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 EraMost 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. ReengineeringThe 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 EconomyWhen 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 . TodayToday, 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.
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