The Business of IT - Part 2

By Mark Johnson

In the last newsletter, we offered a brief survey to help determine how well your IT organization is run. If you completed the survey and scored a seven or less, there is definite room for improvement. If you scored above 7, congratulations! But before you throw a party, there may still be room to fine tune the effectiveness of your IT function. So this article, the first in a three part series, is for everyone interested in improving overall IT performance. For convenience, I have included our list from the previous article and highlighted the first three areas of concentration below:

1. Overall, how well do you believe your IT business is run?
2. Do you have a multi-year, integrated strategic plan that guides investment, mission planning, and execution for IT?
3. Does this plan include strategies for cost optimization, including globalization, consolidation and virtualization?
4. Do you have clearly documented technology architecture and standards for the products and services you provide?
5. Do you have marketing, sales, and customer service functions to engage with your internal customers?
6. Do you have a formal manufacturing resource planning and control framework managing and controlling the software and technology acquisition, deployment, and production operation of IT?
7. Do you have a robust quality assurance function to ensure the highest quality in the products and services you provide?
8. Do you have formal service contracts that codify the service level expectations of your internal customers providing a standard against IT performance that can be measured?
9. Do you have a robust process for ensuring that your hardware, software, and services providers are contracted with you in a way that enhances the success of overall mission execution?
10. Do you have a robust information security and awareness framework to ensure protection of your enterprise’s information assets and intellectual property?

The balance of the list will be addressed in the final two installments of this series.

1. Overall, how well do you believe your IT business is run?

This question cuts as close to the bone as possible. At the core, it deals with the subject of leadership effectiveness. The degree to which the IT leadership team of the department is visionary, mature, and aligned toward a set of clearly defined strategic objectives is the degree to which the department will function effectively. By leadership team, I am referring to everyone from the front line managers up to the CIO.

To illustrate the importance of leadership effectiveness in producing a well run IT business, I would like to draw an analogy. Consider an NFL team that wins the Super Bowl. How does a Super Bowl winning team achieve that outcome? What is the role of the Head Coach (illustrative of the role of the CIO) in creating that result? To find out, let’s look at the leadership team of the 2006 Super Bowl Champion Pittsburg Steelers (17 leaders strong.)

Bill Cowher	Head Coach
Dick LeBeau	Defensive Coordinator
Ken Whisenhunt	Offensive Coordinator
Russ Grimm	Asst. Head Coach/Offensive Line
Bruce Arians	Wide Receivers Coach
Keith Butler	Linebackers Coach
James Daniel	Tight Ends Coach
Dick Hoak	Running Backs Coach
Ray Horton	Asst. Defensive Backs Coach
John Mitchell	Defensive Line Coach
Darren Perry	Defensive Backs Coach
Kevin Spencer	Special Teams Coach
Mark Whipple	Quarterbacks Coach
Matt Raich	Quality Control - Offense
Lou Spanos	Quality Control - Defense
Chet Fuhrman	Conditioning Coach
Ray Jackson	Asst. Stength/Asst. Special Teams/Player Development

Contrary to popular belief “job one” for Bill Cowher (and the CIO) was not to build the team, but to build the leadership team, for Bill, that is the coaching staff. While the players get all the glory, their success as a team on the field is more a reflection of the success of the leadership team in recruiting, coaching, mentoring, and developing the raw talent that each member brings to the team.

Football, as in IT, is a “team game.” Individual performance matters very little if the team doesn’t perform well as a cohesive whole on the field. A well run football team gets in the playoffs and wins championships.

According to Patrick Lencioni in his book, “The Four Obsessions of an Extraordinary Executive” the first of four principles for building a healthy team (one that performs well together) is to “build and maintain a healthy leadership team.” Principles two through four are:

	2. Create Organizational Clarity
	3. Over Communicate Organizational Clarity
	4. Reinforce Organizational Clarity through Human Systems

To win the Super Bowl, Coach Cowher first had to create a leadership team capable of creating and executing a Super Bowl winning strategy to implement his vision for the team. That involved reviewing each leader in context of the overarching vision to determine whether they fit. Changes were necessary to strengthen the leadership team with the raw material necessary to recruit, build, and develop the players into a team capable of winning the Super Bowl. So it must be with IT.

Once the coaching team was set and the vision aligned throughout (organizational clarity), it was necessary to conduct a SWOT assessment of the players in order to identify strengths and weaknesses in the team roster. This activity was followed by adjustments to the roster, i.e. some players were released to make room for other players with the talent, motivation, work ethic, and desire to create a team capable of winning the Super Bowl. So it must be with IT.

Finally, with the player roster defined, the leadership team set about the business of preparing the team to hit the field and execute the plan. One thing is certain, on each and every game day the players were on the field executing the strategy of the coaching team. The results speak for themselves, as it will in IT.

So if you desire to improve the operational effectiveness and results of your IT department, take a long hard look in the mirror and a lesson from the Pittsburg Steelers head coach, Bill Cowher. Assess your vision for the department. Is it clear and aligned with the needs of the business? Is it clearly documented and socialized throughout the leadership ranks? If not, fix it!

Next, take a long hard look at your direct reporting leadership team. How well are they aligned and working together as a cohesive unit? Is this team capable of creating a cohesive strategic plan to implement your vision? If not then you need to determine what is necessary to change this immediately. Only by stepping up to the leadership challenge can you begin to improve operational effectiveness of your team.

2. Do you have a multi-year, integrated strategic plan that guides investment, mission planning, and execution for IT?

This question has a binary answer: yes or no. If the answer is no, then the action to take, assuming you have addressed the leadership issues identified above, is to immediately set about the process of creating one. This process must begin with a thorough understanding of the overall business strategy of the company, and must be completed in 6 weeks.

What are the top business strategies for the upcoming three years? What are your company’s customer, product, and go-to-market strategies? How well do your existing Information System solutions align with, and enable these strategies? Where are the gaps? What is the cost structure of your IT organization? Do you have a global sourcing strategy to help leverage cost and skill opportunities available off shore? How does your organization compare with industry baselines? Is the ratio of spend on sustaining operations versus new information systems solutions optimal?

The answers to questions like these must frame the creation of your multi-year strategic plan for IT. We suggest that you plan for a rolling three year horizon each year. Once you have the strategic business context, we recommend that you time-box the creation of your strategic plan to six weeks. An interactive planning process that engages the entire CIO Staff (the CIO and all direct reports) works best, as it inherently generates leadership alignment to and ownership of the plan. These are prerequisite to successful execution.

3. Does this plan include strategies for cost optimization, including globalization, consolidation and virtualization?

A critical component of the multi-year IT strategic plan is cost optimization. This, more than any other thread in the plan, requires a long term perspective. The core business application portfolio is both interdependent and non trivial, optimizing the interaction of core technology cost drivers such as Network, Telecommunications, Data Centers, Servers, and Storage. It requires an integrated leadership team that understands its interdependence and maintains a persistent focus on driving service levels up while driving cost out. Today, this must include embracing a global sourcing strategy for IT labor.

A comprehensive set of the right measures is essential as a tracking and control mechanism. Creation of the same should be one of the themes of the IT Strategic Plan.

Another important aspect of the cost optimization agenda is global contracts optimization. This includes hardware procurement, software licensing, maintenance and support agreements, and telecom agreements. Depending on the nature of your business, business to IT cost drivers will vary; however, it is important that your leadership team fully understand what they are and begin to educate the business as to how key business decisions drive IT investment requirements, so that adjustments can be made to help constrain unnecessary upward pressure on IT costs.

Conclusion

In this article we have addressed the first three questions from our IT Effectiveness survey. We have shown how the foundation of IT operational effectiveness is the success of the IT leadership team. As we discussed in the Leadership Workshop during the fall IT Directions event in November, building the IT leadership team is the first and most important responsibility of the CIO. Everything else flows from there. Join us next time when we continue the series by addressing the following three questions from the list:

	4.	Do you have clearly documented technology architecture
		and standards for the products and services you provide?

	5.	Do you have marketing, sales, and customer service
		functions to engage with your internal customers?

	6.	Do you have a formal manufacturing resource planning
		and control framework managing and controlling the
		software and technology acquisition, deployment, and
		production operation of IT?

Happy New Year!

Mark Johnson
Managing Director, “Office of the CIO”