What business executives don’t understand about IT

When I graduated from college, I worked as an assembler language programmer for Sears. At that time, Sears was the world’s largest retailer and it was just beginning to use the new System 360 from IBM. IT was looked upon as a group of techies that performed some unexplainable job that was supposed to revolutionize the business. Beyond that, the senior executives across the business knew little of us nor did they want to know.

Ever since then, IT has been accused of being too technology-oriented. But much has changed. We have seen more CIOs being recruited from outside of IT to inject business knowledge into IT, and many IT leaders themselves have pursued MBAs for the same reason. Despite this, many non-IT executives still don’t understand how to work effectively with IT, nor do they believe doing so is part of their job. It is up to CIOs to change this narrative so that companies can maximize the value of IT.

To do my part in helping convince business leaders they must play a role in IT, I stepped directly into the business executive pipeline, volunteering to guest lecture in the MBA program at a local large university. The title of my presentation has been “Digital Transformation Strategy,” subtitled “How to effectively exploit the IT resource to gain sustained competitive advantage.”

When I present to future MBAs, I focus on four central issues that business executives most often get wrong about IT.

Where IT should report

The initial point of discussing organizational structure is to educate those most likely to be aspiring for corner offices that the CIO needs to report to the CEO or COO. To often CEOs have positioned IT to report to some other executive, oftentimes the CFO, and according to CIO.com’s State of the CIO survey, 18% still do. This decision is often made because IT is viewed as a cost center. Putting IT under the CFO, the company will likely have financially sound systems but perhaps not the ones the company strategically needs.

When the CEO doesn’t think IT is important enough to get top-level attention, that message filters down to the rest of the corporation. IT is not viewed to be as important as Sales, Finance, Manufacturing, Operations, or Marketing — dangerous in a highly competitive environment where efficient or innovative systems can spell the difference between the corporation’s success or failure.

Who should determine the IT agenda

All of senior management must be involved in achieving consensus on the IT agenda, not just the CIO. This can be achieved only by establishing a committee of all CEO direct reports whose job it is to achieve consensus on the annual IT agenda.

It’s a fool’s errand to think the CIO is smart enough to understand the needs of each department in a modern, complex corporation and be able to determine the overall priorities. This must be in the job description of every executive who reports to the CEO. Without this committee, there is a danger that the IT agenda will not be aligned to the corporate objectives.

What IT’s role is in corporate strategic planning

Next, the company’s top executives must ensure that the CIO participates in the corporate strategic planning process. In this role, the CIO brings to the table any emerging technologies that could be adopted and what their impact could be on the corporation — especially with respect to the competitive environment the company faces.

This is vital input to the planning process that could ultimately affect the entire corporation and must be incorporated from the start.

What role the business plays in systems development

Systems development is another important area executives need to understand. The systems IT develops will not be used by IT; rather, they will become integral to the requesting department. It is important, therefore, that management understand the processes involved in proposing the system, estimating the cost, determining the ROI, producing the deliverables, changing the specifications and time frames, and measuring the system effectiveness. After all, the completed system may impact sales projections, departmental costs, and individual incentives, to name a few.

Management must also assure that the people in the user organization are given the time and recognition to do the work required to develop the precise specifications of the system. Without this understanding, tomorrow’s MBAs will fail to maximize the true value of IT.

Additional notes for future business leaders

There are several other areas that the corporation’s executives need to be aware of to effectively understand the IT organization:

• They should be aware that IT staff need to continually attend industry events and take training courses to stay abreast of new developments.
• They should realize that a dual career path in IT that rewards technical expertise and not just the management of people is a requirement for success of IT as an organization.
• They must support the idea that you never buy your last computer and that we must continually stay up-to-date with new hardware and software trends in the industry.
• They must also be willing to participate in business continuity planning to be ready if any major outage is experienced.

One final thing. I would like to see companies participate in post-implementation studies to determine whether the new system achieved its objectives and ROI and what could be done to do a better job in the future. This would require time on both IT and the end-user departments but it would go a long way to improving results.

These are the topics discussed with the MBA students to help them understand their role in IT when they achieve C-level status in the corporation. I would strongly recommend that current CIO’s and their senior staff develop plans to present these ideas to their peers. My book The 9 1/2 Secrets of a Great IT Organization has the subtitle “Don’t Do IT Yourself.” This collaborative process across the business-IT divide, if successful, will go a long way to maximizing the potential of information technology for the good of the corporation overall.