New Business Imperative

Which brings us back to Thorp's benefits realization approach and the reasons it is now a business imperative.

We urgently need a fundamental shift in management mind-sets to allow organizations to move from managing technology projects in isolation to managing business programs, Thorp says. Programs must clearly focus on business benefits, including organizational, process and people change projects in addition to technology projects. They must elevate decision making from the technology level to the business level, and from the business "silo" view to the enterprise view.

In addition, the organization must evaluate multiple business programs, select the best, then manage these as a portfolio of programs. Last but not least, Thorp says, organizations must recognize that decision making is not a one-time event. Programs must be proactively managed through to the full delivery of value.

To drive such changes, CIOs must sit down and work with the business stakeholders to ensure from the inception there is a clear understanding of the business outcome the project is supposed to enable. "Seven to nine times out of 10 that isn't the case; we rush in to do things without really having a clear understanding of the business outcome we are trying to achieve," Thorp says. "Once you get to that business outcome the next question is: What else has to happen to achieve that outcome?

"I met with the deputy CEO of the Defence Materiel Organisation, and he made a great statement in the course of conversation. He said: 'I need to get the right people in the room having the right conversations'. That's what I'm talking about here - getting the IT people and the various stakeholders in a room and getting clear understanding of what they're trying to achieve in business terms, getting a clear understanding of all the changes that it is going to require, and who is accountable for those changes.

"Because IT isn't accountable for probably more than 15 to 20 percent of it, the business has to step up," Thorp says.

Only when it does will we see fewer warehouses unaccountably disappearing into the void.

SIDEBAR: How to Talk Business

Every IT project is a business project. Here's how to make that clear

By Steve Ulfelder

"There are no IT projects" at Kaiser Permanente, says CIO Cliff Dodd. Instead, he says, "some business projects have a significant IT component. And like any other project, they have to be rationalized with a business case; every [regional] CFO that could be impacted has to sign off."

"No IT projects" is something of a motto at the US health- care giant. It is one of five principles instituted by Dodd four years ago, continually stressed in PowerPoint presentations and even on placards on the walls. And it's becoming a guiding philosophy in many other companies as well. One result of this is a demand for rigorous cost-justification of projects that used to be dismissed because they were considered too technical to explain or were assumed to be just a cost of doing business.

That puts the onus on CIOs to cost-justify initiatives whose returns may be difficult to quantify to non-technical executives. "This is where a lot of IT departments have a problem," says Jim Carty, president of consulting firm IS Value. "They see a need but cannot get funding approved."

But it can be done. Here are three successful approaches.

Money Talks While it may be obvious to an IT group that an upgrade is the smart move, business executives don't necessarily share that opinion - often for good reason. "When I was working with Amex a few years ago, they were running certain parts of their operation on Intel 8088s," Carty says. "The [PCs] could still do what they needed them to do, so there was no reason to replace them."

If you believe that a piece of hardware, a network switch or a software package needs to be replaced, be prepared to prove it and remember that dollars talk. For example, when Hatfield Quality Meats sought funding last year to update its Demantra demand-planning software, CIO Bob Hardner studied the newer release's features and translated them into persuasive business terms. The proposed upgrade would cost only $US20,000, but "we had to uncover net gains", Hardner says. The answer was clear: While the old version allowed forecasting only in weekly "buckets", the newer release could provide demand forecasts on a daily basis, he says.