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The Boiler Room Rag

The Boiler Room Rag

I'm two weeks on the road now, all overseas, continually heading east for meetings in Europe, then on to Asia, Australia, Japan, then home. I've learned that the secret to dealing with jet lag is simply to decide ahead of time that you're going to feel lousy every single minute you're gone and for several days after you get back. This doesn't make you feel any better, but it somehow lessens your urge to throw yourself in front of the bullet train. I'm on my last leg home, a domestic hop, and the guy in front of me almost broke the LCD panel on my laptop when he leaned back. Why can't I take my eyes off his hair plugs?

What awaits me back at the office is a month's worth of phone calls and a mountain of periodicals I'll never get around to reading holding down an even bigger stack of urgent junk mail. I'm so looking forward to it.

The worst of the lot will be the trade magazines that my boss has been good enough to forward to my attention. Really, with the possible exception of a user with an uncle in the software business, there's nothing more dangerous than a CEO with a copy of an information technology magazine like the one you're holding right now.

In a CEO's hands, it's a smart bomb that lands on your desk with a Post-it note attached to one or more of the articles, each scrawled with the same five dreaded words: "Why aren't we doing this?"

Over the years, a million glib and intemperate answers to this question have popped into my head, and only a superhuman effort of self-control has kept me from succumbing to the temptation to slap a Post-it Note on his ample forehead reading: "We would, but I'm too busy down here in the boiler room making this nickel scream!"

I guess I'll wait and make that my last official act. Perhaps we CIOs could convince our favourite publications to print their articles in a code that could be deciphered only with the help of a Captain Bitmap Decoder Ring. (Don't bother denying that you have one.) The problem with a question like, "Why aren't we doing this?" is that while there may be a thousand answers, there are few good reasons. For most organisations, the answers eventually boil down to anaemic budgets and a failure to build organisational capability and readiness while competing with Internet start-ups to recruit technology talent ("Hey, kid, we're hip! Honest!").

The most interesting and vexing problem with information technology budgets is how disconnected the entire process of setting and scrutinising spending has become. If your budget is like mine, 80 per cent of it goes to keeping the lights on and implementing small system enhancements, and the other 20 per cent goes to new development and major enhancements. However, over the course of the entire year, the 80 per cent that goes to sustaining systems gets only 20 per cent of the users' attention, and the 20 per cent in new development gets 80 per cent of the scrutiny (translation: whingeing and nit-picking). Now, you might say that the reason the 20 per cent gets the attention is because that's the portion of the budget that is discretionary. But is it?

What would happen to us and our companies if we could reverse this particular universe. Let's say, for example, we could get our management to fixate on the "keep the lights on" portion of our budgets and allow us to spend as much money as we wanted on new development and enhancements, provided we stayed within the boundaries of diminishing returns (remembering that nine women will not produce one baby in a month). Now, you may feel the need to wear a safety helmet and goggles when you explain this to the executive committee, but consider the following:

Every new development project we've got either in progress or on the drawing board returns benefits well in excess of the investment. A recent accounting pronouncement known as SOP 98-1 requires many companies to capitalise the internal and external costs associated with the development and deployment of software for internal use. This change means that the costs associated with development do not hit the books as an expense while the development is going on.

Instead, the project costs are amortised over five or seven or perhaps even 10 years, starting when the software is actually put into use. When you couple that with the fact that the benefits on new projects cannot be realised until these systems go live, it follows that staffing these efforts for the shortest possible development times makes absolutely perfect sense.

Perhaps the best way to frame this argument is to say that as we make the move from a service economy to an experience economy (see Disney World), competitive differentiation between companies will come from the innovative use of information technology. Going to the McDonald's of software companies for payroll or general ledger software will be fine, but developing creative, capable expertise in those things that might set our companies apart from the rest of the pack, like e-commerce, will certainly be the difference between success and . . . that other thing.

As we struggle to compete on a truly global basis, the need for this kind of risk taking has never been greater. Yet it's hard to imagine that more than just a handful of established companies will actually make this kind of commitment. In most businesses, there's never been much patience for mistakes, and as things get more demanding, running faster and faster, that impatience could eventually turn to contempt.

If your organisation makes the conscious decision to minimise risk - to let somebody else innovate, take the risks, suffer the inevitable setbacks - then you'd better hope that that somebody else isn't your competition, and you'd better be comfortable with a solution or a process that everyone else in your industry will have access to.

Investing in this capability requires devoting a sufficient amount of cash and being able to recruit the necessary talent. Even more important than recruiting every smart, creative, funny-looking propeller-head you can lay your hands on is retaining every smart, creative, funny-looking propeller-head you've already got. Your ability to do both hinges on being able to offer training, great working conditions, challenging projects and, while you're at it, changing your company's name to something something dotcom.

The very worst part is that this budgeting game has a way of taking on a life of its own. In fact, it consumes far more management time and attention (meetings, spreadsheets, presentations, coffee) than it could ever return in benefits to our shareholders. Tracking spending is important. Making sure that you are investing effectively is important. Grilling managers that might otherwise be delivering great systems and churning out pages of spreadsheets is a waste.

Imagine what we might all do, what we might all contribute to our organisations, if we had adequate budgets and productive, stable teams. This is not a circumstance that many of us have ever experienced. Surely the realisation of this possibility could induce temporary disorientation for even the most stout-hearted.

Imagine. Visualise. Got it?

Good. Now run down to your CEO's office and try out these arguments. I'll be easy to find when you get back. I'll be in the boiler room puttin' the hurt on Thomas Jefferson.

Anonymous has been a CIO at household-name companies for over a dozen years. Commiserate with him at confidential@cio.com

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