Mark McDonald

Blogging Note:  Like Gary Trudeau I am taking a week off from blogging, but I would like to share a past post that may be helpful. The origional posts were made in the Summer of 2009, but much of their points remain true.  I have made links to the original posts to make it easy to navigate to the details for each item.

12 things every business needs to know about IT

“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.

A company has difficulty understanding IT in the language that IT speaks: applications, databases, technologies, etc.  But, what language do executives and managers use to understand something and its role in the company.  The answer is straightforward, think back to the last time you were at a party and someone asked you/or you asked someone “What do you do?”  Chances you talked about your job title, role and position in the organization.

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. This item points to the particular or peculiar position (depending on your point of view) that IT holds in an enterprise.  Effective enterprises take advantage of that horizontal nature to drive proven practices and integration across the enterprise.  Less effective organizations struggle with IT’s lateral nature, which often arises, at budgeting and funding times as everyone benefits from IT but no one wants to pay for it.

#2 – IT is a hybrid organization. This item, compounding with the first, makes IT a mystery to many executives.  The hybrid nature of IT is its role in both current operations and future transformation projects.  Effective enterprises recognize both roles and manage these roles differently.  Other organizations are frustrated by these roles either seesawing between cycles of development and operations, or by separating the two functions into entirely different organizations.

#3 – IT is part of a capability. Technology has been an end to itself for more than 30 years and effective organizations understand the fallacy of that belief.  They look to change technology in coordination with information, business process and human capital.  The old adage of ‘people, process and technology’ is well worn and sometimes trite, but effective organizations understand its meaning while others only hear rhetoric.

#4 – IT applies information to replace cash, capital and operations.  Effective organizations recognize that they manage assets that go beyond their balance sheet.  They target information as a tool for cycle time, quality and operational performance improvements.  Others view information as a resource to be hoarded, often in data ‘warehouses’.  Effective organizations see information as a resource to be applied to raise business performance.

#5 – IT is complex because the business is complex.  This notion is lost on many executives both in IT and the rest of the enterprise.  They see complexity as an intrinsic quality, one that cannot be readily controlled.  Effective organizations work to make themselves complex where it matters and simple everywhere else.  This means that they leverage IT as part of a capability and look to change more than just systems when they transform their enterprises.

#6 – Executives can easily misapply IT. Take the first five items together and it is easy to see how executives and IT professionals can get IT that is costly, inflexible and delivers a mixed level of services.  Effective organizations have a clear Information strategy, understand customer and market expectations and most importantly communicate those expectations clearly across the enterprise.

#7 – Executives misunderstand IT in strategy. The elements of corporate strategy involve decisions regarding the competitive nature of the enterprise, its products and markets.  Given that view, it’s easy for executives to think of something that is operational in nature – like IT – to be something that is supportive but not necessarily strategic.  Effective enterprises understand the connections that translate strategic intent into operational performance and build upon traditional classic strategies to derive approaches that leverage all elements of a capability.

#8 – IT can evolve faster than management thinking. The truth of this statement is behind the ‘lag’ that many report between the adoption of new technologies and the benefits realized from those investments.  That lag has been the excuse for poor results in ERP, CRM, SCM and other technology investments.  Effective enterprises apply IT in coordination with changes in the way they manage and work across the enterprise.  They invest in management capability at the same time as technology capability.

#9 – IT plays different roles in different companies and industries.  True enough but too often the cost, uncertain value, and complexity of IT driven by the other items on this list have led executives to adopt ‘industry standard solutions.”  Effective enterprises follow that same path, but they leverage item #3 and change the other aspects of a capability to create competitive advantage.

#10 – IT financials require improvement. Effective enterprises right now are looking for better alternatives to funding IT given its horizontal #1 and hybrid #2 nature.  Allocating IT budgets, chargeback, project Roy’s are all methods that are nearing the end of their useful life.  Check this space for future innovations.

#11 – IT requires ongoing investment in its core, like other operations, just faster.  Effective enterprises recognize the power behind Moore’s law and the need to invest in IT as an operational resource, the same as their supply chain, sales force etc.  Effective enterprises invest more in IT because they see the results of IT

#12 – IT effectiveness and business effectiveness are linked. The real reason that business leaders need to know about IT is that IT is an important part of any effective business.  While that sounds like a claim that is more often opinion than observation, it is something that we have been studying at Gartner Executive Programs for some time.  The good news is that the two are related.  The better news is that we can quantify the difference between high and low effectiveness performers.  The best news is that IT effectiveness matters, it is linked to enterprise effectiveness and this makes all the other 11 things meaningful.