BTM and the Office of the CIO

Although the effort to align business and technology needs to include many stakeholders, ultimately, there is one group that should take primary responsibility: the chief information officer and his or her immediate staff, or the office of the CIO. Some companies prefer to give this position a different title ”vice president of IS or director of IT, for example. At the end of the day, however, these positions are mostly interchangeable with the CIO in the sense that their primary responsibility is managing the corporate IT department.

IT, like any other major business function, is both highly complex and unique to individual companies and business units. This chapter does not attempt to present an authoritative view on what functions an IT department should include ”you could write books and books about the responsibilities of the IT department and still hardly scratch the surface. Instead, what's important to pick up from this chapter is that broad trends describe how the function has evolved (see Fig. 2.1), and emerging challenges for the IT department point to a new approach for solving the disconnect.

Figure 2.1. As the IT function has evolved, its business focus has increased dramatically

The Operational Era

Most early IT departments consisted of a few secluded programmers huddled (figuratively and often literally) around a mainframe system that served the entire enterprise. In keeping with the purely tactical human resources and financial systems that they supported, these primitive departments were considered cost centers that fell under the responsibility of business unit heads or the corporate CFO.

These early IT departments assumed responsibilities such as setting up mainframes, managing early networks of personal computers (PCs), and backing up corporate data. In the end, this was just a supporting role: IT departments either provided back-office support directly, (managing a database of customer information, for example) or developed systems (such as accounting platforms) that were designed to automate back-office functions. These operational tasks didn't give IT much clout with executives, and during the operational era, the department frequently struggled to earn the respect and trust of their peers in the business.

Reengineering

The second phase of IT's evolution happened in response to the explosion of business process reengineering, or BPR, during the early 1990s. Advances in technology like client/server computing encouraged management to envision a world where enterprise software could be used to automate business processes and streamline operations. In a reflection of the period's challenging business climate, reengineering was used as a pretense for downsizing: Technology, it was reasoned, would either replace workers outright , or at the least improve their productivity and allow them to assume new responsibilities, which would make extra workers unnecessary.

The IT department evolved in response to BPR to include not only back-office operations, but also deployment of the systems that promised to automate the enterprise. Still, however, the function focused on the technology and let others handle business decisions: Representatives from business units would pass along a description of the systems that they wanted ”at times something as simple as a vendor and package ”and then the IT department would take over, develop or deploy the system, and hand a finished product back to the business.

These reengineering programs weren't always successful, since having software that was able to execute a process didn't automatically make people change their behavior, or guarantee for that matter, that the process embedded in the software was an improvement over its manual predecessor. In any event, IT's interaction with the business expanded dramatically during this period as they were asked to develop and deploy new systems that would automate business functionality.

The New Economy

When the New Economy burst onto the scene, the IT department, like all things related to technology, became larger than life. Many companies responded to the astronomical market capitalization of dotcoms and other startups by creating semi-autonomous "e-business" divisions and giving strategic control over them to the office of the CIO and other senior IT managers. In radical cases, companies elected to actually spin off a dotcom to handle their Internet business, with IT executives as senior managers, and sometimes the CIO as the new company's chief executive.

In either of these cases, both the office of the CIO and IT workers in general found themselves with new, strategic ("e-strategic" perhaps?) accountability. One thing to note here, however, is that these business responsibilities were limited to either the e-business division or the spin-off ”they were largely distinct from the business as a whole.

Like many executives, pundits, and analysts caught up in New Economy hype, these newly minted executives frequently failed to reconcile dramatic advances in technology with sound business objectives. As a result, many e-business divisions and spin-offs pursued a strategy that might best be described as technology for technology's sake ”where real business objectives took a backseat to IT trends like CRM and e- marketplaces .

Today

Today, of course, mainframe-era IT, reengineering, and the New Economy bubble are all things of the past, and the IT function has changed once again. With the retreat of New Economy excesses, it would be tempting to speculate that the department has relinquished its strategic responsibilities. Instead, however, both the office of the CIO and the IT department in general have been forced to assume even broader business responsibilities. Companies aren't abandoning ambitious technology projects. Instead, they are demanding real, bottom-line results from them. And, more than any other group, it's the office of the CIO and the IT department who are being asked to deliver.

While the specific responsibilities of the IT department can vary from company to company (and even from business unit to business unit in large conglomerates), in general, today's IT department has business responsibilities that touch nearly every aspect of the function: developing and customizing software that improves how the business functions; controlling costs and maximizing efficiency through project management; implementing new hardware and software; managing strategic suppliers (including vendors , consultants , and partners ) to maximize the value of the relationship; supporting operations and infrastructure, including the systems that automate crucial components of the business (CRM, supply chain management [SCM], HR platforms, etc.) and the IT infrastructure (servers, networks, PCs, and so on); managing change in the business; and maintaining the crucial corporate data that helps managers throughout the enterprise to make intelligent and informed decisions. Each of these areas is clearly related to the function's traditional technology focus. At the same time, however, each requires a sound mastery of the business which hasn't historically been IT's strongpoint.

The Changing Role of the CIO

"I've interviewed a lot of CIOs over the years , and it's always interesting to see the migration of the profession. I think right now the best CIOs would come in and talk as much about the business equation as they would talk about the IT infrastructure.

What today's CIOs really have to do is get into the minds of the business leaders ”the CEO, COO, division heads ”and find out what differentiates their product lines, their businesses, from anybody else. What are they hoping to gain in value against their competitors ? Or in delivery to their customers? And once the CIO really focuses on the drivers of business success, then they can translate that back into 'how can I build my IT infrastructure to get a better picture of where we're going and where we stand on that strategy?'

Once they see that, then when they go into meetings and start talking about technology investment, they can speak not just in terms of 'this software has a payback of a year', but instead about 'how IT impacts the business drivers and strategic differentiators for the business.' And 'if we put these pieces in place it allows us to do these things that do truly differentiate us.'

And that's a whole different level of discussion than CIOs have had in the past. It's the value that IT is going to deliver to the business, and it's the stepping-stone towards IT being an integral part of the way you pull off a business strategy. That's the mindset that successful CIO's are carrying with them now. So they have as much of an energy to want to learn about the needs of the business as they do about the data centers, hardware, networks, and so on."

” Jack Mollen, senior vice president of Human Resources, EMC Corporation