World Class IT: Why Businesses Succeed When IT Triumphs

By Peter A. High

World Class IT

Technology is all around us. It is so pervasive in our daily lives that we may not even recognize when we interact with it. Despite this fact, many companies have yet to leverage information technology as a strategic weapon.

What then is an information technology executive to do in order to raise the prominence of his or her department? In World Class IT, recognized expert in IT strategy Peter High reveals the essential principles IT executives must follow and the order in which they should follow them whether they are at the helm of a high-performing department or one in need of great improvement.

• Principle 1: Recruit, train, and retain World Class IT people
• Principle 2: Build and maintain a robust IT infrastructure
• Principle 3: Manage projects and portfolios effectively
• Principle 4: Ensure partnerships within the IT department and with the business
• Principle 5: Develop a collaborative relationship with external partners

The principles and associated subprinciples and metrics introduced in World Class IT have been used by IT and business executives alike at many Global 1000 companies to monitor and improve IT's performance. Those principles pertain as much to the leaders of IT as they do to those striving to emulate them.

• Language: English
• Publisher: Wiley
• Release date: Oct 27, 2009
• ISBN: 9780470543719

Book preview

Introduction

Prior to the 1970s, computer and electronics-based technology was hardly a pervasive part of our everyday lives. Automobiles were not yet computerized, fax machines were just taking off, and, significantly, the personal computer had yet to be popularized. Individuals who dreamed of a career in information technology departments were likely those who happened to come into contact with technology. Microsoft founders Bill Gates and Paul Allen famously attended the Lakeside School in Seattle together that had a time-shared PDP-10 computer, which allowed them to learn computer programming and, equally important, to dream big dreams that would have an impact on us all.

Today technology is everywhere. Some of us are awakened by clocks that are MP3 players, have coffee makers that operate on electronic timers, navigate the routes we drive each day with global positioning systems (GPSs), check in to flights and select our seats before we arrive at the airport, and operate Blackberries to send and receive email messages with colleagues wherever in the world we may be.

Today we are all technologists, insofar as we interact with technology every day. The younger one is, the more innate all of this is. I did not have a computer in my home until I was in high school. My children have been using them since they first learned to speak. The younger generations are becoming what Richard Nolan, professor emeritus at Harvard Business School, refers to as Digital Natives.¹ Technology is in their DNA, and the consequences are profound.

A similar evolutionary path can be tracked within corporations. Well into the 1980s technology leaders tended to follow a typical career track. They probably studied engineering at a university, they got their first jobs in some technology-centric business, and they worked their way up the corporate ladder. If they reached the apex of the technology department, they were nowhere close to being viewed as peers of other division leaders within the organization. To make matters worse, the tenure of the average chief information officer (CIO) was roughly two years. No wonder the acronym CIO was cynically referred to as Career Is Over.

During this time, IT executives likely were overseeing the development of systems that assisted with back-office functions. They might have developed a homegrown accounting system; they might have developed systems to track employees’ hours. These were important undertakings, to be sure, but CIOs tended not to garner invitations to the strategy-setting table at which the company’s long-term vision was being discussed. They tended not to develop new innovations that would help the sales staff understand their customers better, to say nothing of systems that customers themselves would use. Frankly, customers did not expect to interact with the technology. There was no Internet; there were no self-serve gas stations or grocery checkout lanes. ATMs were barely known.

The late 1970s and early 1980s were a turning point. Personal computers gained in prominence. Answering machines became household necessities, and VCRs were used to record television programming or to watch movies. CIOs started to make inroads into adding recognizable value to the businesses in which they operated, though typically that value was in the form of cost-cutting. This was a time when automation was quickly replacing manual labor.

In the 1990s, a key innovation sparked the leap forward in the prominence of technology in everyday life: the Internet. Many people point to Netscape’s initial public offering in August of 1995 as the watershed moment in this trend. The resources that the Internet offered increased the efficiency of research, putting a world of information at one’s fingertips. Those who were connected—both individuals and companies—were advancing leaps and bounds beyond those who were not.

For a time in the late 1990s, I was a consultant in a firm that focused on eBusiness strategy. Our firm was composed of smart people who had one foot in business and the other in technology. It was an amazing time, as many industry leaders—companies that had operated successfully for decades—nervously watched an erosion of their market share to a new breed of companies. The most prominent example was Amazon stealing market share from older competitors such as Barnes & Noble and Borders Books. The term Amazoned entered into the popular lexicon, referring to a small, nimble, tech-centric company emerging out of nowhere to steal business from less nimble companies populated with Luddites.

Thus began the CIO revolution. All of a sudden, CEOs contemplating the ideal CIO began searching for technologists who had a strong head for business. A greater percentage of CIOs began to report to CEOs as opposed to CFOs or COOs. CIOs who were as comfortable with P&Ls as they were with 1s and 0s were given a seat at the strategy-setting table, influencing the business from a technology perspective. Likewise, CEOs began to think differently about technology, incorporating it into their long-term strategic plans.

Of course, there were many examples of what appeared to be changes in the rules governing business as a result of the explosion of eCommerce and eBusiness. One of my favorite stories from this period was about a group of three individuals who approached my firm asking for advice on an investment they had made. They had bought the domain name cookies.com, and they wanted to know what sort of business they should create with it. Developing a company name and then going about determining the business to be in was definitely a new phenomenon. Of course, considering that the URL business.com was sold for $7.5 million, domain name speculation was a business in and of itself for a time. (Today, cookies.com links to a different site that does, in fact, sell cookies.)

It only made sense, therefore, that the dot-com bubble’s burst in March of 2000 would lead to some cynicism about IT departments. For CEOs, CFOs, and COOs who had never embraced technology, this was a welcome comeuppance for the IT departments that they did not fully understand. However, for the new breed of CIOs who saw themselves as business leaders akin to the company’s other division leaders, a shift had happened. There increasingly were examples of IT departments driving value to the top line and to the bottom line. IT would not prove such an easy victim for the chopping block as with previous economic downturns. CIOs had a seat at the strategic table and thus were able to articulate and defend their division’s role. And there was now a wider appreciation of how technology could help a company survive and indeed prosper moving forward. Technology, in short, had become indispensable. As Bob Willett, CEO of Best Buy International and Enterprise CIO put it, "Nothing happens in a multilocated business unless it is driven through technology . . . . Technology is the agent of change, and your failure as a leader to understand how technology operates . . . and how to take advantage of it, [means that] you are massively underestimating what it is that can be