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Fear of Transparency

Fear of Transparency

IT loves new technology and typically invests too much, too early. Many times, these Buck Rogers-type investments are made at the expense of more fundamental operational issues

Five excuses CIOs make to avoid practising what they preach

It's ironic that while IT leaders are trying every trick to improve alignment, they're often not practising what they preach. Business alignment requires establishing mechanisms to improve relationships and ensure agreement about what will be done, how, by whom and when. The key to this is enhancing the transparency of decision-making. But while CIOs go to great lengths to modify the behaviours of their business partners, they resist examining and modifying their own. For example, many IT organizations initiate projects or select technology without approval or review committees. While CIOs could get away with this when they made pretty much all of the decisions on behalf of the users (whether they liked it or not), that's impossible in today's world of shared accountability.

To reform your own behaviour, take a look at what some managers do to get around the rules. (The following framework has been adapted from an MIT Sloan Management Review article titled "Games Managers Play at Budget Time".)

The Sandbagger: "There is no way we can deliver quality and cost on time - pick two out of the three."

IT is famous for overusing this trite and often untrue formula. Business leaders don't have the luxury of delivering the same ultimatum to the marketplace; competitors are more than ready to deliver improvements across the board. The IT sandbagger also makes statements such as: "It's impossible for us to cut our expenses in light of the tremendous growth and demands on IT." During times of budget freezes and cost-cutting, CIOs lose credibility when they say this without the metrics to prove that they are squeezing every dollar.

The Magician: "Investing in this new technology will transform our capability to deliver IT products and services."

IT loves new technology and typically invests too much, too early. Many times, these Buck Rogers-type investments are made at the expense of more fundamental operational issues. When such "grand programs" come from the business, IT recognizes their folly immediately; but when they come from IT, the rules of portfolio allocation, piloting and measurement are forgotten.

The Lone Ranger: "IT is our business, and we can responsibly invest internally without formal governance."

Nothing does more to harm IT credibility than CIOs who invest in secrecy. Like doctors treating themselves, CIOs define their own needs, obtain funding by calling the projects mandatory and implement on a self-imposed time line.

There are two reasons why this behaviour makes business leaders roll their eyes. First, where are the business cases, alternatives analysis and discussions about priorities? Second, these projects siphon resources away from business initiatives. While CIOs may be acting very responsibly, the lack of project transparency encourages their business partners to imagine the worst.

The Visionary: "I can't say when, but this is going to be big - really big."

CIOs maintain a difficult balance between advocacy and independence. In their effort to form business relationships, CIOs sometimes show favouritism in promoting pet business projects. They shift into a cosponsor role. As a result, projects go without the necessary hard look and emerge half-formed, without a commitment to deliver short-term performance gains.

The Hostage-Taker: "If we don't do this, we will sacrifice our future."

IT often holds the organization hostage when responding to challenges like Y2K, Sarbanes-Oxley and consumer privacy. CIOs understand that they will be held responsible if something goes wrong. But instead of presenting a range of options, IT often presents a single high-cost, low-risk solution. The midlevel technologists (who are desperate to obtain necessary infrastructure funding) tend to add their wish list.

While it's true that getting investment in infrastructure is one of IT's biggest challenges, business executives can typically see through a bloated proposal. They may not be able to challenge IT's solution, but the CIO will be viewed as an extortionist and will pay for it down the road.

CIOs lead the formation of policies and practices that enable responsible IT investing. Hand in hand with this role is the burden of being model citizens and complying with the letter and spirit of their own policies. Failure to do so results in IT undermining the very alignment these policies and practices are meant to foster.

Reader Q&A

Susan Cramm answers questions on "Fear of Transparency"

Q: If getting investment in infrastructure is one of the CIO's biggest challenges, what is your solution for accomplishing it in an above-board manner that includes the business?

A: First and foremost, develop a plan with the business users. Assess the health of the current infrastructure, determine positioning vis-a-vis competitors and define appropriate investment levels (what your business can afford) and growth rates (namely, how fast the business is growing).

The plan should identify the various categories of infrastructure investments and forecast necessary changes: refreshing current capabilities, enabling critical capabilities and reducing the technology footprint.

Refreshing current capabilities should be funded as a tax, established as a percentage of the infrastructure budget or in line with depreciation going off the books. Investing in new capabilities or reducing the technology footprint ideally ought to be justified by a combination of operating cost savings and decisions about whether it's time to invest based on competitive considerations and affordability guidelines.

Q: Y2K, HIPAA and Sarbanes-Oxley have all been driven by compliance needs, not by IT. If you want security, you pay for it; if you want disaster recovery planning, you pay for it; and if you want it quickly, then get your wallet out. If IT would stop sugar-coating the truth, then business and IT may one day work in harmony.

A: I'm not sure that the business would describe its conversations with IT as being sugar-coated. More often, IT asks for money; IT's requests are denied. Then, a crisis occurs, and IT comes back with a big price tag. Granted, that's frustrating, but it doesn't justify IT's provision of a single solution with a high price tag with no other options. Instead, we should engage the business with options that represent varying risk levels, then ask how much insurance the business wants at what cost.

Q: When IT is transparent to business executives, they mostly want to use that information to cut budget. How can IT get around the view that it should operate at as low a cost as possible and give back funds as soon as possible?

A: It's interesting to contrast your comment with another one that came in about this column: "When you involve business partners in technology decision- making, they engage. When you assume that they know nothing about IT and don't want to know, that becomes a self-fulfilling prophecy."

On the value side, many IT organizations have not established governance to ensure that business executives compete for IT investment dollars. If CIOs are trying to justify expenditures on their own, they lose. On the cost side, many IT groups don't do a good job of explaining their cost structures in terms of the services provided or by providing proof of yearly productivity improvements. Without a good view of IT costs, the only option left for the business is arbitrary reductions.

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