The IT Value Stack - Layer One: Strategy Entwinement
by Ade McCormack

     
   

In my book The IT Value Stack, I present a model to help organizations yield best value from their IT investment. This seven-layer IT Value Stack takes IT value maximization beyond the IT department and into the boardroom.

The foundation layer of this seven-layer stack deals with strategy entwinement. In essence, your IT leaders should have significant influence over business strategy; too much of your organization's ability to function and out-innovate your competitors relies on IT.

So, if it is so important why doesn't it happen?

Here are some of the reasons:

Business leaders set business strategy.

A systematic approach such as the Balanced Scorecard provides the mechanism to tie the boardroom imperatives into the activity of each function, including IT. While a command and control approach works in some respects, if one is to go beyond IT as a cost management tool, then foisting the strategy on to the CIO is not the way to go.

Many business leaders see IT as a commodity.

The assets, both people and technology, can be acquired in much the same way as stationery. Very few businesses involve the head of the stationery cupboard in strategic decision-making.

IT Investment.

Unlike other departments, the IT function cannot express its budgetary requirements in a manner that is compelling to business leaders. The level of IT appreciation at board level does not help this.

Thus, it is left to the CFO to decide the IT department's budget. This has a disempowering impact on the CIO, who is now under pressure to work within this often arbitrary figure. A CIO's attitude is likely to morph into disengaged supplier rather than strategic partner.

Trust.

Late delivery, poor functionality and brittle systems have led to both the boardroom and business-side staff losing faith in the IT function's ability to deliver. If they cannot perform operationally, how could we ever let them loose on the business strategy?

CIO bottleneck.

Supposedly the interface between the boardroom and the IT department, the CIOs are typically up to their neck in operational issues as mentioned previously. This causes the CIO to be inward-looking rather than boardroom-facing.

In many cases this suits the CIO because as an ex-technologist, this is where they feel more comfortable.

What action can be taken to redress the lack of strategic entwinement?

It requires more than an away day at some well-appointed hotel. Ultimately, something akin to genetic engineering is required. In the extreme, it will necessitate the ejection of those who are incurable and the acquisition of those made of the "right stuff" (DNA flushing).

More likely, it will require a strong dosage of knowledge, skill and attitude enhancement (DNA engineering). The outcome of which is that those who remain in your organization recognize the critical relationship between IT and organizational success and have the ability and attitude to support this.

Many business leaders will need to develop:

  • a greater understanding of the fundamentals of IT (including terminology and technology market trends);

  • an understanding of what IT can do for their organization in respect of cost management, competitive advantage and governance;

  • the ability to measure IT value;

  • the ability to engage the IT department in strategic issues;

  • the management skills to handle strategically influential technology vendors;

  • a belief that the CIO is a key member of the executive team;

  • and a realization that being a business leader today means being an IT leader.

Similarly, CIOs need to develop greater strategic awareness; interest in and functional knowledge of the business beyond their own department; their value measurement and management skills; their boardroom influencing skills; and the ability to inspire those outside the IT department.

These new abilities will go some way to improving strategic entwinement.

Remember this is the foundation layer of the stack. Enhancing your technology or improving the service function of your IT department will lead to very little business value improvement if the issue of strategic entwinement is not addressed.

But strategic entwinement is not enough. Harmony at the leadership level does not always translate into productivity at the operational level. In subsequent columns I will explore the higher layers of the IT Value Stack and cover what needs to happen on the shop floor to deliver enhanced business value through the use of IT.

     
   
     
   

The Author

Ade McCormack Ade McCormack is the author of The IT Value Stack - A Boardroom Guide to IT Leadership (Wiley, 2008) and IT Demystified. He writes a regular column for the Financial Times advising business leaders on business-IT issues He is the founder of Auridian, a people-development business focused on helping organizations get best value from their IT investment. For more information or to contact Ade, see www.auridian.com and www.itvaluestack.com .
     
   
     
   
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Copyright 2008 by
Ade McCormack. All rights reserved.

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