Disarm the Resisters

Besides the hurdle of time, cultural resistance is another challenge CIOs should anticipate. At 7-Eleven, CIO Keith Morrow was surprised at the difficulty of introducing the concept and processes both within IT and among the user community. Now three years into this effort, he realizes that unlike a function such as marketing, a change in how IT operates could affect the nature of people's daily work across every area of a company. Department heads, who once had their own distinct ways of working with the IT group, now have to comply with standardized IT business processes. For example, every IT project now has to have a business case with clear ROI and tangible benefits, even IT infrastructure projects. "This loss of control can be threatening and difficult for those involved," says Morrow.

Morrow has learned that the best way to counter this reaction is through setting expectations. "We try to be very clear and up-front about the goals, roles and the level of commitment we need to be successful," he says. "You have to have a multilevel communications plan that reaches all affected constituents." It's crucial to maintain respect for the dignity and importance of every person impacted by change, Morrow adds.

IT staff can have an even tougher time than internal customers adjusting to the new businesslike processes. The primary reason is that not many IT workers have been exposed to the kinds of governance that other business functions operate under. IT managers at 7-Eleven had a particularly hard time with the new realities of budgeting. "If you run IT like a business, then the budget process must be what it is in any good company," Morrow says. "People didn't realize that there are very hard decisions that you have to make. You have to break contracts. You have to make gut-wrenching business decisions to cut staff."

Morrow overcame the fiscal inertia through performance accountability. IT employees are compensated based on customer satisfaction targets, financial performance, knowledge and team development, and their ability to meet deadlines, budget goals and quality metrics.

Avoid a Culture Clash

Some well-intentioned CIOs may develop IT "business models" that are out of sync with the larger corporate culture, which can lead to entrenched resistance and resentment. Atmos Energy CIO Les Duncan saw that happen when he was director of information services at British Petroleum. Each BP business unit had an IT department run as a profit centre. They all had their own internal sales and marketing professionals and competed with each other for BP's IT business. No other corporate function had its own sales team focused on making money, and internal customers didn't like having to pay IT costs that ultimately led to IT profits. "You must have the functions of a business, but you have to be careful not to look or act too differently than any other department," Duncan says.

At Atmos, Duncan mirrors the larger business by measuring IT success the same way other functions do - with formal internal customer satisfaction surveys. Other departments don't have their own HR and financial functions, so neither does IT.

Exposure Cuts Both Ways

Lastly on the subject of hurdles and drawbacks, there's the unease that can accompany visibility. While greater transparency of technology costs is a goal of running IT like a business, the other edge of that blade exposes IT's shortcomings for all the world to see. "The whole idea behind running IT like a business is to open the kimono," says Rubin.

But many CIOs are reticent about revealing all. "Your flaws are exposed. The opportunity is there to fail miserably and be very visible," says Macromedia's Urwiler. "But just like when you're running a business, you have to find a way to explain things that don't go right. If a company has a problem, on a quarterly basis they have an opportunity to talk to shareholders about what happened. And we can do the same thing."

Urwiler reveals his department's performance to the company's IT governance committee, warts and all. "Every single month we tell them how we're doing against budget, against cost-cutting initiatives, with strategic projects and systems availability," says Urwiler. The news isn't always good, but a simple explanation can go a long way. "You don't just send out raw data, there's a colour commentary that goes along with it. And in the end, you find, the business appreciates being told the truth."

At floor manufacturer Mannington Mills, corporate vice president of IT Jim Sloane reports back to the business on IT performance every four weeks. "It's a little scary in the beginning, admitting your flaws," he says. "But I have found that IT folks work harder on fixing their flaws when they are visible to others." In fact, Sloane has noticed that major system breakdowns have decreased since IT began reporting on its performance. [To find out more about how IT should report to the business, see "No Surprises", CIO May 2004 or at: www.cio.com.au No Surprises]