Author: Yogi Schulz
Perception of IT value is a subtle phenomenon. It’s often subjective. It can be challenged. The effectiveness of a presentation or the power of a well-told story influences perception of IT value. The dubious value cases that have been proposed on occasion have made the already jaded executive team even more suspicious of IT value claims.
In this slippery environment, capable CIO’s are easily tripped up and can be perceived as less than successful than they are.
Whose value is it anyway?
The value that IT contributes is difficult to distinguish from the value the business department contributes. For example, if procurement is smoother as a result of a supply chain system project, is the value due to IT successfully leading the implementation of new software or is the value due to the improved business processes that the business department has implemented?
The answer is obviously both. To ensure this point is not lost, the effective CIO communicates this shared value message. The CIO can reinforce the IT department’s contribution by educating the organization to appreciate that the successful delivery of IT projects is a shared opportunity.
Assignment of credit and blame
In too many organizations, disasters belong to IT while successes belong to the business. Too many na«ve CIO’s allow such nonsense to continue.
In my experience, there’s plenty of blame to go around in disasters and plenty of credit to go around in successes. However, all too often, the IT organization works hard on projects, communicates poorly and is not astute politically. In contrast, the business organization is too pre-occupied by daily operations to work consistently on projects but communicates well and is more astute politically. As a result, senior management hears mostly from the business and starts to believe their spin as the objective truth.
To counteract this misperception, the CIO can improve his or her communication skills and ensure that the IT perspective on the project is heard. The CIO must also rise above the minutiae of daily IT operations, often a comfort zone, to meet regularly with other members of the executive team to appreciate their pressures and challenges.
Alignment with the Business
Aligning IT with the business is an old topic that’s still a struggle because alignment is so easily lost as the business continues to change rapidly. For example, some business departments have fallen in love with wireless e-mail. Some IT departments were caught off-guard by this development and failed to support these devices in the e-mail infrastructure.
Some IT departments spend a disproportionate amount of their leadership focus and capacity on financial systems because IT reports to the CFO. In the mean time, the production and marketing departments are starved for attention.
CIO’s can verify or improve their alignment by making sure that IT resources are deployed to sustain the company’s largest assets and enhance the products or services that contribute the highest share of revenue. These areas of the company are rarely represented by the loudest or most articulate voices at the planning table.
Customers, suppliers and employees are using IT continuously. We wouldn’t use it if we didn’t perceive value. The CIO’s who make this point, through effective communication and sharing successes with business partners, enhance the perception of IT value.
Concern over Costs
Many organizations have invested enough in IT that IT operating costs have grown to become the second highest cost category on the income statement; just behind employee salaries and benefits. That places the CIO in an unwelcome spotlight at budget time.
Fortunately there is significant value associated with these costs. For example, many economists attribute continued productivity increases, even through our current recession, to investments in IT. This value shows up in every cost center as lower operating costs for which every department head receives the recognition.
To avoid taking the heat for high costs while others bask in the compliments for cost control, the CIO needs to make the link between these costs and value clear.}
Explain, Educate and Re-Educate
I have listened to an executive explain, in all earnestness, that the success of his multi-billion dollar oil sands production facilities project was not significantly dependent on IT. I was shocked. I happened to be aware that the project was highly dependent on e-mail to keep his geographically dispersed team in touch with each other. Being a large construction project, it was highly dependent on CAD/CAM for design and for construction drawings. With its isolated location near the Northwest Territories, the project was addressing a huge logistical coordination risk with ERP for procurement and materials management. Because the project was building a continuous processing facility, much like a refinery, its operational success was highly dependent on advanced process simulation software to resolve issues of scale and energy efficiency.
Does this description sound like a project that is “not significantly dependent on IT”? How does a capable executive come to honestly hold such a totally erroneous opinion? Where was the CIO?
The role of the CIO includes the role of educator, communicator of IT trends and possibilities, reminder of value achieved from past investments. Whenever the CIO skirts this role, disaster looms because no one in the executive suite has a perception of the value that IT produces.