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Posts Tagged ‘Get Business Results’


For IT’s Clients within the Business

In spite of the new business realities, the issue of focusing IT on business results does not seem to be a direct or explicit concern of corporate management. If it were, surely we would see business-oriented specific metrics, accountability for those metrics, and commitment to upgrading and rewarding IT business skills. Nevertheless, this issue is very much a concern among IT’s “users.” The very term “user” captures the historical gap between the business and IT; it’s an abstraction that contrasts with, say, “client” or “colleague.” IT’s clients within the business have long been demanding that IT professionals understand the business better, act more responsively, and listen and communicate more effectively with them.

Clients

IT's Clients

Most IT organizations have made a genuine effort to respond to these demands, through first the creation of business analyst roles, which contrast with traditional “systems” analysts, through the use of steering committees and related mechanisms for communication and mutual learning, and through more flexible and adaptive approaches to design and development, including prototyping. Most recently, the trend has been towards establishing a meaningful client relationship with the business, with an Account Manager plus service level agreements.

These approaches appear largely to be add-ons to the IT organization rather than a commitment to developing a new mainstream of skills and roles. But Account Management does respond to the IT clients’ main concerns, and in this sense offers plenty of perceived payback.

Clients – those responsible within business units for some element of business that involves IT development or use – appear to be looking for peace of mind and confidence that IT will actually focus on their needs. They also want to build their own self-confidence in the dialogue and be sure that there is business awareness on the part of IT and careful matching of the technology to the business need. They express a frequent insecurity about their own understanding of the technology and worry that IT is more interested in “elegant” technology solutions or in pushing a favorite technology or tool on them.

For these operationally-oriented managers, “business results” really means collaboration and support. It is not at all apparent from our interviews and surveys that IT’s business clients themselves feel much accountability for actual bottom-line results. There seems to be a shifting of the responsibility onto the Account Manager for making sure everything works and everyone is pleased. That is hard to accomplish, and the Account Manager too often seems caught in the middle between an IT organization that is primarily focused on technology results and a client base that wants the IT “problem” off their backs.

For the Managers of the IT Organization

Managers in IT are very actively taking on the problem. Of all the four parties discussed here, CIOs and their key aides have the most active interest in the issue of business results. There are many obvious reasons for this, to which we can add new ones for them to take more radical action fairly urgently.

Basically, the entire issue of business results centers first on the role of the entire IT function, regardless of how it is organized (corporate center, business unit IT groups, etc.) and how much of it is outsourced. What is its purpose and distinctive contribution? There is also a second and growing issue: the variety and scarcity of newly critical IT skills, plus the commoditization of others.

CIOs (like their business colleagues) want their IT units to be value-added. They can’t accomplish that without at least the following:

  • Internal client satisfaction. Again, this is what is driving the trend towards Account Management.
  • Talent base. This may well be the main barrier to organizing for business results – it’s hard enough to organize for basic technology results. One of ten advertised IT jobs goes unfilled today, and the talent scarcity is a primary reason that many IT functions have been outsourced, or turned over to consultants and contractors.
  • A core role in the growth areas of IT application and use. This is a constant race against time, scarce resources and legacy system demands. In the past few years, the growth areas have been ERP, Internet/intranet/extranet development and middleware. Today, the growth areas are CRM, IP, supply chain management, and object-based development tools and SOA. Tomorrow’s agenda looks like it will include wireless telecommunications, and more and more innovations in electronic commerce technologies, tools, and applications.

Here, there is some conflict between the focus on business results and the focus on technical delivery. The obvious reasons for CIOs to emphasize the first of these, business results, is simply their need to establish and maintain credibility within the business and to ensure client satisfaction. Increasingly, they must rely on contractors, systems integrators, consulting firms, vendors, outsourcers, and hosting services, both for talent and for handling large-scale initiatives in the key growth areas.

In addition, more and more electronic commerce innovation is being led from outside IT, especially from Marketing. In many areas of Internet use, design is replacing programming as the core development skill, with small firms using new “front-end” tools to create Web sites, dynamic catalogs, links to logistics hubs, etc. These specialist firms are often brought in to work directly with IT’s clients; IT often plays a very peripheral role in these ventures.

All of these emerging practices displace many traditional IT development responsibilities. In particular, the explosive growth of Cloud providers will, over the next year or so, entirely transform the nature of much of “systems” design and implementation, in the same way that spreadsheet and other PC software eliminated reliance on COBOL programmers for producing ad hoc reports (but we expect the Cloud revolution to happen even faster and to a far greater degree). salesforce.com, for instance, turns CRM from a large capital investment (where IT managed the lengthy and complex process of installation and customization) into a variable cost, on-demand – “apps-on-tap” – incremental purchase.

These trends point to the non-obvious reason for CIOs to focus IT on business results: the commoditization of many traditional roles and skills. In an era when electronic commerce is becoming a rapidly emerging, urgent, and large-scale priority for the business, it is not at all apparent where the value-added elements of IT will be in the future. My research suggests, however, that the critical contributions of IT will surely be in communication, coordination, and collaboration – relationships. IT has to create new value-added capabilities as the old ones become commodities. To compound the challenge, the new role for IT demands specialized skills and experience that usually must be brought in from the outside.

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At one level, it is obvious that IT should focus on providing business results. In practice, though, the complexities of systems development and operations, and the nature of the IT profession, skills, careers and organization push in the other direction, towards IT remaining strongly centered on its core mission of delivering technical results. My interviews, surveys, and case studies carried out in this project show that the case for focusing IT on business results has not been effectively made to most IT professionals. In addition, our findings are clear that the efforts of IT organizations to bridge the business-IT gap, mainly through the creation of account management roles, have been limited and only partially successful.

Business Results

Business Results

Unless the case is convincingly made, then there is obviously little momentum or leverage for real change. How important is it that focusing IT on the business really should be a core priority for both IT and the business itself? Who should the case be made to? There are four parties who need to be convinced and become part of the solution – if this really is accepted as a problem: (1) corporate management, (2) IT’s clients within the business, (3) the managers of the IT organization, and (4) individuals in IT. The following is our assessment of the payoffs for each of them:

For Corporate Management

In general, senior business executives do not appear much involved in issues of IT organization (for an extended discussion of IT governance practices and the knowledge base required if senior business executives are to exercise effective leadership of IT, see Project TL: Developing Technology Leadership in Business Executives). They are, however, deeply concerned with its costs and performance.

Clearly, development productivity must improve dramatically. A survey by Computerworld in early 2010 identified the “Premium 100” IT organizations – the 100 best-managed IT groups in the United States. The data describing these companies lists the percent of projects delivered on time and within budget for each organization. The average is less than 30% – and these were the best of the best! In a separate study, Forrester Research reported several years ago that over $85 billion of IT systems projects had been cancelled in one calendar year for failure to meet business needs or because the systems were incapable of performing as designed.

Historically, poor development productivity has been one of the biggest complaints about IT from business managers. Given that for many companies today information technology accounts for close to half of their capital investment, an obvious question to ask is what a 20% improvement in delivery time and cost performance would be worth.

There are many reasons for the long historical track record of budget and time overruns. The two main ones most widely reported are weaknesses in project management and poor coordination and communication between IT and its “users.” This latter concern is what lies behind the efforts of many IT organizations, including most of the members in this project, to establish an account management role. In this way, IT takes on responsibility for dialogue in the belief that will lead to better business results.

But it’s not clear that this is in fact happening. I found in this study is that there is virtually no operational conception of what “business results” actually means. There is no general agreement on metrics by which, for example, IT Account Managers can be evaluated or can evaluate themselves. If anything, corporate management seems to reinforce the focus for IT on its technical role and responsibilities by defining IT’s results primarily in budgetary and technical performance terms.

To my surprise, I found very little interest among the IT professionals we surveyed in one subject that is all about business results: electronic commerce. For most business executives, e-commerce is now a critical priority, and it is a major topic in the mainstream business press, including Business Week, The Financial Times, The Wall Street Journal, and Fortune Magazine. Universities are racing to establish MBA degree programs in EC and a major, conservative and meticulous research study recently demonstrated that the Internet economy in 2009 amounted to $500 million, a growth of close to 70% over the previous year.

Internet-based electronic commerce has become very much a matter of betting on the company’s business future through information technology. The new business models require complex coordination of technology design and operations, business processes, marketing, finance and operations. This is apparent in the experiences of online retailers over the past two Christmas seasons. They discovered, often at the cost of escalating customer dissatisfaction, that it is not enough just to implement the technology elements of a Web presence. Customer service, fulfillment processes, handling of returns, ensuring advertised goods are in stock, and making deliveries as promised – all these processes require major attention and impeccable performance. In other words, the IT component of electronic commerce must be focused on business results, not on Web site development and operation.

Who will be in charge of ensuring the business results for electronic commerce? We can summarize the situation in most of the Project BR members, and in other companies that we reviewed, as one where no one is really in charge. Surely, that must change. The stakes are now too high. Electronic commerce is really not about “electronic” business, but about business – the new technologies are enabling fundamentally new ways of conducting all business; online retailing is just a very small part of what the new economy is all about. A 30% on-time and within budget track record would be a disaster in this new context.

Thus, there is a new business imperative for an IT organization that is deeply focused on fundamental business results. To be blunt, the payoff for senior business executives is business survival. In the economy of today and the foreseeable future no business can afford an IT organization whose only measures of success are technical proficiency and cost control.

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