Mark McDonald

Business recognition of IT’s value is a constant challenge for CIOs and IT executives.  While we can talk about IT’s fundamental role in modern business, its leverage and how the business just does not understand; there are ways in which IT keeps itself from being business relevant that need to change.  One of those ways is how IT values activities over results.  Here is an example.

I was talking with a CIO about how they planned to rationalize their application portfolio.  They simply had too many applications.  The CIO wanted to reduce duplicates where possible and eliminate un-used applications wherever possible.  The result would be a reduced set of applications delivering more consistent services to the business at a lower cost, risk and support requirements.  The results seem pretty straightforward and very results focused.

The CIO talked about the process they would use to decide which applications to eliminate.  It involved a logical but lethargic set of inventorying and assessment activities that create lists that are prioritized and then presented to a steering committee to make final recommendations.  This type of process, conducted across the entire application portfolio was pretty resource intensive and therefore expensive, but the potential benefits were significant.

The CIO conducted a pilot reviewing about 10% of the portfolio – more than 700 applications.  The results of the pilot were mixed with only about one in ten applications reviewed facing termination.  The CIO said that the pilot worked and in the coming year they would review all of the applications.

When I asked if they expected that 10% termination rate to continue?  The answer was no, actually the rate should go down to less than 5%.

A 10% termination rate would just barely make the business case; a 5% rate would not.  This begged a follow-up question, and then what are you going to do?

The response was, we will conduct the review because that is what we said we would do.

The CIO and their team valued conducting the activity in its own right, versus recognizing that the activity would not achieve the result they hoped for.  That is an example of valuing activities over results.

Now you can argue that there is value in retiring 5% of your applications, there is value in going through the process of inventorying and grading your applications and there is value in showing the business IT’s willingness to manage its cost structure.  However, there is also value in finding another way to get the intended cost savings as this technique while operationally sound is not economically effective.  There is also value in the activities that are being postponed because IT and business resources are reviewing applications – the vast majority of which the decision is ‘no decision.’  Finally there is reputational value in the CIO and IT executive team showing that they are willing to go after results not just execute planned activities.

A results oriented CIO and IT organization would balance these alternative values in the decision to continue with this process, rather than simply moving forward because it was in the plan.

This is just one example of IT valuing activities over results.

Why is this important, well think about what the decision to continue activities that are not going to get the intended results says about IT to its business peers?

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Category: 2010 Leadership Personal Observation     Tags: 2010 planning, CIO Leadership, cost cutting, IT Leadership, Leadership, personal musing, Signs of weak management

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