An Obligation, Not a Choice
Years of being viewed as overhead and run as a cost centre - exacerbated by technology hype and unfulfilled expectations - have pummelled IT's reputation. "If we behave as a cost centre, we won't get the most benefit from IT, and we certainly won't earn credibility," says Doug Busch, CIO of Intel.
The sheer size of technology budgets demands more prudent management. "If you look at how much money IT spends here, we're the equivalent of a billion-dollar business. We have the obligation to run IT like a business," says Busch. [For a full profile of Intel CIO Doug Busch, see "Inside Intel", CIO September 2002 or at www.cio.com.au/index.php?id=489457919 - ED]
It's not just the magnitude of the budget, but the influence that IT has throughout today's enterprise that demands a new way of operating. CEOs and boards of directors have taken note of their dependence on IT, and they will no longer tolerate IT operating by its own set of rules, as a mysterious black box with no apparent business discipline or accountability.
And CEOs are increasingly wise to the alternatives at their disposal should IT fail to measure up. "If your IT department can't do this internally, the business is going to say: 'We might as well outsource', and you'll be forced through the keyhole," says Joe Gottron, executive vice president and CIO of The Huntington National Bank. "One way or another, IT will be a business."
Number-One Barrier: Time
Once people grasp its meaning, running IT like a business might not sound so difficult. In fact, if you look at the individual practices that survey respondents employ, there doesn't appear to be much new under the sun: sound project management methodologies, regular strategic planning meetings, customer satisfaction surveys, financial audits - the list goes on. But mastering a handful of practices won't cut it. CIOs must put multiple processes in place, each buttressing another, and manage them in a rigorous and repeatable manner.
This is new territory for IT, which is why it's so hard. "Businesses measure themselves on financial numbers, on customer satisfaction," says Rubin. "If you look at the history of IT, for years, there wasn't process management in place, there weren't quality measurements or product measurements. Huge pieces were missing. For CIOs, it has been like trying to run a business before the invention of bookkeeping."
Thus, it takes time - buckets of it - to reconfigure IT as a business. That is the number-one barrier to success, say survey respondents. At Intel, Busch first focused on establishing good customer account management. Then came the cost accounting discipline. Then measuring the business value of IT deliverables. Now he's focused on optimizing those practices. It's been four years and counting.
It's an unnatural evolution for most departments, says Mark Popolano, CIO of financial services giant AIG, where he has been playing Darwin for the past six years. "What we ended up doing was a series of changes: standardization, setting up a project management office, portfolio management, financial reporting. And it didn't really start to take hold until about two years into the process," he says.
The protracted effort can take its toll on the IT leader. "You're not looking at a three-year legacy with this kind of model," Popolano says. "You're looking at how you'll be running 10 years out or beyond, and a lot of people don't have the staying power for that."
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