“If only the business understood IT, then the company would get move value out of IT.” This statement is a common belief among IT professionals. Understanding begins with the basics, framed in a language that is acceptable to the audience rather than the teacher.
Talking about IT using the language of organization, its role, what it does, position, etc provides a starting point for teaching the business about IT. Using this staring point here are a twelve things that every business leader needs to know about IT.
#1 – IT is horizontal
#2 – IT is a hybrid organization
#3 – IT is part of a capability
#4 – IT applies information to replace cash, capital and operations
5. IT is complex because the business is complex
IT professionals generally like complexity; they are impressed with how intricate technology can become to support business operations. Where IT professionals see elegance, business professionals see cost, core rigidity and all the reasons why IT does not work. Both sides have to recognize that IT is complex because the business is complex.
Executives think of IT in terms that they know – their personal life and personal computer. They see software for email, calendaring, personal finance, publishing and the like and think – it cannot be much different for me as it is for the entire enterprise. They are right, to some extent at the functional level, what they are leaving out is the multi-multi-multi differences that separate the individual and their PC from the enterprise and its IT.
Enterprise are multi-person, multi-product, multi-location, multi-channel … the list can go on and on. That multiplicity, show in the figure below which is a model of a cellular telephone company, requires systems to support them. Take that multiplicity away and sure you could run the company on a single computer hooked to the Internet, but it would be a one-person show.
Time compounds the structural complexity discussed above as not all processes, products and teams require or receive the same technology. Time changes the set of available technologies as new technology and solutions come on the market. Time erodes the effectiveness of current solutions as competition and customers evolve their thinking and needs. That is why even after going through a massive IT consolidation – for example to an ERP – executives are soon asking for new solutions.
Complexity is fundamental to the definition of the modern corporate. Every since Adam Smith talked about the division of labor in the manufacture of straight pins, work has become decomposed into smaller units and with each wave of decomposition there came a need for more controls, management, oversight – in other words complexity.
The complexity engine perpetuates itself as the constituent groups look to extend or perpetuate its existence. Some see this as a form of Darwinism where only the fittest survives. If that were true in human beings, then the stomach would be in competition with the brain, the legs and other parts of the body. Wait I know that there is a joke in there somewhere, but lets not digress.
IT complexity comes from two of the earlier things business leaders need to know, namely that IT is horizontal (#1) and a hybrid (#2) organization. CIOs and IT executives need to make sure that this complexity is managed and earns a proper rate of return.
If the world stood still, if competitors did not change, if we ran simple business models, if regulations were stable and clear, then IT would be simple because the business would be simple.
Executives across the entire organization need to recognize that implicitly many choose complexity over simplicity and that they cannot lay all the blame for complexity on IT. There is more than enough culpability to go around for multiple applications, heavy customizations, standalone systems and aspects of IT complexity.
Executives choose complexity often in the name of flexibility, getting close to the customer and being responsive. The result of these choices are duplicate and near proximate operations, organizations, products and business rules. Think about your business and ask how much difference is there really between how you work across geographies, divisions or product lines. The answer is too often no enough to warrant the near duplicate or highly similar operations in the company. Use the following questions as a way to assess this situation.
- First ask yourself is what you are trying to do this really need to be fundamentally different
- Could you borrow/copy a process, tool, asset etc from someone else to accomplish the same task?
If the answer is no, then ask your self if being different will generate a premium in terms of market opportunity, financial return, return on investment that is significantly above your company’s cost of invested capital?
- If it does, then fine your are earning a rate of return exceeds the cost of capital plus your company’s complexity premium.
- If it is not, then perhaps the need for being different is coming from another source and needs to have a second look.
The IT industrial complex is also responsible for this complexity as they seek to decompose the technology marketplace with waves of similar but not fully comparable products, required upgrades, etc. Sure the move to open standards and interoperability has made a significant dent in the problem. Just think of the duplicate proprietary networks avoided with the 801.X class of standards.
While there are perfectly legitimate technical reasons for this, but CIOs and IT executives need to recognize that their decisions are also a complexity driver. CIOs and IT executives should have an actively managed plan for leveraging the existing asset base as well as managing the end-of-life for technologies in order to reduce complexity.
IT is complex, because the business is complex. It does not have to be so as both complexities can be managed and mitigated with some forethought and a willingness to make tough decisions.