ESSENTIAL BUSINESS KNOWLEDGE FOR I.T. EFFECTIVENESS

Dr James Robertson is an independent management consultant who has undertaken an in depth study of the factors giving rise to information technology project failure and the failure of I.T. to meet business expectations.  He has developed a concise "Pulse Measurement" investigation to diagnose why I.T. is under-performing and from this analysis of organizational pain he advises organizations how to achieve the true potential of their I.T. investments.

In this series of exclusive articles Dr Robertson shares the insight he has gained in nearly three decades of practical experience with regard to the effective application of information technology.  These articles are intended expressly for CIO's and other I.T. executives and managers.  A complimentary series of articles address the subject from the perspective of the CEO and business executives and managers.

Dr Robertson can be contacted at James@JamesARobertson.com

Many organizations experience a breakdown in communications between their information technology function and business management.

This results in situations in which organizations make critical decisions without clear understanding of the consequences and then experience considerable frustration and even loss as a result.  In many organizations the divide between the "business" and the "technologists" is pronounced and sometimes adversarial.

This article looks at the situation from the perspective of the CIO and other I.T. executives and managers on the "technology" side of the fence.  A companion article looks at the situation from the perspective of the CEO and those on the "business" side of the fence.

In "CIO Insight" February 2004, published by Ziff Davis, Allan E Alter quotes Harvard Business School Professor Emeritus Richard L. Nolan as saying in a speech before the Society for Information Management the previous October that additional board oversight should be extended to information technology. "IT is the next disaster waiting to happen," Nolan is reported as saying. "Companies are running on autopilot. We're seeing boards that are essentially inactive, while even top managers are giving short shrift to IT."

The article goes on to report major I.T. project failures and to ascribe a major bankruptcy to I.T. system failure and suggest that board members may soon be sued by shareholders for negligence in the event of such incidents.

I consult regularly to organizations who are expressing frustration with I.T. or wondering what direction to take.  In doing this, I have the opportunity to talk to senior executives and CEO's and hear their side of the story and then to talk to the CIO and managers responsible for I.T. and hear their side.

Frequently one would think that one was looking at two different organizations, so distinct are the differences of perspective.  In diagnosing these situations I have come to recognize the characteristics of the two poles and have also learned that it IS possible to facilitate the development of a constructive working relationship between the business and information technologists.  Frequently this does not require a large investment and generally it does not require the replacement of major systems or a change in the contractual relationship (outsourcing) between the I.T. unit and the business.

There are a number of issues that warrant attention in seeking to understand the perspective of the CIO and technology executives and managers generally.  These can be summarized as:

The business does not appreciate what we do and some executives are hostile and highly critical

As mentioned above it sometimes happens that there is an adversarial relationship between the business and I.T. functions, more frequently there is a communication breakdown that one or both sides recognize but do not know how to solve.

An essential component of this divide is the need to establish a common vocabulary and understanding between the two parties.

On the one hand this requires a better understanding of the fundamentals of information technology, as set out in the companion article to this for CEO's and, on the other hand, it requires a better understanding of business fundamentals as set out later in this article.

At the end of the day, business executives have a fiduciary responsibility to ensure that they have an informed and effective understanding of I.T., that is, they have a duty of care towards the owners of the business to ensure that I.T. is managed effectively.

I.T. executives and managers have a corresponding responsibility to ensure that they understand the business.

Poor communication is a double edged sword -- when there is a communication breakdown each party is quick to blame the other, however, from a simple statistical perspective when two parties cannot agree and each blames the other for the problem then the chances are they are each about 50% responsible.

Thus, it is vital for I.T. executives and managers to take steps to better understand the business and to equip themselves to communicate with business executives, managers and users in language those people understand.  AND it is vital for business executives and managers to equip themselves to communicate with I.T. personnel in language they understand.

If both sides are taking active and constructive measures to be understood the chances of a breakdown in communication are dramatically reduced.

In seeking to resolve this problem it is important for I.T. executives to understand that it is NOT their responsibility to "sell" business outcomes to the business, that is the responsibility of business executives.

Business asks questions we do not have the technology or resources to answer

A frequent source of frustration for I.T. executives is the unwillingness of the business to invest in the technology they think is required to meet the needs that business expresses.

Frequently business executives express requirements in terms of language that sounds like specific technology, often technology that is costly.  This frequently reflects what business executives have heard from peers in other organiz­ations or that they have read reports of.  An essential assumption that is made in such conversations is that the person making the request has a clear understanding of the language they are using.

Thus, for example, an executive states that they want to be able to get "all information at the touch of a button".  For the technologist these words immediately conjure up a picture of a state of the art data warehouse solution with leading edge business intelligence software coupled with person years of work analysing and developing dashboards.  The business executive responsible for the statement on the other hand is probably not envisaging anything like this.

If the I.T. executive takes such a statement as a mandate for action this can result in large amounts of time being spent formulating a project to deliver "touch of a button" functionality only to be told that the exercise is out of touch with the realities of the organization, or worse still, to be ignored and marginalized as being out of touch with the realities of running a cost conscious organization.

Another dimension of "touch of a button" is that the real need might well be better satisfied by a person with strong grounding in economics, business and statistics, equipped with a modest portfolio of software tools and working in close collaboration with the technologists, supplying answers to information requests within a few hours or even days.

Yet further, "touch of a button" may be hyperbole from an executive whose strength is marketing or some other field where the expression has no precise meaning and where the thought of spending large sums of money on a technical solution had not even entered their heads at the time they expressed the need.

Communication and listening skills and the ability to feed back "I am hearing that you are wanting us to make a very substantial investment in technology in order to deliver 'touch of a button' capability, is that correct?" may be all that is required to head off a major unwarranted investment in time and money.

Scope changes constantly -- business personnel keep changing their minds

An extension of the above point is that business personnel involved in I.T. projects appear to change their minds constantly.

Technologists are accustomed to computers doing exactly what they are told, accordingly they expect precision in what is communicated and, as in the "touch of a button" example assume that users understand exactly what they are expressing.

With most business people this is not the case -- not because there is something wrong with business people but because human beings are much more adaptable to imprecise language than computers are.

For this reason rigorous attention to detail and precise specification of requirement in plain language, before any major investment in technology is made, is vital.

An in depth grounding in business as well as in information technology is a necessity for translation between the business and the technologists that serve it.  This is easier said than done, ideally such personnel should be developed over years, working years in line management positions across a diversity of business disciplines and also working years in technology roles across a diversity of technical disciplines.

Few people have the privilege of such diverse experience and few people really want such diversity of experience unless it comes almost accidentally as a consequence of career changes that happen without intentional design.

Depending on the size of organization such a person might be employed full time or might serve as a professional advisor to both the business and technology function on a part time basis.

I.T. is moving so fast we cannot keep up -- we need the business to understand this

"The technology is moving so fast we cannot keep up" is a widely held view.

Yes, it IS so that there are very rapid developments in computer technology.  There are seemingly overwhelming wave after wave of new developments at least some of which do, indeed, require investment to remain current with.  Awareness and alertness on the part of technologists IS an essential part of their function.

However there are many other cases where it should be of no more than passing interest that there is new technology available.

In order to place this statement in context, consider most other areas of life.  Many of us drive to work on roads that are decades old, many live in houses that may be decades old, in fact in some circles it may be prestigious to live in a vintage house and even to drive a vintage car.

We obtain water and electricity from infrastructure much of which is older than we are and many organizations operate factories and warehouses that are decades old.  Yes, there IS newer technology but when the old technology is getting the job done there is no need to replace it.  There was a time when these technologies were developing so rapidly that it was difficult to keep up, but those times are past and most of those technologies are mature and we can keep up at our leisure as time really takes its toll.  I.T. has also reached this stage.

A further example -- the basic Boeing 747 aircraft design is recognizably over thirty years old but it is still a mainstream source of air transport.  By contrast, the Concorde, far and away more technologically sophisticated than the first 747 first flew four years before the 747 yet never "flew" economically and was finally mothballed in 2006, compelling evidence that advanced technology is NOT the primary requirement for successful business technology investment.

The point?

The vast majority of business users do not know how to use the technology that is currently available to them effectively.  Most require time and repeated training to develop real facility with what they currently have and, since it is human beings, NOT machines that deliver value, this points to a major constraint on new technology deployment.

In considering this point consider that I.T. is really about people as evidenced in the section that follows and err toward evolutionary change.

Essential business knowledge for I.T. effectiveness -- The essence of business that is missing from most I.T. conversations

In responding to my experiences in evaluating I.T. situations where the business complains of under performance I have come to realise that there are some essential principles of business that many people take for granted and which are seldom codified in a formal fashion that everyone can understand and apply.  It is vital that these principles are acknowledged and known by both the business and I.T. function staff in order to understand how to apply I.T. to create value.

These principles are listed below:

1. Every organisation has a fundamental reason it exists, strategy is fundamental, the why, what, how, etc which results in the various "drivers" of the business.

It is necessary to understand and prioritise the core business drivers and to use this understanding to focus everything else thereby creating new opportunities for organiz­ational improvement.

2. Money is only a medium of exchange and measurement, it is a proxy or surrogate for value, a measure of performance of perceived value by people.  Money is easy to measure because it IS an instrument of measurement but strategy and competitiveness determine money yield and require other measurements.

3. Only humans create, destroy and determine value, things only have value IF a human being is willing to exchange (pay) for it.  Things, like computer systems, are inert and their value is determined by what people do with them or think about them.

4. Ways of being create or destroy value:

-- Leadership, empowerment, delegation, loyalty, morale

-- Accountability, responsibility, trust

-- Self discipline, commitment

-- Care, compassion, love, humanity, generosity

-- Esteem, ego, acceptance, recognition

-- Safety, security, health

-- Faith, belief, morals, values, religion

-- etc

This is the essence of what a person gives to an organisation and what a person seeks from an organisation -- how they "are".  I.T. implementations that destroy or weaken these can destroy long term corporate value and competitiveness.

Constantly changing systems when many in the organization have invested huge amounts of themselves in emotionally, through overtime and personal sacrifice in the existing system saps morale and motivation, reduces energy levels and reduces the productivity and efficiency of the organization.

5. Ways of doing create or destroy value:

-- Knowledge

-- Experience

-- Planning, analysis and design

-- Method, process, standards

-- Problem solving, creativity, initiative

-- Systematic disciplined, diligent, productive contribution

-- Communication, language, semantic skills

-- etc

This is the "technology" and capability that the person supplies to the business -- what they do.

Every time a piece of technology is changed a portion of knowledge and experience is discarded and has to be replaced.  The process of discarding and learning anew consumes energy and morale and adds no value until the person reaches a level that exceeds their previous level, which frequently never happens.  Then, the technology is blamed when it is, in fact, the frequently erroneous business decision to replace a functioning system rather than optimize it, which is at fault.

6. Service or supply to others creates exchangeable value -- organisations comprise human beings and exist to supply products or services to other human beings who consider that product or service to be valuable.  This forms the basis of the value transaction.

7. The rest -- technology and methodology, assets, etc.  These form a substantial component of most organisations and are the primary focus of many organisations but they cannot create or destroy any value EXCEPT through human beings.

Information technology is inert, it is NOT strategic in and of itself, it does NOT create value in and of itself.

People create or destroy value.

I.T. executives who clearly understand these principles and apply them will find that they are much better able to define an appropriate role for information technology in the business and to engage in meaningful dialogue with the leaders of the business.

Attached Files

The CIO side of the I.T. Divide

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