How to Tap IT's Hidden Potential

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“ How to Tap IT’s Hidden Potential”
Article by Amit Basu and Chip Jamagin. Wall Street Journal. Mar 10, 2008.
Summary by Alissa Crescimano

Key Message: Companies are failing to recognize the value of IT due to a “glass wall that separates the IT group from the rest of the business”. The article discusses five reasons for this glass wall and six steps to get over this wall and realize IT’s full potential and benefit to the business. (NOTE: The article states there are “seven steps”, but only outlines six.)

Five Primary Reasons for the Glass Wall’s Existence
  1. Mindset Differences between Management and IT
    1. Technology-driven versus business-driven mindset leads to a minimization of interactions.
  2. Language Differences
    1. IT uses jargon and acronyms. Executives speak the language of business.
    2. Much is lost in translation.
  3. Social Influences
    1. Persistence perception toward IT people as “nerds”.
    2. Outsourcing has worsened this estrangement.
  4. Flaws in IT Governance
    1. IT decisions are made by the wrong people with insufficient input.
    2. Ironically, outsourcing has improved IT management since a governance committee is needed to manage.
  5. Difficulty of Managing Rapidly Changing Technology
    1. Technology changes rapidly and is subject to fads, confusing even to IT professionals.

Today, CEOs can’t ignore IT and expect to success. They must break this wall to realize the full potential of IT and its benefit to business.

Six steps to Shatter the Glass Wall
  1. Begin with IT literacy – and commitment – at the top.
    1. CEO and board must lead the way.
    2. Executives must know as much about IT as accounting, finance, and marketing
    3. Managers must also communicate the importance of IT to competitiveness
  2. Hire an IT leader who sees the big picture.
    1. A true CIO must be a leader who understands the strategy importance and use of IT
    2. CIO must be able to work within the management culture at the executive level, can present IT issues as business issues to the executive team, and is willing to learn the business as well as technology.
    3. Gain full support of CEO
    4. Have strong knowledge of IT, the business, and IT’s role in that business
    5. Bring IT into the boardroom and onto the executive agenda
    6. Rotate management and executive candidates through IT
    7. Group IT personnel as integral components. Extend them beyond departmental boundaries.
    8. Outsourcing does not diminish role of IT manager, just shifts the focus toward broader business considerations.
  3. Create demand for IT solutions.
    1. Knowledge of IT should be as mandatory as functional knowledge (i.e. marketing, finance, manufacturing)
    2. Move from a “technology push” to a “demand pull” culture
    3. Have IT and managers work together to think of ways to improve the business using IT.
  4. Make sure nothing gets lost in translation.
    1. Be able to translate the language of IT to management, and vice versa
    2. Make language clear so that the costs/benefits of projects are understood.
  5. Rationalize IT spending.
    1. IT expenses and investments should be subject to the same rigorous justification as any other project.
    2. Understand the business value before simply approving a project.
    3. Ensure proper IT governance by making sure all affected parties are involved in the decision-making process and that decisions are made at the highest levels with full understanding.
  6. Create an IT portfolio by evaluating risks and returns.
    1. Just like a portfolio of investments, analyze the costs, benefits, and risks of all IT projects into one comprehensive, IT portfolio.
    2. Break the myth that project benefits are “intangible” and cannot be measured.
    3. Break large projects into smaller pieces so you can quantify any benefits and manage the project more closely.

Where should one start? Start by asking questions such as:
  • “What would happen to my company if my information systems failed?
  • “How is IT reshaping my industry?”

Following these guidelines will break down the glass wall between IT and management so they can truly work together and focus on how IT can help improve the business.