The reality is this: accountability for IT success should fall not
only on IT managers but more importantly on business leaders, said
Frank Koelsch, executive vice-president, corporate strategy and
research for Info-Tech Research Group in London, Ont.
And by the same token, he said, CIOs must have an equally important
role in defining business strategy as the CEO.
Koelsch's views are echoed by Paul Williams, a trustee with the
Rolling Meadows, Ill.-based IT Governance Institute (ITGI) and author
of a book released earlier this month titled IT Alignment: Who is in
Charge? The book discusses strategies for business-IT alignment, and
provides guidance on the responsibilities of the CIO, CEO and board.
Research indicates that these are the issues being neglected by many
businesses. More than 50 per cent of organizations polled in a recent
ITGI survey lacked any formal structure to align IT investments with
business strategy. And fewer than 25 per cent engaged board members
directly in the IT strategy-setting process.
Business should actively involve IT to better understand the realities
of technology's capabilities and risks; and IT has to learn to think,
communicate and plan in business lingo, say both Koelsch and Williams.
"There are no IT projects; there are only business projects. That's a
baseline, so it's incumbent upon the business executive to include and
to drive IT initiatives as part of business initiatives, as part of
the business deployment process," said Koelsch.
He says business objectives and IT's ability to support these are
doomed if there is no business and IT alignment.
According to Koelsch, a common vision between both units is essential
to achieve agreement on issues such as: how much a project will cost,
how long it will take, what resources it will consume. "Often IT
managers are told they have to do something, at a certain cost, within
a certain time frame and deliver certain IT capabilities, all of which
are unrealistic."
Williams said companies should look at "buying IT" as akin to
embarking on a major business change initiative, in which IT plays a
significant, but not an isolated or discrete, part.
"One of the most common reasons for [IT] failure is a lack of
understanding of the way that the business [itself] needs to change or
adapt to benefit from the [IT] initiative," said Williams.
He said this business change component is rarely understood fully, and
is always more complex than anticipated. For this reason, he said,
business leaders need to be educated, not just on what IT can do, but
also on what it can't do -- and that includes bringing about [people
and business] change in itself.
IT managers have to be realistic and not have unreasonably high
expectations about the business benefits of a project. "Sometimes they
will have to downgrade business expectations."
Williams said businesses must work in full partnership with IT
departments (including third party outsourcers) to build reliable
metrics for project performance and ultimate success. These metrics
would consider things like active IT investment portfolio management
and the impact of risk on project performance and delivery.
"Business often sees IT as a 'magic box' solution in that all you need
to do is buy the [product], plug it in and miraculously it will give
you the [expected] benefits," said Williams. "We all know it cannot be
that simple. There needs to be a joint understanding that IT of itself
will never deliver benefit."
He said businesses must specify statements of value expectation that
are specific and measurable. "Too often the benefits are articulated
in soft terms such as improved staff morale or improved product or
service quality. These are too vague."
"Improved staff morale should lead to lower staff turnover and
therefore [support] quantifiable measures such as reduced costs for
recruitment or new staff training. Similarly, improved product quality
should lead to higher revenues and reduced costs for dealing with
returns.
"What needs to be understood, of course, is that all of this becomes
totally academic unless the value achieved is actually measured across
the life cycle of the solution. Without such measurement there can be
little accountability and minimal learning," Williams said.
John Sloan, senior research analyst at Info-Tech, says business
success comes from a combination of a CEO who wishes to "include and
drive IT" and a CIO who is an aggressive student of the business.
"It's equally important that the IT leader be able to speak the
language of business," said Sloan. "This needs to be a priority."
The focus should be on achieving a business strategy and creating
success measures. "IT and business can only see eye-to-eye on the
business value of IT if they both speak the same language. As this is
a business value discussion, that language should be a common set of
business value measures," Sloan said.
According to Sloan, IT governance has created the framework for
planning, measurement, control, execution and accountability. "Through
governance, the enterprise asserts its ownership of IT. The IT group
and business stakeholders start by agreeing on goals and how success
will be measured."
According to Sloan IT decision-makers should place a higher priority
on formal management systems that document a set of repeatable and
measurable procedures. "The biggest impact of formal systems is not so
much on the speed and efficiency of projects themselves, as on the
management of expectations. Repeatable and measurable procedures
provide benchmarks that everybody can understand and accept."
This process is often best led through a properly constituted and
representative investment committee, said Williams. One option is to
outsource this task to an independent investment office to avoid
internal bias and politics. "The outsourced service would not make the
final decisions, but would ensure proper, objective comparison of the
facts to enable an informed decision to be made.'
He said the CEO must ensure that decisions on IT-related investments
match the business priorities and -- through active involvement of the
CIO -- take into account skill and resource limitations.
"It needs to be made clear that IT is there to deliver the IT
component of key projects, but ultimately it is the business'
responsibility to deliver value from the total project. This needs to
be done in full partnership and shared accountability between the
business and IT," Williams said.
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