IT strategies should echo corporate objectives

When Victor Koelsch accepted the post of chief information officer at tyre producer Michelin in November 2001, he found that...

When Victor Koelsch accepted the post of chief information officer at tyre producer Michelin in November 2001, he found that chief executive Edouard Michelin needed to be convinced that IT generated value.

Koelsch told the GigaWorld conference that to do this he had to fundamentally change the behaviour of the IT department and the way the company used IT.

He set out to correlate the benefits IT delivered to the businesses against specific IT investment. "Business needs to be measured on your outcomes," Koelsch told delegates.

The Michelin IT department had traditionally been an internal services provider driven by cost, but in January 2003 Koelsch launched a programme of change involving strategy, governance, organisation, architecture, sourcing and competency.

"We are articulating an IT strategy that is absolutely aligned with the strategy of [Michelin's] business units," he said. Such a strategy needs to provide an IT vision five to 10 years in advance, driven by business needs. "We are now finalising the first IT strategy that has ever existed in Michelin," Koelsch said.

In January 2003, with the chief executive's blessing, Koelsch instituted a balanced scorecard benchmark that identified 12 objectives for the IT department that were linked to objectives in the balanced scorecard for the whole company.

"We have our own key performance indicators that aggregate to these 12," he said. These included understanding the business and entrepreneurship.

Koelsch also established governance committees, which validate IT architectures and measure how many exceptions to the overall architectural plan have been granted. "The idea is that [the number of exceptions] should be zero," he said.

IT has also helped the company move to a tightly process-driven business. "At Michelin, we use IT and a new governance model to speed the transition to a process-driven enterprise," he said.

Koelsch said the old IT department model was driven by the delivery of applications, but, "You have to be more oriented around how people use [IT services]." This involved putting IT department staff into business units at senior management level to understand how IT could meet the objectives of the business.

Any IT directors looking to take this route should get their own house in order first, Koelsch said. "It is a very difficult conversation to talk about value generation when people's PCs do not work very well," he said.

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