“Today we still find that most IT organizations spend 70% of their time on operational tasks and just 30 of their time on IT innovation,” writes HP Distinguished Technologist, E.G. Nadhan in an HP newsletter early this year. As a result C-level managers often dismiss IT as a cost center to be minimized rather than view it as a potentially valuable strategic partner in the business.
Managing partners Gerry Mendelbaum and Mark Neibert at, Camber Advisors, a private equity consulting firm focusing on mid-market, often struggle with this perception as they work with their private equity investor clients when buying and selling business assets. But don’t blame IT; it might not be its fault.
“It is hard to make a strategic IT contribution if the business itself doesn’t have a strategy,” says Mendelbaum. Or, Neibert continues, “they may have various strategies.” Either way—no business strategy or multiple strategies leaves IT with little to go on if they want to make a dent in the operational-innovation imbalance.
Especially now, with a wave of new technologies—mobile, cloud, social networking, big data analytics—dramatically changing the way companies conduct business IT should a priority item. If nothing else, the Camber partners note, IT often is among the business’ largest capital and operational expenditures, which makes it imperative managers find better ways of deriving value and leverage from the IT assets.
In the past “many business managers considered IT a necessary evil, but that now is changing,” observed Mendelbaum. Of particular interest and value, adds Neibert, “is how software supports business processes.”
The challenge is to elevate IT from a cost center charged only with keeping the systems running to a strategic business partner that helps to contribute to the bottom line. This is not something the business or IT can change overnight but Mendelbaum and Neibert have five suggestions to get a CIO started:
1) Spend money wisely—IT must be guided by a roadmap or a strategy or something that channels its spending into areas important to the business. Tight business-IT alignment is hard to achieve but some measure of coordination would be valuable.
2) Don’t let inertia rule—technology changes rapidly yet many IT groups, especially in small and midsize organizations, are happy to cruise along doing what they have always done. Technology changes and the business changes while inertia just drags you down. Put another way: IT must become proactive in using technology to meet business challenges.
3) Pay attention to IT trends—Mobile, cloud, social networking, big data analytics are just the latest. Some is driven by the consumerization of IT and much by Moore’s Law, in which IT capabilities increasingly cost less than they did before. Other trends, like Software-as-a-Service (SaaS), are driving up the potential strategic value of IT by delivering the latest, most advanced software as a shared service.
4) Assess your IT staff—that’s where the biggest chunk of IT spend goes. When was the last time you talked with your IT staff? Are they passionate about IT, about the business, and about opportunities to advance business objectives using technology or are they struggling to simply keep the systems running as is?
5) Are there accepted processes—in large companies IT usually is directly tied to and governed by recognized processes. This is less so the case in smaller and midsize organizations where there may be no formal processes or only ad hoc processes and even these probably are not documented. Processes don’t have to entail much; process can start with nothing more than a list of priorities or a project work schedule.
In the end, if the CIO wants to change IT into a business contributor it must get involved in business process and strategy. Be warned: not every IT team is willing or capable of doing this.