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Issue Date: October 2007

Is IT splitting down the middle?

October 2007

I was in London recently, co-presenting the Butler Group Masterclass on ‘IT costs and value’. What disappointed both Tim Jennings (The research director at Butler Group) and myself was the relatively low rating given to us in the session in which we discussed Value Frameworks – those tools and models that you would use to define and track the value that IT is bringing to your organisation. The rest of the sessions scored their usual high evaluation rating – it was just this one.

As is the case with all Masterclasses that we do, we go through the delegates’ evaluation forms with great interest – we say that it is to look for areas for improvement, but it does not hurt the ego getting high scores for your efforts either. But in this case the delegates’ evaluation was of some concern, and indicated a possible area for improvement. So we retired to the local pub, (a pint costs R50!), to think this through.
Terry White
Terry White
We looked at the content of what we had discussed in that session and where the audience had had questions. We also looked at the nature of the audience, as perhaps they were coming from a different place than us, but there was an even smattering of CIOs, IT finance, and portfolio managers. There was also the usual few people from the large consulting houses, keeping an eye on latest developments. So the audience was fairly typical. We also looked at whether Tim had scored more than me or vice versa, but this was in the norms as well. (It is interesting to note that we always score higher when we are talking to a ‘foreign’ audience than at home – I suppose this is a case of a prophet in his own land).
The session itself looked at what Value Frameworks were available, and then we went into more detail with the one framework that we believed to be the most useful and mature at the moment – it is called Val IT, and it builds on the foundation set by the COBIT audit framework. One delegate asked if ITIL had not come up with something similar and the answer is that they had. But while the Val IT framework has been developed and available for three or four years now, the value element of ITIL was only published in June 2007. We have looked at the two offerings, and while not directly comparable because they do different things, we consider Val IT the most useful for developing an IT Value governance regime. So that, or something like it, was Tim’s answer to the question and he moved on. Only to be surprised by the relatively low rating for this session.
The pub post-mortem ended with us shrugging and writing it up to experience: if a definite trend developed we would worry again, but this time did not have enough information or insight to work out what went wrong.
Now that I am back in South Africa I am beginning to think that there may indeed be a pattern that will inform us. If I think about the questions that were asked throughout the day, over five sessions, it appears to me that most of the questions and comments had an underlying theme: someone asked me if the technical CIO was the person to take the IT department up the value maturity scale into a full partnership with business – my answer was that some succeed, but most are better suited in the CTO role, because they cannot or will not let go of their roots – more often it is a person with a business background that takes IT into true value-adding territory. Someone else asked whether getting closer to the business meant losing IT people into the business – the answer is yes, because IT people are extremely bright with an astounding work ethic, and once business gets hold of them, they do not let go. And there were more questions about how IT justifies itself to the business, or accounts for benefits that business should achieve, and so on.
But the tone of the questions was always a little aggrieved in nature: “We are not being given credit for what we do, and now we have to fight to show that we actually add value. They should respect us more.” There was a distinct 'us and them' flavour to their questions.
A few years ago Nicholas Carr wrote an article, followed by a book called: 'IT Doesn’t Matter'. He caused a storm in the IT industry, but received knowing nods from business folk, and was voted the best article for that year in HBR by HBR staff. Interestingly, Nicholas Carr’s argument was not even an attack on IT – he merely compared other technologies which had reached maturity (like railways and electricity) and noted that IT was following pretty much the same path – that the benefits of having IT per se were transitory at best, and that lasting competitive advantage using IT was pretty much impossible. However, the real value of IT is that it facilitates innovation and the development of new processes in the business.
The subtext of much of what we had talked about in the Masterclass was saying much the same thing – that IT on its own does not add value, it is what the business is able to do using IT that matters. In fact I recounted the story of one CEO telling me what he thought IT leadership was: “New products, new markets, and new channels. If it is anything else, it is not leadership.” I had also talked of the difference between outputs and outcomes, and that IT seemed to be more output focused: 'We deliver error-free systems'. While business is more outcome focused: 'And what business improvements can we expect as a result of these systems that you deliver?'
In general then, it seems to me that there are two types of IT people – those that think that technology is important, and those that do not. Remember I am talking about IT people here.
Those that think that technology is important, also tend to think that the SLA is important, and that they add real value just by providing stable systems – as one IT person said to me: “You just try switching the life-support machines off in a hospital and see if they add value or not.” But all of these viewpoints have nothing to do with adding value in the Nicholas Carr sense. Just switching off the electricity, or unplugging the sewers, or tearing up the roads, or stop delivering IT to run the business – because we cannot do without any of these in the modern world does not mean that they add value – they are just tickets to the game.
The real IT value-adding game is being played by CIOs who think that technology in itself is not important – it is how the business uses the technology that adds the real value. And to be part of how the business uses the technology, these CIOs recognise that they and their departments need to spend most of their time in the business, working with them to innovate and improve. To run the technology, they will hire a CTO, or even outsource the lot – there is much more important things for them to be doing.
So perhaps we are heading for two types of IT department, those who think that their job is IT, and those who think that their job is business. And maybe the delegates to the Masterclass were of the former category, thinking that value is a business issue. Which would be a pity.

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