I.T. CANNOT BE ONLY THE CIO'S RESPONSIBILITY
By IMD Professor Donald A. Marchand and Joe Peppard - October 2013
IT is not something that can be managed from a box on the organizational chart. Unfortunately, this is not the view in most C-suites. Just look at what most do: They appoint a CIO and give him or her a budget and a mandate to get on with it! Why? As one CEO said to us: “I just want to forget about IT and concentrate on my core business.”
Of course, this response would be fine if the challenge were merely to deploy technology (on time and to budget) and ensure it continues to function properly for as long as required. It would also mean that outsourcing to a proven tech provider would be a legitimate response to perceived problems with IT (get someone with more experience and knowledge to run it for you). Or that the cloud is the remedy for IT’s perceived inability to deliver, its inflexibility, tardiness, and questionable return. (By portraying IT as a utility like water and electricity, with apps on demand, a pay-as-you use model, and unparalleled scalability, what could be more attractive?)
The reality is somewhat different. This approach may work for business functions like manufacturing or logistics, but it definitely won’t work for IT.
For one thing, what a manufacturing director is and is not responsible for is very clear. So what can a CIO be held responsible for? Technology? This only results in technology being deployed on time and to budget and works. What about being held to account for the benefits and value from IT spend?
This raises the fundamental question as to whether a CIO can really be held accountable for something that will only emerge when their colleagues step up to the plate. For example, successfully deploying CRM software on time and to budget will deliver little unless sales, customer services, and fulfillment processes are redesigned, staff trained to have the right conversations with customers, data quality improves, and marketers build the right competencies to use all the data that will now be available to them.
Let’s say that a company’s sourcing strategy calls it to move all IT requirements to best-of-breed cloud-based providers. Infrastructure and IT-based services will now be provisioned and delivered directly from the cloud. The question is, will problems with IT go away, particularly the challenges around delivering business value? Of course not! Why? Because the problems with enterprise IT have generally nothing to do with IT. They never have!
What the cloud does is make the technology-supply side more efficient and perhaps more agile. It may make costs more predictable and shift investments from CapEx to OpEx. It may even lead to access to leading-edge technologies. But these are generally not where the challenges lie when we look at the situation in most companies regarding return from IT spend.
The reality is that the organization still requires a strategy for information and systems. It still needs to make choices around process standardization and the extent of digitization, define the degree of integration required, and think about innovation opportunities enabled by IT, whether they be process innovation, business model innovation, management innovation, or innovation in the customer experience. And the organization still needs to prioritize IT spend, run programs and projects, manage the IT investment portfolio, orchestrate the organizational change to deliver expected business benefits, and make sense of information.
Accountability for some of these areas reside with the CEO and the other members of the C-suite (we are assuming CIO is a member of the c-suite), for others with LOB manager, and some will be shared. What is clear is that they are not the sole responsibility of the CIO. All members of the C-suite need to recognize and embrace their fundamental roles.
What is therefore required is strong governance of IT. Be clear about the decisions concerning IT that need to be made, who gets to make them, how they are made, and the supporting management processes, structures, information, and tools needed to ensure that they are effectively implemented, complied with, and are achieving the desired levels of performance. Unfortunately, we have found that the focus of governance around IT continues to be on the more operational IT issues of delivering technology capabilities and IT services.
The basic requirement for success with enterprise IT has changed little over the decade. There is no magic bullet. The bottom line is that executives need to get their hands dirty and actively engage with their CIO and IT. Decisions about IT today really have little to do with technology!
Donald A. Marchand is a professor of strategy execution and information management at IMD. Joe Peppard is a professor of information systems at Cranfield School of Management.
This article first appeared as a post on the HBR Blog Network.