A high profile industry analyst recently appeared to be implying that US IT management lacked vision, which we at Freeform Dynamics thought was a bit out of order. Analysts should be there to help rather than to pass judgement (see discussion here). But it does raise an interesting question, so we got to thinking about who …
IT Should Not Be a Cost Center
Article links to a blog, which links to a blog, which says:
"...the general feeling that I get is that IT departments are not driving the same pace of innovation and productivity gains that they were 5-10 years ago. There are a lot of reasons for that, including leaner staffing, smaller budgets, a lower corporate profile in many organizations, and having achieved so many efficiencies in the past that there simply isn't any more low-hanging fruit on the trees of corporate productivity."
That's the crux of the problem, right there. IT departments have been told to focus on cost-containment to the exclusion of all else. To some extent, budget constraints do encourage innovation, but you eventually reach a level where you can't innovate in technology without appropriate resources.
I'm a technical user/business decision maker and one challenge I run into is with our IT department's approach to network security. We're so locked down that often we can't get the tools we need until after the need is over. We aren't allowed to have a partner FTP site for fear of viruses, so we transfer files via our own personal domains, where the company has no chance whatsoever to scan them.
In this environment, IT trumpets their success in preventing security breaches and virus outbreaks, claiming they've saved the company hundreds of thousands of dollars. But in my mind, these savings have come at the cost of hundreds of million dollars in opportunity cost. Our competition is closing in, precisely because they are focusing on revenue, not cost-containment.
This has the ability to become a troll-fest very quickly
There are some articles and studies that are worth reading on how you measure value within IT. I can recommend,
Gillies and Broadbent 2005
Gartner Doc G0137362 - 2006
Gartner Doc DF-18-0745 - 2002
• Explaining where the cash for technology is going and where it needs
to be going, based on the value it generates.
• Clearly describing minimum “run” costs of IT and factors that are under
IT control and their relation to business needs (e.g. service levels, fixed
• Outlining IT’s role in supporting business growth
• Outlining IT’s role in business transformation and innovation."
I would encourage people to use learned articles to gain insight into how to measure the worth of IT. None of them would come from "buy a conclusion" report producers like Gartner however.
Gartner has had some insightful moments, such as the production of magic squares to communicate information, but the noise to signal ratio is too great for the most competent CIO to benefit really.
In the last 30 years I have been involved in IT, the quality of the participants, particularly management, has fallen significantly. In the early days a CIO (or DP Manager) was expected to manage people, technology and understand how best those resources could benefit the business.
Maybe its just the folks I've been around for the last decade or so but I'd like to see ROI calculations, budgets, properly managed projects, competitive quotes, post implementation reviews, a service oriented culture and a focus on end market delivery. These would allow a lot better results from what seems to be a constant stream of lurches toward new software architectures (SOA) information architectures (KM) and hardware architectures (Virtualisation). I see nothing wrong with either SOA or Virtualisation (and as we know KM is pixie dust) in themselves, but CIO's and management teams seem to lurch towards them without clear ideas of process or benefit.
That, combined with boards allowing uncritical CEO's to stand well clear of technology seems to mean a slowing down or even reversal of cumulative business benefit provided by the IT function.
Ohhh of course they have vision. Actually too much of it. Top Managers with limited knowledge of the technology give techies their impossible visions to implement. If everything works out and the techies can somehow find a more less suitable solution the top man gets the kudos, if not the techies are not doing their jobs and get sacked...
Re Re Troll fest
Completely agree - In fact I think a pint may be in order.
I was merely pointing out that even when you have all of those foundations laid, the business will still need the connection to real revenue displayed. This would then form the basis of the the ROI or NPV, and would then be reviewed post implementation.
As far as I can see these lurches from one management banana peel to the next are caused by the CIO trying desperately to meet subjective measures put in place without reference to business outcomes. That is to say - Cash.
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