Friday, September 26, 2008

IT and organizational strategy

Yesterday I attended the InformationWeek500 Virtual Event. In one presentation, Rob Preston, Editor-in-Chief, discussed survey findings regarding the status of CIO's in their organizations. Predictably, the survey reveals that IT is seen as a cost center rather than a provider of strategic capabilities, and CIO's are regarded less as equal members of the executive team than as managers of utility services.

The problem with this common belief is that it is self-fulfilling. IT is not included in strategy determination, and it is not funded in such a way as to be able to provide strategic capabilities, thereby proving the original belief. This is harmful to organizations, as they are missing out on opportunities to differentiate themselves, their products and services from their competition's; to make significant improvements in their processes and productivity; and to provide increased value to their customers and shareholders. And missing these opportunities is undoubtedly financially harming these organizations.

I asked Rob how we could educate CXO's on a larger scale than individually. He stated that he sees no other way; and that if the organization doesn't see the value of IT, move to another organization. Though frustrated by his answer, I know I can't expect an easy answer to this problem, given its prevalence and longevity.

However, I don't think we should simply throw up our hands and ignore the issue. All this would do is serve to let this less-than-optimal situation continue unabated. So here's my thought: we need to step out of our IT thinking, and try to think like marketers. We need to stop complaining amongst ourselves and start educating our business partners. But in my experience, simply providing these people with a vision of the value we could provide doesn't convince. Rather, I think we need to start compiling real-world examples of the value IT can provide - as well as real-world examples of the downside of ignoring IT. Here's a start:
  • Harrah's Entertainment has measurably increased sales and customer satisfaction by gathering and using detailed information about its customers and their transactions.
  • Dell became a leading pc vendor by using IT to create a super-efficient and flexible supply chain. It is now using IT to host a web site allowing its customers to have a say in the products it offers.
  • was able to become one of the world's the largest book sellers and major retailer because of the IT infrastructure it put in place to take orders, suggest related products, and quickly fulfill those orders. Now it uses that infrastructure to enter new markets, such as providing ecommerce hosting and offering computing services.
    Wal-Mart first connected its stores together in the 1960's(!), implemented its own satellite network in 1987, and continued to use IT to track inventory, stock shelves, and develop an efficient supply chain. Wal-Mart is currently a significant influence in the adoption of rfid for tracking product.
  • GM has leveraged IT to "cut the delivery time on new vehicles from 70 days to 30, and saved the company millions per year in crash testing by moving to digital simulation."
While it's possible rattling off examples such as these may have an effect on our business partners, wouldn't it be great if the big IT consulting companies such as IBM, HP, and EDS would create marketing campaigns highlighting the importance of IT?