It's Not Your IT Portfolio - It's Theirs
- 09 December, 2002 12:07
One of the most urgent debates in our field today is: how do we ensure that the IT plan is consistent with the company's strategy? We attend conference after conference grappling with just this question. I think this is one of the most important issues that IT faces, and it is at the heart of how IT is accepted within an organisation.
Here's my answer: if you want to make sure IT is consistent with company strategy, you must put the responsibility for portfolio management where it belongs - with the executives who manage the business units. It is not the role of IT to determine which projects should be given IT resources each year. Nor should it be IT's responsibility to justify and develop the ROI on projects. I believe that all of this is the responsibility of those managing the business. It must be the user managers who determine what systems they need to get the job done. In other words, IT is everybody's business.
It really gets down to the question of who is held responsible for the development agenda. At Ace Hardware, no one ever comes to me and asks why IT is not working on their system. Everyone knows that neither I nor my staff make that decision. It's the responsibility of the IT steering committee and the particular officer who represents that particular area. Several years ago, one of our most senior executives indicated that he was expecting IT to complete the last two years of his plan, which included critical supply chain enhancements. I told him that he should work hard to develop the cost justifications before the upcoming meeting of the IT steering committee. Otherwise he might not get the right amount of resources assigned to his projects.
Perhaps, at first reading, my handling of this senior exec sounds obvious. Isn't this the way all IT shops operate? I don't think so. I think that there is a strong tendency for user management and the CEO to give this kind of responsibility to the CIO "because IT is not something I'm comfortable with". CIOs also have a strong tendency to assume the responsibility, either because they don't want to question management or they are convinced they know best about what should be automated.
This issue really gets to the point: What is the role of the CIO? Is the CIO's role to evaluate the company and then develop an automation plan to digitise the company, or is it to be a member of the management team who has technical and strategic input during the process of determining how the company should be digitised? I would argue strongly that it is the latter.
The Path to Longevity
At Ace, we have a defined approach that assures that our plan is aligned with our strategy and everybody is involved in the process. The steps we go through each year are as follows.
1. In early spring, I meet with a select group of IT and user managers to develop a high-level view of strategic systems for the next five years. This exercise assures that the large systems that we want to develop will be understood across the company. This document is shared with the top corporate officers and the board.
2. Beginning in midyear, IT meets with all the user departments and specifically defines what needs to be done during the upcoming year. This discussion is based on the current year's accomplishments along with the new long-range plan.
3. Late in the US summer, these requirements are all prioritised and presented to a committee composed of two officers (whom we rotate) and several users who are all aware of the corporate strategic plan. The group finalises a recommendation based on fulfilling that plan.
4. The recommendation is then presented to the IT steering committee, composed of the top corporate officers, for final approval. At this meeting, priorities can be adjusted, staff can be added, and projects can be added or deleted. Sometimes certain projects are scrapped in favour of more pressing demands. This can be done only with the top decision makers sitting around the table, and it is rare for someone to miss the meeting. The outcome is a final plan for IT that is used to develop the budget for the next year. This year, the plan consists of almost 150 projects. The senior executive I mentioned earlier was able to make a great case for the ongoing support of his supply chain initiatives, and he actually received more support than he had asked for in his original proposal.
Each month a status report on these projects is published online and describes each project and its stage of completion. The report also shows the current estimated cost, the cost expended to date and the date the project moves to the next stage.
In this manner we get each department involved in the automation agenda. The CIO does not pick the projects and thus is not put into the position of selecting one department over another. It seems to me that CIOs who are put in that position are asking for a very short career. Line management should have the authority and responsibility to make these decisions.
Now the first reaction to what I've said might be: how can you expect user managers to know what they need in this fast-paced world of IT? That is indeed an issue. And it goes to the heart of what is the role of the CIO and his staff, which is to be a mentor of sorts when it comes to technology. We in IT must be aware of new and existing technologies that could be valuable in a given user situation. One of the CIO's most important roles is to predict the technology future and sell the concept to user management.
Here is how I would summarise the other responsibilities of the CIO:
1. Provide technical assistance to the long-range planning process.
2. Maintain a stable computer and network infrastructure.
3. Ensure that the infrastructure is secure.
4. Ensure that projects are completed on time and budget.
5. Maintain a stable workforce.
Nowhere did I mention determining what systems we should automate. If the company decides that all resources should be devoted to a financial system, that's OK. As long as the officers agree, IT should not care.
I first got into IT in 1965 at a data processing service bureau working after school. The environment was much simpler then. IT was a way to automate some existing processes and make them easier to use. There wasn't much strategy involved. Today, things are vastly different. Oftentimes, IT is the strategy. In this environment, strategy and how we execute it is too important to entrust it only to IT. In fact IT should not want to accept this burden. That is a job for everyone.
Paul Ingevaldson is senior vice president of international business and technology for Ace Hardware, a $US3 billion cooperative serving the wholesale and retail needs of more than 5000 Ace Hardware stores in the United States and 70 countries