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IT Governance Strategies from State Street, 3M and Others

By Christopher Koch

September 15, 2002 — CIO — David Drew used to have his own supergroup for IT decision making at 3M: the Information Systems Steering Committee. He had all six business division chiefs in there, along with the top functional leaders, meeting together six times a year to do nothing but jam on IT strategy, endorse IT projects of more than $1 million and prioritize IT resources.

It was great while it lasted. In a company of strong business units?each focused on their own wants and needs?the committee was Drew’s base for creating consensus for a unified IT strategy. But when W. James McNerney, the company’s new CEO, took over in January 2001, he broke up Drew’s group. And the business unit executives didn’t protest. They already had to prioritize IT resources for their own unit; they didn’t want to do it at the corporate level too.

"Our company is big and complex, and the group members didn’t feel they understood the issues in all the different units well enough," explains Drew, who is vice president of IT for St. Paul, Minn.-based 3M.

But Drew can’t conceal his disappointment. "The corporate IT prioritization process was moved back to IT, and I would really rather have it at the highest business level," he laments.

Why I.T. is not like a shopping cart

Well, what CIO wouldn’t want IT decisions made "at the highest business level"? For years, management gurus and the IT media have pushed for committees like Drew’s late-lamented supergroup as the solution to the age-old problem of business-IT alignment. If a CIO could just get all the top honchos in the company meeting regularly to talk about IT, the thinking went, all his troubles would be over.

Unfortunately, this ideal of good IT governance is more often philosophical than practical. Even though big companies are now spending more than 50 percent of their capital investment dollars on IT (according to Gartner), few have a supergroup to guide their IT strategies. Most top executives still regard IT as a shopping cart full of hardware, apps and systems, and the extent of their involvement is to say, "We’ll take that one and that one but not that one."

That approach leads to flavor-of-the-month technology spending. Executives buy what they think they need to accomplish the short-term goals of their unit. Corporate strategy? Pie in the sky. Technology and business process standards? What’s that got to do with third-quarter revenue?

If they are ever to rid themselves of the IT-shopping-cart mentality, CIOs must create something better: a governance structure that 1. keeps IT and the business jointly accountable for linking technology to the most important business strategies of the company, and 2. produces IT decisions that benefit the entire company and not just a part of it.

 

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