Missed OpportunitiesBy Eileen Feretic | Posted 2009-03-10 Email Print
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If the IT team doesn’t contribute to business growth, it may become a target for budget cuts and layoffs.
I’d like to be able to report some news that’s all good, but the best I can do is a good news/bad news mix. The good news is that 87 percent of senior executives believe information technology is very or somewhat important to their organizations. The bad news is that only 59 percent think IT makes a very or somewhat important contribution to innovation, and only one-third depend on IT “to provide information about potential business opportunities enabled by new technologies.”
These statistics come from a survey commissioned by the IT Governance Institute (ITGI) and conducted by Pricewaterhouse-Coopers Belgium, which interviewed more than 250 non-IT executives in 22 countries. Basically, these executives gave IT high marks for efficiency and effectiveness but not for innovative efforts, such as enabling new business opportunities.
That’s disheartening because creating business value is, more than ever before, a strategic goal of IT organizations. And it’s the only way to upgrade IT’s image from a department that merely “keeps the lights on” to one that’s a partner in the effort to achieve business objectives. In short, it’s the difference between being a cost center and being a revenue generator.
To dig a little deeper into the survey results, I spoke with Robert Stroud, international vice president of the ITGI. I asked whether he thinks the problem is that IT is really not contributing to innovation, or if the issue is that business management has an inaccurate view of what IT contributes.
Stroud believes the latter is the case, but added that IT has helped create that inaccurate view because it “has not done a good job communicating the business value of technology.” He urged IT executives to speak with their company’s line-of-business managers about the benefits technology brings to the enterprise—especially, the new products and services it can offer to support business initiatives, create new business opportunities and help generate revenue.
As an example, Stroud mentioned the switch from in-person tellers to ATMs and online banking—a change that brought in more customers while lowering the cost of transactions in the financial industry. Those benefits actually altered the business model for banks and directly affected their bottom line.
Unfortunately, according to Stroud, most IT professionals are not trained to think in terms of business innovation. And many don’t know how to communicate IT’s contributions effectively to their peers in other departments.
In fact, the survey revealed that many business executives don’t think IT managers “are communicating new opportunities to the business.” Yet, in a 2008 ITGI survey, IT managers said they did provide their businesses with frequent information. Clearly, there is a communications disconnect.
That’s a dangerous situation—especially at a time when most companies are looking to cut costs. If the IT organization is not viewed as a contributor to innovation and business growth, it is missing an opportunity to enhance its image and stature in the enterprise. It also risks being considered an easy target for budget cuts and layoffs.
The ITGI offers a solution to this problem: Invite CIOs to be part of the senior management team, getting the much-discussed “seat at the table.” With 87 percent of the survey respondents acknowledging the importance of technology, it seems logical that all these organizations would give the CIO equal footing with other senior executives. Sadly, that’s the case in only 58 percent of these enterprises.
Why don’t these firms include CIOs on the executive team? The reason given by 59 percent of them is that they “prefer to maintain a small executive team.” That’s a shabby excuse. “The CIO should be part of the management team driving the enterprise forward,” Stroud said. “No business can function without technology. If IT breaks, the business breaks.”
So, how can IT management improve its stature in the organization? The ITGI recommends the following: Take ownership of IT governance; make the CIO reporting line as direct as possible to the top executive decision body; use external advisers as a source of knowledge and guidance; pay more attention to the potential for innovation that IT can offer; measure the value that IT brings—or does not bring—to the enterprise.
There’s no question that IT brings value, but it needs to add value specifically to endeavors that contribute to the bottom line. If it doesn’t, then IT has missed an opportunity to be accepted as a full and valued partner in the business.