On this past Friday I had the good fortune of spending the afternoon at a big local CIO event called TechTomorrow hosted by TechColumbus. Of the 350 or so attendees, it appeared that most of them stayed for the afternoon’s main session: the CIO Value Forum.
As you can infer the main topic was value. Specifically, IT’s value to the business. As a tech journalist covering IT for over 10 years now this perennial topic never seems to get old — nor resolved. There are a number of reasons for this but, the two main drivers are the business climate IT must work with (and therefore IT’s budget) and the technology the business wants IT to deliver within that budget. Both of these drivers are in constant flux and are often at odds with each other.
The main focus of Friday’s panel discussion was helping the business survive the current recessionary climate (technically the Great Recession is over but these panelists didn’t seem that impressed with the turn-around to date) and come out swinging when things really do start to get better. As you probably already figured the No.1 theme was cost control. While IT can do a lot when it comes to reaching customers better, opening new markets, streamlining business process, etc. it has to do so at a cost that is justifiable in business terms – both balance sheet and lexicon.
To that end, many of the panelists – CIOs of multi-billion dollar global enterprises as well as CIOs of smaller more regional players and everything in between – echoed a similar sentiment: Get IT, finance and business in the same room, talking the same language. Again a perennial topic but an important one since each group can educate the other on the limitations as well as the opportunities each brings to the table.
Working together toward the strategic goals of the organization is always the main goal of these get-togethers; the “why”, if you will, of what your organization is and does as opposed to the “how” of each siloed domain. This will help focus everyone on “outcomes that are meaningful to the business”, as one CIO said. This will also ensure your IT spend has “cross-function alignment”, according to another.
As far as implementing the decisions reached at these meetings, project portfolio management is a good place to start. So is attaching revenue numbers to IT business cases. Most IT projects, even the ones sponsored by the business, don’t contain these bottom-line numbers and they should.
This was the most important take-away for my table companion, a CIO of a large regional healthcare chain. Until that moment, she had always included the tactical costs of Projects X, Y & Z, but never took those numbers all the way down the balance sheet to the bottom line. This is how the board looks at projects and, if you want to be more than an order-taker CIO, you should, too.
I paraphrase but basically what she said was: “Most CIOs could be strategic if they would stop whining and start paying attention to what the board cares about and how they look at the business.”
Perhaps this is why most of the discussion had very little to do with technology. It was focused on business concerns and metrics: total shareholder return (TSR), customer satisfaction, customer retention, brand awareness … measures, until recently, tossed about more often in marketing meetings not IT conferences. Only one participant said they still viewed IT as a cost-center to be contained and even he acknowledged that IT has a role to play in helping the business.
“When you get customer service in there, you do increase revenue growth,” he said of a big ERP imitative his company had done mid-decade. The whole purpose of the project was “delighting our customers,” he said.
Everyone else, to a greater or lesser degree, appeared to have a seat at the table and were involved in the more strategic aspects of the businesses they served; or at least were working to get there. For my table companion, her big break came when the Congress passed the American Recovery and Reinvestment Act. Part of the bill rewards hospitals for switching over to electronic health records (EHR). She began the pushing for this back in 2002, so when this bill passed and suddenly the feds would be picking up the bill for implementing this technology (up to $9M, I believe), her decisions had a bottom-line impact and the board was impressed.
Another theme is that of IT as a business function on par with HR, Finance, Marketing, etc. “Ultimately, once the business owns IT, you’ve won the game,” said one of the panelists. In other words, if the business doesn’t request it no new technology projects are put forth for approval. This way of working comes from what I was told was a very profitable healthcare outfit. “They are very good at making money,” was the quote I believe.
This also held true at a number of other companies represented by the panel: If the business didn’t request it or wasn’t sponsoring it, a project was not presented to finance for approval. To make this type of decision making work, however, IT has to get involved with the business early on, not mid-way through the decision making process when the business is just looking for numbers to fill in the blanks on their business case.
Get involved this year on next year’s business projects, for example. In this way, you can not only influence cost discussions but you can also offer up possibilities that only someone with a deep understanding of what technology can and can’t do can offer.
Some of the other – and newer – ideas bandied about were to read the annual reports not only of you company but that of your competitors. Have your direct reports and their direct reports and so on, do this also. The idea is it will help shift your thinking away from technology and towards a broader view of what your organization does for a living. The further down in IT this thinking percolates, the better your organization will be at providing what the business needs because you will understand better what it (and it’s competition) does.
Having IT folks understand a P&L, balance sheet and the factors that drive revenue can also have a big positive impact on how well IT relates back to the business. Do this “as far down into the IT organization as you can.” Call you finance folks and have them put together some training on this idea is a good place to start, suggested one panelist.
It was also suggested to tie compensation back to strategic objectives. This always gets people’s attention and would most definitely increase participation in those training workshops finance was putting on.
Ultimately, Strategic Objectives + IT = Value. You have to tie what you are doing in IT back to the business anyway you can, as often as you can. Obviously, this won’t work 100% of the time. Nothing does. But, if you don’t try, you will never move IT out of the cost-center category it still occupies on many balance sheets and you will be forever stuck trying to justify your existence when IBM or HP or Dell comes knocking with one of their outsourcing contracts in hand. As one participant said, “It isn’t about IT vs. the business, it’s about business.”
Allen Bernard is the managing editor of CIOUpdate.com, ITSMWatch.com and ProjectManagerPlant.com. He has been covering the intersection of technology and business for over 10 years having written over 1,600 articles, assigned and edited thousands more, and conducted over 4,500 interviews with business and IT decision-makers. He can be reached at [email protected].