Not What, But HowBy Phillip Gordon | Posted 2009-09-29 Print
What attracts CEOs is a well-managed technology function that delivers measurable business value.
Most it executives understand that there are no technology problems, just business problems. Despite that, they continue to make the case for the value of technology—and by extension for their services as CIOs—and they deliver their examples in techno-centric phrases: Technology X delivered “greater flexibility, reduced costs and an accelerated time to market,” as well as other business clichés.
In technology, as in all aspects of business, what matters isn’t what, but how. When IT executives say that “technology X” delivered business value, what business executives hear is that technology is a commodity that can be magically applied to solve business problems and that they can get this IT magic from anyone.
The CIO becomes the equivalent of a technician carrying a sorcerer’s handbook that states, “Take this piece of technology and apply it to that.” And many people agree with this proposition, including Nicholas Carr, in his famous (infamous?) 2003 Harvard Business Review article, “IT Doesn’t Matter.”
This magic-wand perception has been the bane of IT managers and executives for years. Yet, it’s partly their own fault because of their techno-centric way of presenting their accomplishments to business executives. Of course, it is also partly the fault of popular and business media that give their readers the same impression, and of technology vendors that push this message to both CIOs and business executives.
Worse yet, despite the massive hype for technology as a magic solution—and because of the huge expense and the poor communication from CIOs—many CEOs don’t see the magic.
About half of CEOs judged IT as “fair” or “poor” at such things as improving the quality of products or processes, and acquiring and retaining customers, according to Forrester’s third-quarter 2008 North American Business Technology online survey.
Excuse me for restating the obvious—which you have heard many times over the past 20 years, including in this magazine—but technology executives need to work and communicate in the same way as their business peers. Business executives would never tell their CEO that they waved a magic wand (i.e., some hardware or software) to solve a business problem.
What they would say is that they understood the business problem, did the necessary analysis to find a solution, and then managed the efficient and effective delivery of that solution. Finally, they would show exactly how the solution delivered business value through appropriate metrics and testimonials from their peers—colleagues who would explain how their functions benefited from this solution.
This way of working and communicating is expected and understood by business executives. Unfortunately, it is often not what they get from CIOs, which perpetuates the stereotype that IT executives are not the same as “us,” that they don’t understand the business and that they are geeks who love shiny, expensive toys. In any society, if you don’t talk the talk and walk the walk, you are viewed as an outsider.
If, however, a CIO communicates in the expected fashion and is backed up by business peers, then technology is perceived as a unique service that is dependent on the business savvy and management skills of the technology executive, as well as on a solid relationship with peers and senior executives. This view of the importance of IT executives being superior business managers is backed up by various surveys.
A 2008 Hackett Group study (“Core Competencies of Financial Top Performers: Managing the Business Value of IT” by Erik Dorr and Philip Carnelley) found that IT business value management top performers deliver 46 percent higher operating margins, 49 percent higher net margins, 39 percent higher return on assets and 43 percent higher return on equity than their industry peers. This value is delivered through superior IT management.
The smartest CIOs understand that they need to work and communicate as their peers do, and they understand that business value is what really counts.
SOA, BI, BPM, ERP and the endless procession of “the next big thing” technological acronyms are not what matters, and talking about them creates glazed eyes among peers and CEOs. What catches the attention of corporate management is a well-managed technology function that delivers measurable business value: not what but how.
Phillip Gordon has almost three decades of information technology experience in financial services and health care, including positions as director of IT and CIO. He has consulted with startups on business and technology strategy, and has taught technology-related subjects at a number of universities.
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