John Sutherland-CIO-Ramsay Health Care
The health of the business and IT relationship is of central importance to the success of all IT functions. Pick up any edition of leading business journals such as the HarvardBusiness Review or McKinsey Quarterly and one is bound to find an article about the role of IT within an organisation, and how greater synergies and alignment can be achieved. Management sections of book stores hold numerous titles offering advice, case studies and guides on how to make the relationship more productive, while most of the technology super-vendors such as IBM, HP and Oracle publish annual surveys to help CIOs stay on top of their game.
The relationship between the business and IT is a critical factor to be considered in terms of the execution of strategic IT projects. The more complex a project, the more important the context is. Strategic projects are often far reaching and touch on many different groups within an organisation, involving a number of key decision makers within the business. It is helpful to look back over the history of IT to understand where we stand today and what will influence future success.
Rob Thomsett describes the four waves of power shift since the inception of IT in his Radical Project Management book as the Dark Ages, Tokenism, Payback and Partnership. These stages describe in broad terms the attitude towards IT, and in many respects are a response from business leaders to the attitude of IT professionals and IT proponents such as vendors and system integrators.
The ‘Dark Ages’ were a time when a majority of organisations felt they were at the mercy of a dominant IT industry, which had an aggressive attitude towards their clients. IT was new and generally not well understood by business and government.
By the mid to late 1970s, with the advent of databases, networks, Management Information Systems and Decision Support Systems, computing became more integrated within companies, and token ownership began to exist between IT and businesses. IT still primarily controlled costs, quality and priorities, and there was a lot of IT bureaucracy, especially in government and large organisations.
With this history, it was little wonder that Thomsett described the following age as ‘Payback’. Through the 1990s the pendulum swung from IT to business control, and there was a forced alignment of IT with organisational strategy. The introduction of financial measures such as return on investment and outsourcing were used to regain the control and governance of costly IT programmes. However, in an effort to break the hold that a large number of internal IT departments held over their businesses, there was much hype and many purported ‘silver bullets’ from vendors and system integrators. The true cost of the larger outsourcing arrangements was not well understood, and there was certainly some degree of naivety among the business decision makers at the time.
The fourth and final stage is where Thomsett believes we sit today: ‘Partnership’. This has been touted as the nirvana that both the parties have been looking for. With the business-IT relationship having traversed the full spectrum from the 1960s through to the twenty-first century, a happy medium appears to apply to most organisations today.
However, true collaboration and effective partnerships between business and IT professionals still remains elusive to many organisations. Keeping IT relevant, retaining a seat at the decision making table and staying aligned with business strategy is not easy to achieve and even harder to maintain.
“Competitive IT capabilities” was a term coined by Bhatt and Grover, which was used to describe both the IT business experience and the relationship infrastructure. IT business experience refers to the extent to which IT groups understand the business, while relationship infrastructure refers to the extent to which there are positive relationships between IT and business managers. They argue that relationship infrastructure is not only valuable but also heterogeneously distributed and difficult to transfer – some companies do it well while others do not, and it is not an easy capability to develop quickly. Bhatt and Grover carried out an empirical study to determine the effect of these relationship capabilities across 1200 senior IT executives randomly selected from a directory of 3000 manufacturing firms. The study found that the relationship infrastructure significantly affected competitive advantage, indicating that building relationships is akin to building trust between business units and IT groups. Trust underpins a cooperative and collaborative working environment, and in economic terms works as a lubricant, reducing transaction costs. Having a significant amount of social capital at the outset of a new undertaking can help prevent or reduce the erosion of the business-IT relationship on challenging projects.
Building a trust relationship has parallels to the political sphere. It involves and engages users through grassroots listening and collaborating at a person-to-person level. Ensuring that communication is open and transparent, and thinking about users as ‘customers’ who, like traditional business partners, can fulfil the role of partnering to ensure the success of IT projects.
Another impediment to the business-IT relationship is how well the governance process of IT is perceived to be working. Strategic IT project failures are high profile and can damage both a company’s brand as well as the leadership team’s reputation.
As important as a good governance is to the overall business-IT relationship, so too is the degree of accountability expected of IT leaders. To be completely aware and engaged as business leaders, IT organisations and their leaders must move beyond traditional management capabilities of delivering projects, complying with service levels and managing costs. To work effectively with senior management means being in close partnership; understanding the industry and business practices, organisational politics and culture, thinking commercially and appreciating the competitive situation, working hard on improving communication and most importantly focussing on the customer.
Though information technology in itself has become ubiquitous through globalisation and the rise of Cloud services, the effective management of that technology is not. fferentiating factor, and companies should acquire, invest in and retain these resources -their most prized IT asset.