Six IT Decisions Your IT People Shouldn’t Make

Top executives often feel uncomfortable making hard choices about information technology. But when they abdicate responsibility, they set their companies up for wasted investments and missed opportunities.

by Jeanne W. Ross and Peter Weill

For several years now, we have observed the frustration—sometimes even exasperation—that many business executives feel toward information technology and their IT departments. Our center runs a seminar called “IT for the Non-IT Executive,” and the refrain among the more than 1,000 senior managers who have taken the course runs something like this: “What can I do? I don’t understand IT well enough to manage it in detail. And my IT people—although they work hard—don’t seem to understand the very real business problems I face.”

Perhaps the complaint we hear most frequently from the executives—most of them CEOs, COOs, CFOs, or other high-ranking officers—is that they haven’t realized much business value from the high-priced technology they have installed. Meanwhile, the list of seemingly necessary IT capabilities continues to grow, and IT spending continues to consume an increasing percentage of their budgets. Where’s the payback?

Indeed, our research into IT management practices at hundreds of companies around the world has shown that most organizations are not generating the value from IT investments that they could be. The companies that manage their IT investments most successfully generate returns that are as much as 40% higher than those of their competitors.

While a number of factors distinguish these top-performing companies, the most important is that senior managers take a leadership role in a handful of key IT decisions. By contrast, when senior managers abdicate responsibility for those decisions to IT executives, disaster often ensues: Recall the high-profile instances of botched adoptions of large-scale customer-relationship-management and enterprise-resource-planning systems. It would be reasonable to assume that the CRM and ERP fiascoes were the result of technological snafus in getting the complex systems up and running. But in fact the problems generally occurred because senior executives failed to realize that adopting the systems posed a business—not just a technological—challenge. Consequently, they didn’t take responsibility for the organizational and business process changes the systems required.

Such unfortunate scenarios are likely to be replayed as companies face the next rounds of IT innovations: the increased use of Web services, the adoption of handheld devices by employees and customers, and the integration of multiple electronic sales and service channels such as Web sites, call centers, ATMs, and wireless phones.

Don’t get us wrong. IT executives are the right people to make numerous decisions about IT management—the choice of technology standards, the design of the IT operations center, the technical expertise the organization will need, the standard methodology for implementing new systems. But an IT department should not be left to make, often by default, the choices that determine the impact of IT on a company’s business strategy.

To help senior managers avoid IT disasters—and, more important, to help them generate real value from their IT investments—we offer a list of six decisions for which they would be wise to take leadership responsibility. The first three have to do with strategy; the second three relate to execution. Each is a decision that IT people shouldn’t be making—because, in the end, that’s not their job.
1. How much should we spend on IT?

Given the uncertain returns on IT spending, many executives wonder whether they are spending too much—or perhaps even too little. If we can just get the dollar amount right, the thinking goes, the other IT issues will take care of themselves. So they look to industry benchmarks as a way of determining appropriate spending levels.