Management Summary
I started with what we thought was a simple question: what management practices will focus IT professionals on business results more effectively? For over 40 years business executives have been complaining that IT professionals are more interested in IT than they are in the business. And there is plenty of evidence that those complaints are legitimate. We have all heard stories of huge, technically elegant projects that failed miserably when they were implemented because they were inappropriate, poorly designed, or they “solved” problems that end users didn’t know they had (or knew they didn’t have).
However, I learned rather quickly that it isn’t easy to pull together an inventory of management tactics; our “simple” question raised all kinds of very basic issues about IT’s fundamental role, about what it means for IT to add value, insourcing versus outsourcing, recruiting strategies and career paths, IT/business relationships and accountabilities, and IT professional development strategies.
Focusing IT Professionals on Business Results
In short, focusing IT professionals on business results takes you back to very basic principles about how to plan, organize, and manage the IT function. Your basic organizing principles not only send signals to your IT professional staff about what they should focus on, but over time they also generate career experiences for the IT staff that either build knowledge of the business, and a value orientation towards the business – or do not.
I learned that IT professionals need only basic knowledge about the business. Staff who are highly technically-oriented, and who have been hired to make the boxes and wires work reliably, really don’t need to know the business – they need to know how to operate the technologies they are responsible for, how to fix problems, and what levels of performance matter. Other than that, investing time and money in teaching them core principles of marketing, finance, or operations may well be a waste of the organization’s resources.
Fortunately, however, there are a number of things you can do to improve the way your IT professionals think about the business and how they focus their time and energy on acheving results for the business. We have identified a wide range of management practices that can encourage and develop a business orientation among those IT professionals whose knowledge and understanding of business practices does make a difference.
This report lays out in detail some new and radical ways to think about the issues, and proposes a basic rethinking of some very fundamental IT management principles – including how to determine which IT functions to retain within the company and which ones to outsource, what kinds of staff to hire and how to assimilate them into the company (not just the IT organization), and how to develop effective working relationships with your business partners. Taken one at a time, none of these practices is all that radical, but implementing each of them effectively can lead to a different kind of IT capability than what we typically find today.
There are two different avenues to take to focus your IT professionals on business results. At one extreme, we suggest that you consider very seriously outsourcing virtually all of the technical functions in the IT organization – all those IT staff whose don’t understand the business, don’t want to learn about it, and who contributions are primarily technical. At the other extreme, we recommend adopting a portfolio of management practices, including key relationship managers, that will foster the communication of business requirements and reward your IT staff for accomplishing meaningful business results. Both paths are viable – in one case you rely on formal contracts and service level agreements to ensure that IT investments are appropriately deployed and focused on business results, and in the other you depend on fundamental management practices to identify, enable, encourage, and reward business-focused efforts within the ranks of your IT professionals.
Summary of Findings
The difficulty of focusing IT professionals on business results is not new; in fact, it is at least 40 years old. As long as there have been IT specialists who cared more deeply about their own technical expertise, there has been a gulf between end users who view IT as a tool to accomplish their business objectives, and those IT specialists whose goals is to produce and operate the tools themselves.
My research led us to the following observations and conclusions about this challenge:
- Four major forces are making IT’s business orientation even more critical today than it has been for the last 40 years: corporate policy decisions about IT priorities have become much more central to basic business strategy; the rise of Application Service Providers and Internet front-end toolkits is changing the near-monopoly value-added role that IT has historically played in large organizations; getting past the ERP backlog has freed resources for innovation and pointed senior management directly at e-commerce opportunities; and electronic commerce itself is evolving beyond simple Web site design and maintenance, placing broader and more critical pressures on IT to be integrated directly into business operations throughout the enterprise.
- There are at least four separate groups whose commitment to focusing IT professionals on business results is important: corporate management; IT’s clients in the business; IT managers; and IT professionals themselves. These four groups have different needs, different interests, and different criteria for assessing the contributions of IT to the business.
- Many, if not most, IT professionals are simply not interested in business outcomes. Their education, their interests, and their experiences, are all focused on how to make the technology itself productive. There are virtually no opportunities for IT professionals to learn business skills in formal professional development programs.
- Within the ranks of IT professionals, there are four distinct groups whose education, experiences, career goals, and interest in the business issues are vastly different: pure technologists in infrastructure roles, project managers and systems analysts, IT general managers, and “hybrids” or relationship managers.
- There is no clear agreement on what is meant by “business results,” or on what constitutes “business literacy.” What one IT professional in one organization needs to know about the business differs radically from what his or her peer needs to know, whether they are working for the same organization or not. Demands for general business literacy or “business acumen” for IT professionals are not only difficult to respond to, but may actually be misleading in that they can distract executives away from more important questions about specific performance requirements for IT roles.
- There are two broad organizational strategies for addressing these challenges: radical enterprise innovation, or transformation; and aggressive IT evolution towards a customer-centric or relationship-oriented form of organization. Both strategies are radically different from what is most common today.
- Many IT organizations have recently implemented Account Management jobs as a way to foster customer-centricity and develop more constructive relationships between IT and the business. There are several different forms of Account Management, but all have proven difficult to implement. Nevertheless, Account Management appears to be a highly promising means of improving the focus of IT organizations on business results.
- Measurement and reward systems are one of the most effective ways to signal what is important to your professional staff, and to reward them for achieving important outcomes. Yet there is almost no evidence that performance measurement and reward systems for IT professionals are coupled to operational business results in any meaningful way.
Key Recommendations
- Any program of improving the focus of your IT organization on achieving business results must begin with a broad organizational analysis. Be very clear, strategically, about the value-adding role of IT in your business. If some IT activities are not central to it value-adding role, consider seriously whether they should be continued internally, or outsourced. IT activities that are not unique, differentiated, or linked closely to business results can often be done more efficiently and more effectively by a service provider whose commitment to business results is ensured through contractual service level agreements.
- For the value-adding core IT roles, link their activities and performance measures directly to important business outcomes; leverage those linkages with explicit compensation and reward programs tied directly to outcomes.
- Develop a portfolio of business systems and procedures for communicating business requirements and goals to your IT staff: formal planning mechanisms, IT Account Manager roles, project planning and management systems, and formal, results-oriented individual performance measurement and reward systems. Most importantly, take these practices seriously, and be certain you develop a culture of shared accountability and understanding between the business and IT.
- Ensure that IT professional development programs include (and require) basic business skills along with technology-oriented programs. Develop formal classroom programs, support outside management education programs, and build two-way job rotation programs that enable IT professionals to have experiences directly in business roles.
- Lastly, don’t ignore one of the most fundamental ways to build a business-oriented IT staff: recruit for IT positions from a wider diversity of schools and majors. Starting with a more diverse resource pool may be the most effective way of all to build a more business-oriented IT organization.
Article by Shaun White http://www.sacherpartners.eu Contact Shaun for more information
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