The WSJ and Diamond on IT for CEOs

Blogger: Craig Roth

I highly recommend "How to Tap IT's Hidden Potential" for CxOs (CEOs and CIOs in particular) and their direct reports.  It is in the special Business Insight section that was published in the Wall St. Journal today (3/10/08).  The article boils down the basic organizational issues in maximizing the value of IT as teaching IT literacy, getting a CIO that understands the big picture, creating demand for IT, translating tech-speak (I'd consider this a corollary of IT literacy), rationalizing IT spending, and executing portfolio management on IT.  This is an exemplary list of what a CEO and CIO can do hand-in-hand to enable IT's value to be realized. 

The only topic I felt was not fully explored is the value of portfolio management in helping the business to acknowledge the run/grow/transform buckets of IT projects.  The article mentions portfolio management as important for assessing risk (which it is), but it is also important for approving the amount of expenditure needed to simply run the business ("keep the lights on" as they say) versus the amount needed for continuous improvement (the "grow" part) and more risky, long-term bets on business transformation.  Too often I see businesses that seem to think of IT as just one of those three buckets, resulting in under-funding and skunkworks projects in the other two.

For some more detail on how business and IT executives think about IT's value and assess its value in terms of run/grow/transform buckets, I'd recommend a 2007 study by Diamond Management & Technology Consultants called Digital IQ.  This survey found that about 72% of organizations somewhat or totally agreed that the CIO is very involved in business strategy development (although products companies were more likely to say "totally agree" than services companies which were weighted toward "somewhat agree").  However, when asked where IT will have a major or extensive change on business operations, the executives mostly thought IT would change itself (55% for products companies and 68% for services) rather than after-sale customer service (only 43% for products companies!) and finance/accounting (32% for products, 36% for services).

In addition to discussing the relationship of IT within business strategy, the Diamond study also uncovered some nuggets relating to the place of virtual collaboration and presence in the IT portfolio.  Oddly enough, while virtual collaboration and presence had a #1 showing for impacting the running of a business (44% said it would have a great impact), it was #4 out of 6 for growing the business (35%) and #4/6 for transforming the business (16%).  I don't mind the low ranking on transforming the business when up against valuable technologies such as SOA, ID management, and data mining.  But the 16% figure is surprising to me considering the low saturation rates I see for use of collaborative technologies and the great improvements there have been in recent years towards treating them as infrastructure rather than point applications.  As an emerging technology, I would expect to see a higher acceptance of collaboration's transformational capabilities rather than praising it for keeping the lights on.  I suspect one more level of drill-down would have indicated that these executives saw virtual collaboration as typified by e-mail and not innovation, brainstorming, social networking, joint authoring, or collaborative knowledge capture and exchange.

Sure enough, when asked if organizations plan to use virtual collaboration and presence technology only 16% say "yes" and the rest aren't sure.  I think that us analysts in the Collaboration and Content Strategies service and the people we talk to at our clients have our work cut out for us.

Comments

[Andrea Harris]

Rick Sherman also blogged about this article, mentioning the portfolio aspect:
http://datadoghouse.typepad.com/data_doghouse/2008/03/how-to-tap-its.html

[Anonymous]

The link to the Digital IQ report is incorrect. It should be www.diamondconsultants.com/digitaliq.