Sharing the Load

Governance Lessons from Performance Leaders

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CIOs are used to shouldering the burden of IT budgetary and process decisions on their own but new research suggests it is time senior business executives started sharing the load.

With IT now integral to the success of every organisation, the question of who makes important budgetary and process decisions is vital. Professor Peter Weill from MIT in the US says important IT decisions should be made jointly by CIOs and senior business executives.

"We've been studying hundreds of companies, trying to understand what it is that differentiates them in terms of getting the kind of value they want from an IT investment," Weill says. "One of the signatures [of high IT performers] is the key decisions that are made are made jointly between people who run the technology and the people who run the business."

An Australian expatriate, Weill is the director of MIT's Center for Information Systems Research (CISR). Weill argues that CIOs and the boardroom should collaborate on six key IT decisions. Without this collaboration, he says, the consequences could be dire. "If senior executives don't participate in these six IT decisions -- if the IT organisation makes them alone -- the IT organisation takes on too much risk for itself and assumes that risk for the organisation," he says.

On the other hand, he says, when IT decisions are shared with business executives, "decision making becomes joint accountability". Weill's six key IT decisions are listed below.

DECISION 1: How much should we spend?

"In the end it all comes down to money," Weill says. "I think one of the hardest decisions we face is how much to spend on IT."

According to Weill, this is a question that is perennially on boardroom executives' lips. "I spend a lot of time working with boards and senior executives and that is the question they always ask me. As if there is one number that we could name and say, 'That is how much you should spend on information technology'."

Weill says two equally important corollaries to this question are "who should make these budgetary decisions?" and "how do we hold those people accountable for results?"

To ensure productive IT discussions at the boardroom level, it is necessary to alter the way IT investments are conceptualised. "We think of [IT investments] as a portfolio, in the same way as you would think of a personal investment portfolio in your own investment regime. We have come up with a framework that breaks information technology investments into four asset classes." The four asset classes are: transactional processes, information management processes, strategic development or innovation, and infrastructure. Importantly, any given project can be any combination of the four asset classes.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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