Managing IT right starts with rightsizing IT for value

If you want to hear a big number that sums up a key conundrum IT leaders face today, it’s this: The Consortium for Information and Software Quality estimates that the annual cost of poor software quality in the US has grown to at least $2.41 trillion, or 9.4% of total GDP.

The big picture implication is that, if CIOs were to ‘do IT right,’ we could save on a macro basis trillions of dollars. But here’s the rub: Despite the CIO title having existed for 42 years, what CIOs should be doing continues to be the subject of heated debate. Can we — living in the digital age, working in an information economy — say unambiguously, “Company X is managing IT right and Organization Z is managing IT wrong?” Is there a spectrum of measurable “IT rightness/IT wrongness”?

The reality is that, in an economy where every task, process, and outcome hinges on the proper functioning of some combination of technology components, the responsibility set for the CIO is potentially infinite. As such, so much of what constitutes good IT leadership today is determining where IT’s effort should be directed given the limitless possibilities.

Winnowing the IT estate

Bowing to the pressure of the contemporary zeitgeist I could not resist asking ChatGPT, “Where should CIOs be spending their time?”

ChatGPT surfaced 10 areas where IT leaders should focus their efforts:

• Strategy and alignment
• Innovation and emerging technologies
• Digital transformation
• Cybersecurity and risk management
• Vendor management and partnerships
• Talent management and leadership
• Stakeholder engagement
• Continuous learning
• IT governance and performance management
• Industry and regulatory compliance

That’s a pretty good, touching-most-key-bases list. But as you might expect from our generative AI friend, it lacks urgency and the human juices of organizational politics. It lacks soul.

Concerned that my job as a CIO Whisperer is under threat from an AI chat interface, I decided to get some non-algorithmic direct evidence. I asked a group of executives to complete the following sentence, “CIOs should be managing…” Then I posed what I thought might be a clarifying question, “What are CIOs accountable for?”

The always practical and down-to-earth Cheryl Smith, former CIO at McKesson (Fortune 7) and West Jet (2nd largest airline in Canada), author of The Day Before Digital Transformation: Unlocking digital transformation for business leaders,and guest lecturer on Digital Transformation Execution for the IT Masters Degree courses at George Mason University in Virginia, believes that in situ CIOs can save their organizations millions of dollars by doing the basics of IT right.

In the late 1990s — when Smith was in charge of internal systems at Verizon, reporting to CIO Ralph Szygenda, who later went on to become CIO at General Motors — she instructed her people, “Don’t print out any reports. Stop printing out any reports.”

Back then there was nothing online. When an executive came in and yelled, “Where’s my report?” the team would figure out what the application was and who was the person in charge. “We discovered tons of stuff nobody cared about,” Smith says.

This experience, she adds, underscores one of the richest sources of low-hanging IT value: shutting down unnecessary applications. Organizations have too much software.

While we may never have a universally accepted IT metric, we can, as a starting point, stop spending money on IT we don’t need.

Dealing with the glut

IT financial management — sometimes called FinOps — is overlooked in many organizations. A surprising number of organizations do not have a very good handle on the IT resources being used. Another way of saying this is: Executives do not know what IT they are spending money on.

CIOs need to make IT spend totally transparent. Executives need to know what the labor costs are, what the application costs are, and what the hardware and software costs are that support those applications.

The organization needs to know everything that runs — every day, every month, every year. IT resources need to be matched to business units. IT and the business unit need to have frank discussions about how important that IT resource really is to them — is it Tier One? Tier Two? Tier Thirty?

In the data management space — same story. Organizations have too much data. Stop paying to store data you don’t need and don’t use. Atle Skjekkeland, CEO at Norway-based Infotechtion, and John Chickering, former C-level executive at Fidelity, both insist that organizations, “Define their priority data, figure out what it is, protect it, and get rid of the rest.”

A general rule of thumb used by the information management community — think AIIM, ARMA, NARA — is that around 68% of stored data is junk, approximately 25% has value, 5% is subject to regulatory retention requirements, and 2% is subject to legal hold.

Why are you paying a 200% premium for data storage, let alone all that is required and management and maintain it, if more than two-thirds of your data is irrelevant?

Bottom line

I was not totally surprised that the responses to my CIO straw poll were broad, varied, and situationally dependent. After all, CIOs at top performing enterprises do not suffer from Group Think. They are aware of general trends but focus on crafting bespoke strategies and tactics optimized for their particular situation.

But if there is a common thread among their responses, it is that IT leaders cannot fall prey to the potentially infinite responsibilities of IT today. Rationalization is a core IT action. Their stakeholders must know where and why IT resources are allocated — and what the cost is of maintaining a status quo that fails to produce adequate value.