By Andy McCue, 29 November 2005 10:10
NEWS
Boardrooms are failing to get full value out of their technology investments by pursuing a short-term cost-cutting approach to IT that focuses on the bottom-line impact, according to leading CIOs.
Three-quarters of silicon.com's 12-man CIO Jury user panel said organisations are guilty of viewing technology as a cost centre and focusing on the bottom-line impact of the IT department - at the expense of its potential to directly influence top-line revenue growth.
But CIOs admit that part of the problem lies with IT leaders who are unable to engage other boardroom executives in a language they understand. Stephen Hand, group IT director at Lloyds Register, said: "CIOs have yet to establish a language for IT's business value that is as meaningful to the CEO as cost savings."
A lack of boardroom representation for IT in many organisations adds to the view that it is merely a support function or even a "necessary evil", according to Kevin Fitzpatrick, CTO at Manpower.
He said: "This leads to IT being seen only as a route to cost savings rather than a possible route to achieving all business goals."Luke Mellors, IT director at the Dorchester Hotel, said the cost-based fixation with IT is a dangerous business proposition for the future.
He said: "Cost-based management of IT is the single biggest factor in IT failures. Value-based IT management has to be the way forward where IT becomes an inherent value driver to the business and of strategic importance."
Andy Harper, head of information systems at United Utilities North West, said CIOs need to be able to demonstrate to the board the true value IT-enabled processes can deliver for an organisation.
He said: "This will help to shift the perception of IT as a source of true value for the business, rather than as a cost base to be managed down."
Yawar Murad, CIO at GE Life, said it requires "visionary leadership" coupled with a deep knowledge of the organisation's market to engage the management team.
But Kevin Lloyd, CTO at Barclays, said the savings versus growth demands are "inextricably entwined" and that both are governed by the same cost/income targets and total shareholder return.
Steve Ritchie, CIO at Investcorp, added: "In any sensible organisation there will be a balance between top-line growth and bottom-line expense management. The split will vary depending on the type of business, its current state and its future plans. Successful organisations will implement IT solutions that deliver at both ends of the spectrum."
Today's CIO Jury was...
Paul Broome, IT director, 192.com
Alan Brown, director of IM&T, West London Mental Health Trust
Peter Dew, CIO, BOC
Kevin Fitzpatrick, CTO, Manpower
Stephen Hand, group IT director, Lloyds Register
Andy Harper, head of IS, United Utilities NW
Kevin Lloyd, CTO, Barclays
Luke Mellors, IT director, The Dorchester Hotel
Yawar Murad, CIO, GE Life
Steve Ritchie, CIO, Investcorp
Peter Ryder, head of ICT, Preston City Council
Bob Silverman, CIO, Spring Group
If you are a CIO, IT director or equivalent at a large or small company in the private or public sector and you want to be part of silicon.com's CIO Jury pool, or you know an IT chief who should be, then drop us a line at editorial@silicon.com
Comments
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1. Bruce Chadwick
The problem stems from:
* IT being viewed separately from business change. Companies that are led by business led programme and project management see end to end process change as essential. IT is a crucial part of that.
* Too many board room people are fixated with numbers. FDs sit at the right hand of the CEO rather than at the bottom of the table. Inspired leadership tends to be market and customer focused instead.
2. Simon
If 'managers' thnk IT is the problem, then usually it's the managers fault !
My experience says :
IT is usually not given it's own board member, being a task 'tacked on' to someone elses remit.
The role it's usually tacked onto is the Finance Director - probably because a significant element of IT in most companies is the system(s) that manage the flow of money through the business.
Many of these FDs wouldn't know their RAM from their USB. To be fair, at least one of the FDs I've worked for acklowedged this and gave us a level of autonomy to suit - but then they were replaced with someone with neither the knowledge, nor the inclination to not get involved - so then you are in a situation where you CANNOT have a meaningful discussion with them beyond "it costs £x", but then they turn around and criticise you for not keeping them involved.
Then you get caught between demands to be proactive (but with any requests turned down if they don't solve an issue that's already been causing problems) and spending as little as you can (or less).
And finally, as Bruce Chadwick hints at, you get the problems where major changes in the way the business operates are being made, but no-one bothers to even tell IT until it's too late to point out any problems, or even actively exclude them. It's not fun when 'management' comes to you in the afternoon and tells you that as of tomorrow morning the warehouse will be running a different method of work - and by the way, can you sort out the system changes !