The Business of IT

By Mark Johnson

In a recent e-Week article by Peter Coffee entitled “Enterprises Want It All and Want It Now” Coffee cites that “Patience is no virtue at either end of the tech supply chain.” Whether the topic is virtualization, processor speed, compliance, or instant configuration Coffee concludes that 2006 may well go down as "The Year of Losing Patience" in the IT realm.

Information Technology is the enterprise wide business function that enables almost every commercial or government enterprise, yet it is under tremendous pressure to deliver today with investments that scale for tomorrow.

IT is arguably the most important service business with which your enterprise contracts. Without IT your enterprise could not function. With so much change and so much pressure to deliver results how can the CIO ensure success?

As the CIO, think of yourself as the Chief Executive Officer of Internal IT Inc., a wholly owned subsidiary company of the enterprise you work for. With this in mind, take a moment to reflect on the following 10 questions. Please note your answers on a piece of paper numerically using a scale of 10 for the optimal state, and 1 for the worst state.

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?

Now, review your answers. Are you satisfied that you’ve honestly and accurately reflected your organization? If so, total your answers and divide the total by 10. If your average score is less than 7 keep reading!

The Acid Test

If given the option to change to another IT service provider what percentage of your internal customers do you feel would make the switch? In fact, some customers may have already defected to another provider. They are the ones that run shadow (or rogue) IT functions.

The CIO Challenge

Across Silicon Valley enterprise investments in internal IT range from 2½ to over 7% of annual revenue. CIOs face tremendous pressure to drive out cost and deliver greater value and relevance for the enterprise today, while ensuring that tomorrow’s needs can be met with minimal incremental spend. Of total IT spend as much as 2/3rds falls into the category of sustaining operations or infrastructure. We are hearing that redirecting investment from this category into delivery of capabilities that enhance competitive position, improve customer satisfaction and retention, and enable revenue growth is at the core of today’s IT challenge.

Infrastructure is the area where we find most of the licensing, procurement and maintenance relationships with third parties. It is also the area where we find most of the operational processes that either make IT efficient and cost effective, or inefficient and costly.

Inefficiency and excessive cost leads to business failure. In the business of IT the same leads to CIO failure. Running IT well requires a high level of business acumen in addition to technology expertise. It also requires an effective governance and architectural framework articulated in an integrated, interdependent aligned-to strategic plan covering all areas of the interdependent IT function. This is the only way to achieve scalable, highly available, cost effective, efficient, business relevant IT today, with the promise of extensibility tomorrow.

In the next three issues either myself or a member of my OCIO team will address a different subset of the 10 areas listed above providing you with strategies and tactics for optimizing each area, ultimately pulling it all together in framework for driving a strategic plan for your IT business function. So watch for our upcoming newsletters to learn how you can rise to the IT challenge and win.

Cheers,

Mark Johnson
Managing Director, “Office of the CIO”