Getting IT Right

It’s been 40 years since the advent of modern IT, yet few companies do it well. If you stick to three central principles, you can turn IT from a costly mess into a powerful weapon.

by Charlie S. Feld and Donna B. Stoddard

Of all the members of the executive committee, the CIO is the least understood—mostly because his profession is still so young. Over the centuries, the fields of manufacturing, finance, sales, marketing, and engineering have evolved into a set of commonly understood practices, with established vocabularies and operating principles comprehended by every member of the senior team. By contrast, the field of information technology—born only 40 years ago with the advent of the IBM 360 in 1964—is prepubescent.

This generation gap means that, in most organizations, the corporate parent—caught in the linguistic chasm between tech-speak and business-speak—has no idea what its youngest child is up to. Management too often shrugs its shoulders, hands the kid a fat allowance, and looks the other way. Later on, the company finds it’s paid an outrageous price for the latest technological fad. Instead of addressing the problem, many companies just kick the kid out of the house.

The result in many major corporations is that IT is an expensive mess. Orders are lost. Customers call help desks that aren’t helpful. Tracking systems don’t track. Indeed, the average business fritters away 20% of its corporate IT budget on purchases that fail to achieve their objectives, according to Gartner Research. This adds up to approximately $500 billion wasted worldwide.

Such waste—most egregious in industries like transportation, insurance, telecommunications, banking, and manufacturing—is a direct result of the fact that IT has so far operated without the constructive involvement of the senior management team, despite the best intentions of CIOs. Over the years, IT departments have enthusiastically fulfilled requests by different corporate functions. In the process, companies have created and populated dozens of legacy information systems, each consisting of millions of lines of code, that do not talk to one another. As the data from discrete functions collect in separate databases, more and more resources are required merely to keep the systems functioning properly.

While the Y2K crisis impelled many companies to clean up the worst of their legacy systems, most organizations merely did spring cleaning, ignoring the fact that their technological houses badly needed structural repair. Despite advances in technology, most companies continue to struggle with 35-year-old, costly, and rigid information archeology; a cynical executive board; a discouraged IT organization; and throngs of increasingly frustrated customers. Add the confusion of mergers and acquisitions and a long march of poorly implemented “solutions” (ERP, CRM, data warehouses, portals, mobile computing, dashboards, and outsourcing), and you end up with chaos. How can this situation possibly be set right?

Making IT work has little to do with technology itself. Just because a builder can acquire a handsome set of hammers, nails, and planks doesn’t mean he can erect a quality house at reasonable cost. Making IT work demands the same things that other parts of the business do—inspired leadership, superb execution, motivated people, and the thoughtful attention and high expectations of senior management.

IT success also requires common understanding. Senior managers know how to talk about finances, because they all speak or understand the language and can agree on a common set of metrics (profit and loss, balance sheets, return on assets, and so on). They can do the same with most elements of operations, customer service, and marketing. So why not with IT? There is no longer any reason why nontechnical executives should allow themselves to be befuddled by IT discussions or bedazzled by three-letter acronyms. And there is no reason that technologists cannot learn to speak the language of business and become perfectly good leaders.

We believe that there are three interdependent, interrelated, and universally applicable principles for executing IT effectively and that it is top management’s responsibility to understand and help apply them. The three principles are: