Reaching Too Far Onto the Business Side Can Result in Strains

By John McCormick  |  Posted 2005-11-08 Email Print this article Print

Tech executives are being asked to stretch their muscles by developing systems for the business side, but they need to do so with care.

The situation for chief information officers may finally be turning around. After years of waiting for the call, CIOs are finally being asked to stretch their business muscles and develop systems that help generate sales, increase production or support a move into a new market, according to Gartner and other information management experts.

"CIOs and I.T. are in the midst of a transformation, from internally focused departments and cost containment to supporting growth," according to research delivered by Gartner at its annual Symposium conference, held last month in Orlando, Fla.

But chief information officers need to be careful. With the cost of hardware shrinking and cheap programmers available overseas, technology executives might be tempted to jump out front of their companies' business strategies by building super-sized, feature-rich systems that automate or upgrade a business process they deem inefficient.

"When you hear CIOs talk about their organization being out front of the business, or that there are all these new ideas we could implement if only the business would catch up," says Mark McDonald, a Gartner group vice president, "then those are instances where I.T. has gotten ahead of the business."

The danger here is that tech executives might wind up developing complex, feature-laden applications that are hard to master and provide the company with components that it isn't likely to utilize.

It's happened in the past:

  • Fast-food chain McDonald's in 2001 planned to spend $1 billion over five years to link its 30,000 locations with an instant information network that would let executives track everything from the time each store spent serving drive-through customers to the oil temperature in each fryer. But the system, according to people who have looked at it, was just too big and expensive to pull off and, according to McDonald's, didn't at the time address its most pressing needs—improving speed and quality.
  • Automaker Ford Motor in 2000 began a rewrite of its systems for buying supplies. The effort, called Everest, was abandoned last year. The project was $200 million over budget and, according to a New York Times piece by noted Harvard Business School professor Nicholas Carr, "sank under the weight of its own complexity."
  • A U.S. trucking firm, which Gartner's McDonald has looked at but wouldn't name, had a chief information officer who decided the company's internal logistics and scheduling process wasn't efficient enough and embarked on a big software upgrade. The business, however, was never on board with the program. And the CIO was fired.

    McDonald and other technology experts say there are steps CIOs can take to ensure that their projects deliver systems the business needs and can use.

    CIOs must spend time with their company's business executives so each can get a better sense of what the other needs. Corporate executives can quickly rattle off their top three business goals, says Kay Lewis Redditt, president of CogniTech Services Corp., an information systems consultancy. But when asked what products and services they requested from the information-technology department to support those projects, Redditt says there's often a lot of hemming and hawing.

    McDonald adds that information chiefs need to stay just as close to the business' customers. He says that at many financial services companies, the CIO will go out on sales calls because the integrity of the information in the company's products is so crucial to the client's success. But meeting with customers in this way also gives CIOs a good feel for what the business does and what its customers need.

    Redditt and McDonald also agree that tech executives should only tackle projects that support a stated goal of the company. As McDonald says, "It's more important to be what your business wants you to be than to be what you think you should be."


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