spend
Laurence Holt, chairman and founder of consulting firm Quidnunc divided IT spending into two parts: infrastructure spending to sustain the business and spending on business enhancing IT. He said the main strategy for the former should be to minimise expenditure. For business enhancing IT the key was to show a return on the investment.

The two are closely linked -- without ongoing infrastructure expenditure organisations cannot grow.

Nasdaq's Neidenbach discussed one approach for justifying the cost of IT infrastructure. Last year she spent heavily on upgrading network switches. "Sometimes you have to spend a lot of money on infrastructure," said Neidenbach. "But the cost should feed into some revenue opportunity."

At Nasdaq, the investment in network infrastructure was to set against business growth. "You need to sell ['infrastructure investment] within a business framework," she explained.

IT as an on-going concern
One way to put IT at the forefront of the business is to spin off the IT department as a separate business entity with its own profit and loss account.

This was the approach taken by insurance firm Axa Group. Its global IT operation competes for business within the company. However internal IT departments do not always compete effectively with external IT providers, prompting business units to consider outsourcing a project.

In this situation Claude Cargou, a 10-year veteran CIO at Axa Group, who now heads the company's audit and risk management operation, said the IT department had to get across the old outsourcing maxim that it is dangerous to outsource a problem. "Outsource when you have a solution," he advised.

Focus on short discrete projects
Nasdaq's Neidenbach urged CIOs to concentrate on projects that can provide the business with discrete deliverables quickly. "One to two year projects are killers," she said. By scoping a project over three to six months Neidenbach said the CIO could manage the business' expectations more easily.

Make IT agile for business
Mikko Kosonen, senior vice-president for strategy and business infrastructure at Nokia, said a key driver for his business has been building an infrastructure that could adapt quickly to the fast-paced world of mobile communications. Nokia has used IT to create competitive advantage using open, modular architecture and reconfigurable business intelligence modules.

Other CIOs also emphasised the importance of software reuse and reconfiguring existing systems. Nasdaq's Neidenbach advised CIOs to "leverage existing technology in order to lower costs."

Axa's Cargou said he would not dream of replacing the company's mainframes. Instead he has surrounded legacy systems with middleware.

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