Ten Tips for an Effective IT Strategy

IT Strategy development is not an easy process. It takes a lot of effort from IT Leaders, architects and business stakeholders. Even after a huge amount of effort, we often hear that within a short time the strategy is forgotten. In some organisations, one or two new initiatives can be triggered as a result of the strategy. But soon the rest of the strategy is put on the back burner. Continue reading “Ten Tips for an Effective IT Strategy”

Three Tips for a Stronger Business Engagement

Fostering strong engagement with business partners continues to be a challenge for many IT leaders. For periods of time, such as when, a major project is underway or when a strategy is being developed, relationships with business partners can improve, but in matter of months it drops again. CIOs know that effective business relationships are key to their success. What can be done to sustain business engagement in an ongoing way? What techniques do successful CIOs use? Continue reading “Three Tips for a Stronger Business Engagement”

What Makes an IT Strategy Good or Bad?

Most CIOs would claim to have an IT strategy, but what makes some IT strategies ‘good’ and others ‘bad’? Recently there was a discussion on LinkedIn on this topic. Here are some noteworthy comments from that discussion about what makes a good IT strategy.

‘A great IT strategy that sits on the shelf is useless, and a bad IT strategy that gets executed can be even more harmful.’ Continue reading “What Makes an IT Strategy Good or Bad?”

Running IT as a business: Myth or reality

IT as a business

In January this year Bob Lewis posted an article in Infoworld titled “ Run IT as a business — why that’s a train wreck waiting to happen“. In this article, Bob suggests that a lot of current thinking about running IT like a business is misguided and leading CIOs in the wrong direction. This article explores what is ‘Running IT like a business’ and what should a CIO do?

The myth of the internal customer – IT is expected to treat internal departments as customers and deliver them the software or projects that they have asked for. The problem is that customers don’t always know what they want and they are reluctant to commit anything to paper. Even if they do commit something to paper their thinking (and often budgets) demand a “silo” solution which only partially meets the needs of the enterprise. As a result, IT architecture suffers. IT becomes just an order-taker and not a partner.

IT Costs are always too high – Comparing costs of IT services to the external market is always fraught with danger. Why does a corporate laptop cost $2000 when I can buy a laptop from the local store for half of that price? It doesn’t matter that the other would not run corporate applications or the reliability is too low or it does not include software licenses. Similar stories are heard about the network costs, applications and hosting.

Challenge of the charge-back – IT as a business is expected to charge internal customers for its services. Charge-back is a popular mechanism for this. However, charge-back can create unintended behaviours, where departments try to reduce costs by avoiding IT services. I know a department, which stopped using help-desk for password resets due to the cost of the calls. This resulted in major security issues. Rather than figuring out how to reduce the overall costs, departments tend to focus on individual cost reductions.

IT seen as a vendor – Business begins to see IT as a vendor (usually an expensive one). This results in an arms-length relationship between IT and the rest of the business. As a result, trust begins to erode and outsourcing IT begins to look like an attractive proposition.

Bob believes, “The alternatives begin with a radically different model of the relationship between IT and the rest of the business — that IT must be integrated into the heart of the enterprise, and everyone in IT must collaborate as a peer with those in the business who need what they do.”

Is IT ready for the radical model?

Bob’s comments are spot-on! I agree that turning IT into an internal business unit, which conducts business transactions with other departments, is a less than optimal model. So what should a CIO do? For IT to be accepted as a credible internal partner there are a few things IT needs to get right.

  • Is IT managing service right? – When IT fails to deliver basic services and project, it would be impossible to develop any meaningful relationship with business.
  • Is IT managing the budget right? – If IT budgets are not predictable and IT does not understand or manage its costs, IT would not have much credibility in the enterprise.
  • Is IT investment generating value for the business? – IT must be able to demonstrate that its projects and investments support the business strategy and deliver benefits for the business such as, revenue growth, cost reduction, better decisions or reduction in risk.
  • Is IT managing the resources (or capability) right? – IT capabilities consist of people, technology assets, intellectual capital (processes and know-how) as well as relationships (trust and shared ownership). Successful IT groups leverage these capabilities to deliver and sustain competitive advantage for the business.
  • Is IT managing the “business of IT” right? – Managing the business of IT means managing the costs of IT services and projects, managing demand for services, having effective governance processes along with delivering and communicating value.

IT as a businessThe “radical model” moves the focus from managing IT like a business to managing IT for business value. When IT is solely focused on chargeback and internal customer requirements, it is not always working in the best interests of the enterprise as a whole. But it is neither easy nor straightforward to make the transition from the traditional to the new operating model. Martin Curley of Intel uses the business value maturity framework to describe the journey.

Managing IT for Value

There are interrelated challenges of managing IT for business value (or contribution to business success), management of IT budget, IT capability and managing the business of IT.  IT groups gradually move from one maturity level to the next and need different strategies at each level.

Managing the IT budget

The initial challenges are to get a handle on IT costs and budget and apply financial discipline of expense control as well as forecasting to ensur

Managing IT for Value

There are interrelated challenges of managing IT for business value (or contribution to business success), management of IT budget, IT capability and managing the business of IT.  IT groups gradually move from one maturity level to the next and need different strategies at each level.

Managing the IT budget

The initial challenges are to get a handle on IT costs and budget and apply financial discipline of expense control as well as forecasting to ensure that the budget is predictable. Many IT shops cannot forecast half-year or year-end expenses confidently. Executing the strategies for systematic cost reductions (e.g. demand management, SOE, adjusting service levels, BPR etc) is the next level of maturity. Optimising costs by adjusting refresh cycles or managing risk reward trade-offs is the final level of sophistication.

Managing the IT capability

IT capability is what IT can do for the business. Improving IT capability is about keeping up with the business demands and reducing the gap between demand and IT delivery. The IT capability stages of maturity are:
  • Technology provider – IT as an order-taker who can be counted upon to provide basic technologies and applications that the business requires.
  • Technical experts – IT as providers of technology services. IT is invited to provide technical inputs and expertise. Typically at this stage IT has limited business understanding.
  • Business partners – IT are included in developing business plans and solutions. IT has a good understanding of business and can engage with the business well. IT is proactive and is able to propose innovative solutions. However, the difficulty in going from good service providers to this level should not be under estimated. According to Bob Lewis, innovative CIOs are operating at this level. As Mazda CIO Jim Dimarzio writes in his CIO article, “Being in the room, however, did not automatically equate to involvement.” Jim had to develop the IT capability to effectively engage with the business and contribute to business processes and priorities.
  • Corporate core – IT is considered a core capability and a source of competitive advantage. IT has a track record of innovations that are a major source of competitive advantage.

Managing IT as a business and managing for value

I believe both these strategies are closely related. When IT is run effectively as a business it creates significant value.  The stages of maturity are:

  • Cost centre/cost focus – IT understands and manages the cost of the services well. Cost and quality of service are seen as important. Expenditure is controlled and technology life-cycle costs are considered in investment decisions.
  • Customer /benefits focus – The focus of IT engagement changes from cost to value or business benefits. Formal tools such as business case/Return on Investment (ROI) are used. Services are designed with customers’ needs in mind.
  • Portfolio approach – More sophisticated approaches are used to select investments using portfolio management and value management techniques. IT has effective measures of customer service. Mechanisms such as chargeback are used for fair distribution of IT costs and as a way of changing consumption patterns.
  • Value Centre – The organisation systematically optimises its value using portfolio management, risk trade-off and alignment with strategy. IT demonstrates a different mindset. IT has a strong stakeholder focus and is aligned to organisations’ value drivers where technology is seen as a tool rather than an end.

Conclusion

In closing, I quote Bob’s advice, “Don’t act like a separate business. Do the opposite — be the most internal of internal departments. Become so integrated into the enterprise that nobody would dream of working with anyone else.”

Building effective vendor partnerships

When companies announce technology deals both the company and the vendor are keen to describe the deal as a partnership and not a transaction.  This is because a partnership sounds more strategic. There is hope that this relationship between the company and the vendor can create some long-lasting value or mutual gain, but the reality soon bites. The relationship soon changes from a partnership to transacting, which often leads to bickering and disappointment. Papers regularly report stories of long-term sourcing or services partnerships that are not renewed or are cut down in size. This makes us wonder if the vendor partnership is simply just a myth. Continue reading “Building effective vendor partnerships”

Do not let your communication hold you back!

These days it is not difficult to find CIOs who are excellent communicators. Unfortunately, it is also very common to see many IT leaders who struggle to communicate well. Some IT leaders are very good at communicating technical information with their teams whilst others communicate well with business users. However, many IT leaders find it hard to communicate effectively with all the stakeholders in the business. I have thought about why this is the case and what IT leaders at all levels can do to improve their message delivery, be effective at leading and motivating their team and engaging with the business.

Many people working in IT start in technical or engineering areas where technical knowledge and skills are valued much more than communication skills. In these areas, peer group discussions are about technical issues and are usually full of jargon. Even when these people become team leaders, they have a technical team and a technical boss so the style of communication does not need to change. Those that have to deal with business users often struggle to get their message across or to elicit ‘real’ requirements.

The inability to communicate effectively reduces one’s own performance and damages the reputation of IT in the organisation. It can affect their relationship between IT staff and their peers. When lT leaders talk in jargon their message is lost, misunderstandings occur and they fail to win others over to their cause. Communication blunders can adversely impact an IT leader’s career by reinforcing a ‘geeky’ image. Executives think if an IT leader cannot express their ideas clearly that they should hire someone else who can.

Here are some tips on improving communications:

Avoid jargon

What is true for board communication (Winning the Board Game) also applies to communication with other people. Speak in simple jargon free language. Even among technical people, talking in simple terms is always more effective than talking in jargon. When talking with jargon you are assuming everyone has the same knowledge level as you. When listeners don’t understand the technical terms they lose the message you are trying to deliver. It is even worse when talking to the business because they will just stop listening altogether.

Don’t dazzle them, get buy-in

Some IT people want to impress others with their brilliant solutions or ideas. They are very confident that they know the very best way of doing something or solving a problem. What happens then is that they become so enthusiastic about their own thinking that they fail to get a commitment from the others. They don’t get the perspective of others or try to build a consensus. In fact, the enthusiasm and confidence of these people discourages others from raising questions or making suggestions. Although others seem dazzled by good ideas, this doesn’t mean they believe them or will become part of the solution development process. Failing to get agreement at the start of discussions can create delays later as people struggle to comprehend why this solution is being implemented and why other approaches will not work.

Ask questions

Asking questions ensures an understanding. It also encourages others to ask for clarifications, make suggestions and present other points of view. Asking meaningful questions and listening to the answers engages the audience, making them active participants. It can help show important information, insight or feedback. If you are presenting an idea or business case, asking questions facilitates understanding, which can lead to a agreement.

Don’t act like a sales person

New IT leaders try to motivate their teams or get them energised by behaving like sales people or sport captains by saying phrases like, “go get them” and “play to win”. IT staff are generally low-key and like facts and arguments, not rah-rah. Learn to speak with the audience in their language.
Similarly, using scare tactics to sell ideas does not work. IT Leaders talk about catastrophic consequences when discussing technical upgrades or investments. Most experienced business executives have heard these type of doomsday scenarios from IT before and find them unconvincing. Using rational, measured arguments and discussing options improves understanding along with the presenter’s credibility.

Too many facts spoil the pitch

Just as too little facts don’t make a good argument, too many facts can confuse instead of enlighten. Some leaders think they would be more credible if they have a fact heavy business case or presentation, especially for IT investments. Telling a story can be more powerful than a litany of facts, charts and analyses. In addition to the facts, others are looking for passion and commitment to get them to join you and support your cause.

Don’t get bogged down in technical problems

Although technical problems may be the most pressing issue on your mind or in your day, most other people don’t want to know about your technical problems. The jargon in talking about technical problems can be boring and/or may cause others to misunderstand and panic. As a leader, you are expected to handle these technical problems yourself or ask others how they could help. When leaders regularly talk about their technical problems others may think you can’t handle the job. If the problems are important be brief with the details, tell others the possible impacts on their business and what steps you have taken to resolve the problems without resorting to detailed step by step explanations.

Don’t forget your team

Many IT leaders focus their energy and communication on the upper tiers of management and business managers. While it is important to communicate effectively with management, remember your team needs to hear from you as well. Your team will have questions and concerns and  will need direction from you. You need their agreement and support to meet your goals and do your role. Don’t forget this!

Don’t bypass other leaders

Many senior leaders believe they are better communicators than their managers and team leaders. While it is right for major company news or changes in direction to be communicated from up above, research indicates that communication to the team from their direct leader or supervisor is the most effective and most credible. Immediate supervisors know the on-ground realities and can address what is important to their staff. They can give specific direction. Employing the organisational hierarchy to cascade communications prevents mixed messages and conflicts from occurring. It also avoids the inadvertent undermining of subordinate managers.

Discussion or direction

In meetings, make sure it is clear when issues or items are being discussed and brainstormed. Many leaders don’t clarify when the discussion is over and a decision has been made, creating confusion within the team. If the team continues to discuss decisions after they are made, the leaders’ authority is undermined. In strict hierarchies, once the leader has an idea, the team feels it is disrespectful to challenge it. In this case, encouraging exploration and discussion needs to be very explicit. On the other hand, when a decision is reached, clarity in assigning responsibility and actions improves communication.

Written directions

Making a written record of the decision in meeting minutes or in a follow-up memo further facilitates clear communication. A written record of the decisions made and the instructions given provides useful information for those who were not part of the meeting or the discussion. Written instructions create clarity and avoid confusion as different participants may have a different idea of what decision was reached.

Final word

Remember, improving communication is not a one step process. Communication continues to be a problem in all organisations. To become better at communicating requires practice and more practice.

Good luck!