Making IT Matter

Making IT Matter

At St George they are so over the whole IT-business alignment thing. That's because CIO John Loebenstein considers it done and dusted.

When the influential Harvard Business Review published a controversial article in May last year entitled "IT doesn't matter", St George CIO John Loebenstein had what he characterizes as "a violently adverse reaction".

In the article, editor in chief Nicholas Carr attempted to show that the evolution of IT in business has mirrored that of earlier technologies like railroads and electric power. That is, like other so-called "infrastructural technologies", IT had for a brief period opened opportunities for forward-looking companies to gain sustainable competitive advantages but was now ubiquitous enough to be becoming a commodity input. These days, strategically-speaking, Carr argued, IT was becoming invisible: it no longer "mattered".

Loebenstein thought the Carr piece was both fatuous and foolishly provocative.

"IT of course does matter, within the context of the business," Loebenstein says. "Take IT away and most businesses tomorrow would stop. So IT does matter, but is IT the business? No, it is not. That was a fatuous comment that was not worthy of publication in Harvard Business Review," he says. [See "Fightin' Words", CIO October 2003 for an extensive examination of the heated debate and misconceptions surrounding Carr's now notorious article. - Ed]

To Loebenstein, who brought to the role of heading up St George's IT operations in 1995 decades of experience in the insurance industry, Carr's take was all too much of a piece with the remorseless call from most pundits and consultants of recent times that "IT must align with the business". No it mustn't, Loebenstein says. That's entirely the wrong way of thinking, and means Carr, like all too many others, is asking utterly the wrong questions. In fact, Loebenstein says, CIOs who ask how they can align IT with the business are already in trouble, because the very question implies IT in their organization is something apart from the business.

"When somebody says: 'How do I align IT with the business?' it implies that IT is something separate from the business and it's got to somehow join in with the business. If that's your perception of the organization's structure or the environment within a business, I don't think you can ever succeed," he says.

Loebenstein made his position clear - and won a flurry of press attention and not a little praise - two months before Carr's pronouncement, when he delivered what one IT journalist described as a "a peppery wake-up call" to business leaders to stop blaming the IT department for project failures and take some responsibility for poor management culture themselves. Delivering a speech to last year's Metamorphosis conference in Sydney, Loebenstein told an audience of his peers that he was getting fed up with people always pointing the finger at IT for project issues when a lack of business strategy was often the real problem.

IT was too often in the position of having to carry the can for the failures of others. "You have to ask if there are clearly defined strategies and goals within an organization. If you don't have these, there's no point in criticizing IT," he said at the time.

"Business units themselves have to realize business and IT need to align and move towards agreed corporate strategies," he said. "Alignment means a coming together around a common purpose. If you're going to have alignment, [you've] got to have an organization that has clearly defined strategies and clearly defined goals."

Loebenstein told his peers IT failures were often due to the failure of the business to instil the goals of the enterprise in individual business units, with the result that too often IT found itself being called into a project after key decisions had already been made. He advised CIOs to refuse to do projects that would result in finger pointing, advising them instead to become agents for change who must insist on sharing responsibility across the business. "We have to use the idiom that there are no IT projects, there are only business projects," he said.

That is just how it is in St George. Loebenstein was hired to report directly to former CEO the late Jim Sweeney in 1995. Since then he has helped St George meet the challenges of Y2K and GST, bed down the information systems necessary to complete the migration of St George from a building society to a bank, successfully integrate Advance Bank, Bank of South Australia and Barclays Bank into a single organization, prepare the information systems for the new privacy regime, and undertake a series of major system upgrades.

After St George was virtually written off a couple of years ago by the market as a certain takeover target, IT played its part in helping ensure new CEO Gail Kelly was able to announce record results. But Loebenstein will accept no credit for any of it. Instead, he says, the successes are a tribute to the business as a whole, because St George is a united organization in which IT is a totally integral part. "IT has to be as equal as product development, as equal as the marketing department, as equal as any other part of the business," he says. "You know, you're as good as your weakest link, and in a sporting analogy if a member of the scrum isn't pushing then that scrum will be ineffective."

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