OPINION: Aligning IT with business value

18 Aug 2010

BearingPoint’s Michael O’Dwyer on why meeting the CIO challenge seems like a superhero job spec

When you compare the CIO priorities of the past with today’s challenges, the key thing that strikes you is that while there is ongoing change in technology terms, the business priorities remain fairly constant.

The business priorities set out the “traditional” items we have grown used to, which can be split into two broad categories: taking cost out of the enterprise and using IT to create business value. Examples of these include reducing the IT footprint (ie virtualisation, consolidation, cloud computing) and improving IT outputs (ie supporting better decision-making through information management, better customer integration through Web 2.0, implementing mobile solutions).

Aligning IT with business is still an issue for most CIOs. Through our work with clients, we still see evidence that business and IT don’t always speak the same language and there can still be strains and frustrations between both sides as a result. One example I observed recently was in a manufacturing company where fixed IT costs were allocated per unit of output. The production team had reduced all other costs and were frustrated that the IT cost was static. The CIO was not aware of the issue.

The focus across Europe is on reducing IT costs. Even when CIOs are delivering projects which show solid returns on investment, it is still very difficult to get sign-off for new projects. This is a cause of frustration for a number of CIOs. Shouldn’t we be looking to increase investments if projects are delivering real returns?

Being a successful CIO today requires a wide variety of skills. The CIO needs to be technically adept to keep abreast of new developments, provide leadership to his team and also discern the elements of new technology which will benefit his organisation. The CIO also needs to be a consultant who can build strong relationships with his peers across the enterprise and, through results achieved, earn the right to be a trusted advisor to the business and be involved in development and rollout of the business strategy. In the current economic climate, you can add to this the increased pressure to cut costs, increase returns from investments and support the business to grow revenues. All that’s missing is the requirement to don a colourful outfit and fight villains and invaders from space.

The CIO’s challenge today needs to balance running the IT shop as efficiently as outsource vendors to minimise IT costs, focusing and managing IT investments to ensure they deliver tangible benefits, and taking time to collaborate with business peers to identify ways for IT to introduce innovation to the business to increase productivity and outputs.

If you are facing this challenge, you need to start by building alignment with business peers and proactively develop a business-centric approach to IT. This can start by doing a high-level review of IT’s role in the business today and understanding what services and related value that IT offers (as perceived by the business user).

The output from this can then be used to do a baseline review of the current IT environment to determine areas for improvement (for cost, process or organisation reasons). I have found that this approach often gives new insights to the CIO and gives a good basis for developing a roadmap to better business-IT integration, more efficient IT organisation and processes and a greater understanding of the challenges of the CIO role among business peers.

The Innovation Value Institute based in NUI Maynooth has its IT Capability Maturity Framework which is aimed at helping business and IT leaders to maximise the value from IT. This framework divides IT into four macro elements (running IT like a business, managing the IT budget, managing IT capability, managing IT for business value) which further divide into 32 core processes. This model has been developed by leading organisations such as Intel, NUIM, BCG, Microsoft, SAP and BearingPoint and results from initial case studies show very positive results.

My experience tells me that the IT challenges today are similar to those of the Nineties and beyond. What’s different is that the pressure to meet these challenges and demonstrate IT’s contribution to the bottom line has increased.  

Michael O’Dwyer is a partner at IT and management consultancy firm BearingPoint Ireland