By Brian Kilcourse, Managing Partner
3/4/2008
I attended a user panel discussion at a technology conference last week that was billed as a discussion about how the assembled executives and the companies they represent had achieved better results with the sponsor’s business application. On stage, one of the participants, a senior vice president, was providing a living, breathing example of the “IT/Business alignment” problem, thoroughly trashing his IT organization (in absentia, so they couldn’t defend themselves). He described how he got tired of waiting for that organization to deal with his problems in the timeframe that he wanted, and so… he acquired the solution himself and implemented it on his own. Of course, the technology company was a party to this, and it has to be said, brought an excellent team to bear on the project and did a great job of getting the solution up and running quickly.
The audience had a few good chuckles as the story unfolded, but this vignette (which CIOs everywhere recognize and most guard against) reveals a couple of lessons to be (re)learned. Let’s break them down:
1. WHOSE RESPONSIBILITY IS “IT/BUSINESS ALIGNMENT”?
It is RSR’s contention that the difference between “winners” and “losers” in today’s retail business environment is in large part based on how well companies utilize the information asset. In fact, if you look at the market value of most retailers’ stocks compared to the value of the tangible assets on the balance sheet, you’ll see that the intangible-to-tangible ratio is often in excess of 4:1. That intangible value is largely wrapped up in the information assets of the company. For example, a company’s brand value is defined by how well it services the needs of its customers, and that value is driven by processes that are fuelled by information.
These assets are so important that most companies have an executive specifically assigned to protecting them and promoting their use– the Chief Information Officer. According the business executive on the stage, his CIO wasn’t getting the job done. So an appropriate approach to the problem might be, bring it up to the governing committee (presumably made up of C-level execs), and if the project in question has been approved, prioritized, and funded, and it’s still not getting done, then ask that the CIO find an outside resource to get it done or get another CIO! But this particular executive somehow got permission and the money to go around the CIO. Imagine the shoe on the other foot; the stores don’t like that the DC can’t seem to get orders right, and so they decide to build and run their own DC. Sounds crazy, right?
You IT’ers can guess where this will end up; odds are that at some future point the IT organization will be asked to support the installed application, and that’s when the IT department will do what IT’ers usually do – try to integrate it, manage it, maintain it, and protect it (all things that should be planned for before an application goes into production, not after). All the effort to do these things won’t have been budgeted and there will be hard feelings. IT/Business alignment will not have been achieved.
Lesson learned: The information asset is the entire executive team’s responsibility, but the CIO is accountable for it. Line-of-business execs need to work with the IT executive to get what the business needs in the context of the whole company’s agenda, not any one department’s. Going around the CIO compromises that person’s ability to be successful, and creates unnecessary risk to the information asset itself, since its likely that the professional (and often unappreciated aspects of) IT activities associated with any production implementation won’t have been properly executed.
2. HOW DID THE TECHNOLOGY VENDOR GET IN THERE IN THE FIRST PLACE?
The vendor in this story is a highly reputable solution provider who makes no bones about going directly to line-of-business execs to sell a solution. There’s nothing particularly wrong with this approach as long as, sooner rather than later, the information executive is brought in. In a survey of business executives conducted in 2005 and we often cite in RSR’s “Selling Technology Value to Retailers” seminars, it was revealed that the CEO, CFO, CMO, COO, and CIO all expect to be part of every phase of a technology decision save one: the implementation phase. The CIO and the CIO alone is charged with accountability for that phase (and that’s the way the other C-levels like it).
Of course technology vendors know this. But the debate continues to rage in the vendor community: sell to the CIO or around the CIO? Selling to the CIO may not be very effective, because in today’s business environment the CIO isn’t the only decision maker. RSR applauds this; it is far better for the company if the business executive co-sponsors any technology intended to support his/her business function. The IT department should be accountable for the solution’s technical “abilities” (maintainability, supportability, manageability, and scalability). Selling around the CIO may expedite the sale process, but it creates animosity within the client company’s executive ranks that will come back to haunt the technology vendor – either during this engagement or in the next one.
Former CEO of Euclid Systems and CMO of Seibel Systems, Patty Azzarello (www.azzarellogroup.com), suggests a more effective approach to technology solutions vendors: sell through the CIO. She suggests that technology companies bring the CIO into the process at the beginning, and ask for the IT executive’s co-sponsorship of the solution. This idea makes eminent good sense; IT executives want to be business partners, and want to help the business just as much as other executives do. IT is not a fiefdom- it is there only to enable the business to do bigger & better things.
Lesson learned: Sell through the CIO. Technology solutions vendors have an important role to play in the “IT/Business alignment” issue, and do a disservice to the client and themselves by not asking for the IT executive’s inclusion and support in the decision process. The CIO may or may not be able to help, but since ultimately that executive is responsible for the information asset, it’s a dangerous game to try to single out the business exec to get quicker buy-in.
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