Becoming an IT tamer
Senior executives need to develop the same sense of responsibility (and comfort) for IT investments and projects as for financial decisions
For firms who do not have platforms or are not driving value from them, IT is a strategic liability. In the authors’ view, IT becomes an asset when firms focus on platforms and when senior management does not abdicate responsibility for those platforms. Management needs to assume full responsibility for IT funding decisions and IT governance in general.
Since IT funding has become a strategic decision, senior executives should not abdicate this responsibility. Using the example of BT, the authors propose three focal points: establish clear priorities for IT investments; develop a transparent process for assessing projects; monitor the impacts of prior investment decisions.
When establishing priorities, BT senior management settled on three core business processes (lead-to-cash, trouble-to-resolve, concept-to-market). Southwest, a few years ago, concluded that the firm’s reservation system was the highest priority.
The second focus has senior leadership teams defining the requirements for business cases. The case should include an estimate of ongoing IT support costs - unit cost tracking (e.g. cost per fully supported laptop, cost per data storage unit…) should be a high priority.
Getting value from IT is a learning process and post-implementation reviews (PIR) are a key feature of that learning process. The purpose of these reviews should not be to apportion blame or reward but draw information for future projects, so as to drive more value from similar projects. At BT, the PIR process actually begins prior to development and continues every ninety days through implementation. Those ninety day reviews can lead to the cancellation of projects.
IT funding falls within the larger scope of IT governance by which the authors mean the framework of IT decision rights and accountabilities. The authors have found that senior executives are far less able to describe IT decision rights and accountabilities than they are able to financial decision rights and accountabilities. They estimate that at least 95% of executives master the financial project decision process; in their experience only 45% can describe in detail the IT decision process. Being IT savvy means being as familiar with IT rights and accountabilities as with the more traditional financial rights and accountabilities.
In the authors’ experience, IT governance should cover five areas: IT principles, enterprise architecture, IT infrastructure, business needs and project deliverables, IT investment and prioritization. IT savvy firms had a number of coordinating mechanisms to ensure coverage of those five areas.
Typically, a senior management committee is responsible for IT principles. An IT leadership team, often composed of the CIO and other high level IT managers, takes the lead in enterprise architecture and IT infrastructure. Business-IT relationship managers act as an interface between IT and business unit heads. A Project Management Office or an equivalent team will be responsible for project methodology and oversight. Finally the business value of IT will be tracked and this is where the post-implementation reviews have a key input role.
