IT Value Stack

Coca Cola and IT - The Real Thing

One company that seems to have got the message is Coca Cola. I was directed to an Information Week magazine video where the Coca Cola CIO -- Jean-Michel Ares -- details his approach to being more business-centric. His focus is business value.

Specifically he has:

• Repositioned IT as a partner to the business in creating value from senior management right through the organisation
• Created an IT strategy that is totally business centric rather than IT-centric
• Focused on growing and developing the IT talent
• Kept the technology architecture simple
• Refined the IT processes for greater efficiency.

He warns that in a down turn, CIOs need to focus on :

• Demand management
• Productivity and efficiency.

Again simplifying the environment is mentioned as is virtualisation.

Leaders on both sides of the business-IT fence would do well to track Coca Cola and its use of IT.

EDS Review of The IT Value Stack - Part 3

Here's the last of three posts that respond to The IT Value Stack review that Charlie Bess of EDS wrote on their blog, The Next Big Thing.

Charlie said:

3. One other area that wasn't brought out in the book that I'd like to hear Ade's perspective on is: Cloud Computing. Most of the folks who are working in cloud computing can spell "cost" fairly well, but don't understand "value" and what the organizations will require to use it as an integral part of their business. We'll see how many lessons are going to be learned in that space before there are some changes in the market.

I do believe there was a great deal of useful material in the book and it should make the reader sit back and contemplate their ability to adapt and adopt the concepts, since in any shift like this the leader must ensure that there are followers.

My response:

I have only recently come across the term Cloud computing. It looks like an attempt to bundle grid, virtualisation and utility computing into business/media friendly concept.

That said, extracting better value from one's IT assets is to be applauded. Three years ago grid computing in particular was marketed by IBM but was still really a subject for comp sci academics. In the last year I have seen it turn into commercial reality, particularly amongst investment banks. But true grid computing whereby the user devices contribute to load sharing as well as the servers is some way off as the security implications and underlying architectural requirements are horrendous. But this may move forward faster than I expect because the concept at least is boardroom-friendly. I am sure the out sourcing community will put their shoulder behind it as it strengthens further their value proposition.

I have enjoyed responding to your thought provoking comments and would be happy to take the discussion forward. I have worked with EDS in the UK in respect of helping the IT recruitment function in respect of talent management.

These are interesting times!

EDS Review of The IT Value Stack - Part 2

Here's the second of three responses to the book review written by Charlie Bess, who writes for the EDS Next Big Thing Blog. (See his complete review here.)

Charlie raises this point:

2. Even though Ade talks about the business value being based on the use of IT, he keeps pounding away that IT is separate and must be "entwined". I'd have bought that argument in the mid 90s when most middle management had little understanding of computers, but that does not hold up today. When he and I exchanged a note about how the "typing pool" has disappeared, I suggest the same thing is happening with "long tail" application development, through the use of mashups and other similar techniques. He does talk about the CIO being the evangelist or enabler, but it was a bit weak for me. IT's days as a separate entity inside the corp. are numbered. Everyone needs to take a hard look at the territory they want to claim for their corporation and prepare the IT organization to make it happen. In Ade's book there is a good tactical framework to do this, and it appears to be a valid means to an end. It's just the end state that I'm afraid could have been more thoroughly explained.

My response:

I work with some of the biggest companies in the world and most middle and senior managers are clueless about what IT can do in respect of cost management, innovation and governance. So I am comfortable with the notion of a business-IT divide.

The fact that we have business/systems analysts patrolling the DMZ between the two parties attests to a serious rift. I agree that the IT department's days are numbered, I am pushing for it. In much the same way as the typing pool used to be a function now everyone does their own typing. So it will be with IT. Thus the IT department's days are numbered, but it’s a relatively big number, in my view.

My perspective on outsourcing is that many providers can do IT better than many end user IT functions. An alert-IT department has the advantage that they know their business processes much better than any outsourcer. As time marches on the technology piece will be trivial, the value will be in the business knowledge. But I accept that where an outsourcer acquires the business expertise then that is a heady combination. Some of the outsourcers have already got this message and have moved their proposition up the 'value chain' by presenting themselves as business outsourcers.

On reflection the book would appear a little harsh on outsourcers. I have no fundamental issue with it. I simply want the IT function to put up a better fight, for everyone's benefit. Your comments will certainly influence my presentations/writing and consulting activities to be more balanced on this.

EDS Review of The IT Value Stack - Part 1

Charlie Bess, who writes for the EDS Next Big Thing Blog, reviewed The IT Value Stack. Charlie raised some good points, which I'll address here and in the next three posts.

First, Charlie writes:

I was reviewing The IT Value Stack the other day and in the process exchanged a few emails with Ade McCormack the author.

Although he does a great job describing the issues of value generation within IT the way it is structured today. There were some differences of perspective that I have to bring out:

1. Ade's discussion of outsourcing appears to be fairly harsh. He does not understand the real value of outsourcing. It is not about replacing workers, but about diversifying risk and contracting for efficiency. His whole premise seems to be that an in house team is always the right answer. I'd say that is a high risk proposition. As the industry moves into a more assembly based value creation approach rather than a hand crafted one, the need to have experts (for a short duration) in high value segments should increase. Outsourcers had better be able to apply those resources seamlessly and more effectively than any in house team could ever do. The changes in the IT industry will demand this ability to tap into a more diversified resource pool.

My response to this:

I take the point about risk diversification, and agree, particularly where the in-house function has become lethargic and fails to operate as a keen supplier. The other extreme of course is that outsourcing all your IT to one organisation is perhaps the biggest risk. Again in-house is not the right answer where the IT department is beyond salvaging. My message is that they need to buck up if they are to compete with more commercially oriented suppliers like EDS, which is my view, an perhaps not good reading from an outsourcing perspective.

In my experience outsourcing as a model has gone in and out of fashion as it will continue to do so. I quite like the utility model some players are adopting, particularly for hygiene services. But in my opinion most buyers of outsourced services are looking at cost first. For many they see IT in much the same way as stationery, "where can I get it cheapest', hence India coming strongly into the frame, and hence the western outsourcers getting into India.

The big question for users of IT services, is whether IT is their core business or not. I would argue that core business for Citigroup and American Airlines IS and brand management. And if that is the case should they be handling that to a third party? Maybe yes is the answer. I agree however that slowly but surely IT is moving from craft to assembly. As that happens the likes of EDS can offer a number of things, not least economies of scale. But the slowness of the evolution of IT is making assembly line something of a romantic notion but for the most basic of applications. If that were not true then every IT project would be a success, which is far from the case.

Only Strong Survive in IT/Business Jungle - IT Business Edge Interview

Ann All of IT Business Edge recently interviewed me about The IT Value Stack. You can find the interview at the following link:
Only Strong Survive in IT/Business Jungle.

How to Tap IT's Hidden Potential

In the recent Wall Street Journal article How to Tap IT's Hidden Potential, Dr. Amit Basu and Mr. Chip Jarnagin write that:

"...Analysts estimate that hundreds of billions of dollars are blown every year on IT projects that fail to achieve the desired goals.

The reason for all this is the metaphorical glass wall that separates the IT group from the rest of the business at most companies. The wall prevents IT from being part of the discussion at the highest levels of company planning, robbing a firm of its full potential.

Success in the digital economy of the 21st century demands a strategic role for IT. And for that to happen, the glass wall between IT and the rest of a company has to be shattered..."

The authors have hit the nail on the head in respect of how most companies are not yielding full value from their IT investment and the issues that lead to that.

The IT function exists to deliver business value and as such needs to be managed by the business. My view is that IT is too important to be abdicated to the IT function so must be managed by the board. It would be a step in the right direction for the CIO to be invited onto the board.

They have highlighted why that doesn't happen. In my view that is not enough. Each senior executive needs not just to be IT-aware, but to be sufficiently IT savvy to drive the IT function to deliver both cost savings and business innovation.

The IT Value Stack addresses this issue and the solution in detail. One of the underlying assertions of my book is that ultimately the CEO and CIO should be one and the same person. That is not going to happen overnight, but given the future is IT- centric, it is only a matter of time.

(Some others blogging about this article include John Millinax, CIO-Weblog, Did Somebody Say Strategy, The Data Doghouse, Executive Advisory blog, Agile & Business, Collaboration and Content Strategies,  Useful Idiot and The Mad Admin.)

Moving Beyond IT-Centricity

In From Bad-to-Good CIO: Move Beyond IT-Centricity Laurie M. Orlov writes:

...In other words, the good CIO (one who is admired and respected by both business execs and staffers) transcends the IT-centricity and insulation from the business that frustrates business peers, and pushes the CIO out the door...

My viewpoint is that it's all a question of semantics, but I think IT-centricity shouldn't have its epicentre in the IT function, ie IT-centricity is a organisation-wide issue.

I believe IT-centricity must stem from the boardroom. Treating all IT related problems including substandard CIOs as IT problems is more often than not a mistake. The problem lies somewhere in the recruitment, development and management spaces.

Somebody somewhere outside the IT function got one or more of these wrong.

Avoid the IT alignment trap

Have a look at Avoid the IT alignment trap, an article by Bain employees Steve Berez, Vivek Gambhir and Amit Sinha.

My reaction: I agree that IT-business alignment is not the solution. I also agree that an IT department lacking in engineering and operational discipline will fail to meet the users' needs. But even IT departments that get their act together will still under perform if they focus on alignment. My interpretation of business-IT alignment is buyer-seller. A well aligned IT function does what it is told and does it well.

I believe we need to move beyond alignment to entwinement. In other words the IT function must influence business strategy as much as the users. This is a key way of moving IT as a subject for consideration under the title cost management to being a tool for innovation.

IT: Follow the Lead of Service Firms

In a recent series of blog posts popular author and speaker Tom Peters writes that companies should “PSF” themselves and be more service oriented. (PSF stands for Professional Service Firm.)

IT is, on a day-to-day basis, providing a service, and so must behave accordingly. The quality of that service will determine the users’ perception of the IT department, much in the same way as a restaurant’s service will determine the diner’s perception of the kitchen. A good kitchen fronted by surly waiters undermines the chef’s endeavors. Increasingly, the IT department is providing a service to both users and customers. A lack of service will impinge on client loyalty and thus revenues.

IT’s focus needs to be on the experience users have when they use the service.

For IT to be like a popular restaurant you will need your IT people to become more business-like. This goes beyond learning to be nice to users, and on to identifying who the best customers are and lavishing them with the limited love and attention available. This is also known as resource optimization.

(I discuss this more in the Service Stack chapter of The IT Value Stack.)

IT Struggling?

Interesting piece by BEN WORTHEN of wsj.com: IT Struggling? Put a Business Person in Charge. It shouldn't be as that is what IT staff are paid to do. However it highlights how far the industry has to evolve for these Renaissance IT stories to become mundane Bell curve norm events rather than notable extremes. We need to move beyond the slavish notion of business-IT alignment to entwinement where business and IT in partnership is standard. But it takes a special breed of CEO and CIO to make this happen. And in the main there aren't many of either who are ready for the challenge that I refer to as IT leadership.