Getting in Step on IT Alignment: Experts Share Opinions

1 2 Page 2
Page 2 of 2

Thompson: I would like to have him be more challenging of the way business is done. We think that CIOs have more insight into the future of technology and know that there are ways to do processes better, faster, quicker, and not to just sit there. Status quo needs to be challenged.

May: That’s a great insight because the CIO in many cases is so deluged with operational detail that [he] thinks, "Oh! Now you want to reinvent the business? Go away!" Let’s go to the CIO’s side. What would you change about the [other executives]?

Gregoire: The interesting thing about the CIO’s job is that every other job in the company is either a dial-tone job or a development job. I don’t want to start an argument here, but CFOs have a dial-tone job: Everybody understands what they’re supposed to do; nobody wants them to lead the way into a frontier of accounting. Then there are the jobs like marketing that tend to be all about development. The CIO job is a mix of that. Most IT budgets are 80 percent dial tone and 20 percent new development. The 20 percent of the budget gets 80 percent of the scrutiny. If there was one thing I would change, it would be to say, "We certainly need to continue to scrutinize that 80 percent dial-tone budget, and on that other 20 percent of the budget, we ought to allow our IS organizations to spend as much money as they want to."

If you look at what drives users crazy the most, it’s getting in these endless lines of priority waiting. Yet we squeeze that development budget every year for no good reason. Projects aren’t going to cost anymore; you’re just going to spend the money faster. We did come to that corner at Dell. We had a $360 million IT budget, and—you’re going to laugh—at some point during the budget process, I had to say, "Stop! Don’t give me anymore money!" I couldn’t hire enough people to spend it fast enough. The result, we were bringing up new functions faster, certainly much faster than our competition.

Kozik: Our problem is not the amount of money available (I won’t say how much, but as opposed to millions, ours starts with a B), but it is focus. One of the things I would say to the CXOs is, "Hold us accountable for building a business case or value proposition for the activity." In other words, sometimes we do things because they’re interesting. We need to separate the good ideas from the great ideas. So help us focus, and when we make the decisions, stay with us. But I come back to something Lori said, which is, "Communicate these decisions to the organization." Our challenge with a lot of the academic engineers—we probably have more PhDs per square foot than most of you—is that they have a field-of-dreams approach to IT: If we build it, they will come. We now know it needs to be based more on customer needs and decisions.

May: Many of you have [talked about] reinvention and innovation, which means we’re moving out of our comfort zone—meaning we’re probably going to make some mistakes. What kind of mistakes are allowable for CIOs? It’s one thing to say, "We want you to be innovative," and it’s another thing to say, "You can’t make any mistakes, and we want it all to run like clockwork."

DellaVecchia: [Senior executives] have to encourage trial and error. The most valuable component of making mistakes is to learn and recover from those errors.

Brennan: We don’t want to bet our reputation on experimental stuff. We want lots of little experiments going on all the time. We know we’ll make mistakes, and that’s fine, but we don’t want enterprise-scale mistakes. We would rather be a day behind and perfectly confident that it’s going to be right.

Kozik: An interesting thing has happened to the IT discipline in the past three to five years. The old approach to developing applications was sort of multiyear. [Now] I think most of the better organizations do things in more manageable chunks usually measured in months. That allows you that experimentation.

May: Now Jerry, at Dell, I don’t see Michael [Dell] saying, "Hey, just go out there and wing it, see what happens!" What was the approach when mistakes were made?

Gregoire: There were a lot of mistakes. Some of them were visible, [such as when] we had to pull laptops off the market, and some were pretty big not-so-visible mistakes. The issue is not how big the mistake, it is how fast you recover afterward. If you can’t recover fast, you’re screwed.

DellaVecchia: It’s interesting how all of us are thinking alike. One of the things we do at Starbucks is called time pacing. If you were to draw a mental chart, put the entire big, hairy audacious goal in the upper-right-hand quadrant and then build a stepped approach to achieving that goal in smaller segments. If you do need to change, the segment of recovery is much smaller because your mistake is smaller.

May: Jack, one of the things you do at Vanguard is the whole process where you create this thing called "the agenda," which focuses and forms alignment.

Brennan: [This happens] when we see an opportunity that’s cross-boundary, when we’re not quite sure what we want to do, but we want to have a concerted effort to understand how a technology may affect our clients. We pull out our best-line people, immerse them in this as a full-time job and call them the agenda champions. They basically fan out throughout the company and say, "What does something like online technology in 1993 potentially mean to Vanguard?" Two routes happen: One, it dies, or two, the businesses demand to take it over themselves. That’s what we call a success—when they say it’s no longer good enough for somebody in the centralized unit to be handling this.

May: Sue, you mentioned that you have a unique challenge because you have a lot of mensa-type folks.

Kozik: We’re very encouraged that a process management approach is going to be key to some of our success going forward. The subtitle is "the what before the how before the who." I think that goes against the normal behavior of first we pick the people, then they decide the answer and then they see if it matches the problem.

May: The business is responsible for IT enabled value creation, so how do you get CIO DNA into the corpus of the general business population?

Brennan: You have to make it one of the critical success factors at the human level. I don’t think there’s an ambitious person here who doesn’t understand that to be a senior member of the leadership group, you’ve got to be IT-focused. You’ve got to make it a conscious effort, and it has to be very visible or else you’ll still be talking about [alignment] 10 years from now.

May: One of the things I’m hearing from everyone is that we should spend some time on alignment; we may not be spending enough, but everybody is busy. How do you free up the time?

DellaVecchia: It’s a matter of getting your company in the rhythm. Here’s a metaphor for those of you who play golf. It would be like [thinking], "If I could just get my hands to go right on this grip, everything else would be fine." But it’s an entire rhythm. The whole swing requires everything to work in synchronicity.

Gregoire: Everybody intuitively knows that rework is a lot more time-consuming than doing it right the first time. If you take the time to get alignment up front in the planning phase, you’re going to have a more frequent outcome that works the first time.

May: One point to add is the whole area of vendor management—businesspeople who get involved in managing relationships with the vendors—the IBMs, the professional service providers, the Andersen Consultants [now named Accenture]. When you sit at CIO bars, one of the things (forgive me for the vernacular) that really pisses the CIO off, is basically say, Oracle loses a job, a bid or something at a company and then it goes around the CIO and to the CEO.

The panelists: Can they really do that? I don’t believe it.

May: This is what I’ve heard; it’s a hateful rumor. I mean, because it’s not just internal to the organization, we’re going to have to use what external suppliers provide. How aligned are we in the management of our external suppliers?

Brennan: We want IT professionals supervised by competent IT people, and we want IT vendors supervised by competent IT people. We actually audit what we’re doing by watching how much money we’re spending with various vendors, particularly consultancies, to make sure that nobody has ingratiated themselves with the IT folks. We don’t want amateurs dealing with very complex, technical issues and solutions. One of the roles your partner from the IT organization plays for you as a business leader is vendor management.

Mahoney: I agree. At Staples, we don’t have anybody that’s smart enough to overrule the CIO on a decision like that, so we’re pretty safe. [The panelists laugh.] We also do a lot to benchmark what our spending is, both in the aggregate and item by item.

May: Historically, good behavior used to be, "Hey, the business side makes business decisions; [the CIOs] make technology decisions." But as we migrate to where you’re spending a significant portion of your total operating budget on information technology, it may be appropriate for business executives to play a bigger role in vendor choice. What do you think?

Brennan: I disagree. We spend up to 45 percent of our budget on IT. We have a very tight governance process where the head of the business has a right to say he’s not being well served. But the evaluation is net service from IT, not micromanaging how it happens. The idea that someone like me would tell them whether an Oracle database is the right one or not is just absurd.

Gregoire: Especially in the past five or six years, I had less and less trouble sharing the decisions on vendors. I think it was good to illustrate to users that consultants put their pants on one leg at a time just like everybody else. And it helps a lot when users realize that 100 percent of the software that companies are shipping is broken out of the box. There’s this notion that if you buy this package, it’s going to work, and nothing can be further from the truth. The vendors have cranked up this huge marketing machine. Just watch [ads during] any NFL football game that say, "We get IT done"—the notion being, we’re just sure your IS department isn’t living up to its potential, but we can help. Hundreds of millions of dollars are being pumped into shaking confidence in IS departments. It’s blowing expectations far beyond anybody’s ability to deliver, including the consultants.

Kozik: I leave room for the blurring of the technology and the business. We spend a good deal of time not debating who gets to make the call, but we try to figure out how we can partner so that at the end of the day, what’s being promised in the marketing literature really can deliver for the company.

May: Jerry, you’ve also mentioned, "Well, 27 years ago, when I was knee-high to a grasshopper, we were working on alignment, and we’re still working this issue." Among this gang of six, if you will, do you agree that organizations are becoming better aligned?

Gregoire: No, I really don’t. We may be getting better, but it’s only because the tools are allowing us to do it. We’ve had no breakthroughs organizationally or sociologically. It’s happening organically. The bright spot on the horizon is that we are getting very close to a point where users can develop their own systems within the context of an infrastructure. Alignment won’t be solved, but it also won’t be an issue.

Mahoney: We don’t have IT initiatives anymore; we only have business initiatives, and IT supports them. So maybe that makes me say that it’s more aligned. But certainly, technology is coming out of the computer room and touching everybody’s life, and therefore, I think you have to say that it’s better than it used to be.

Brennan: One of the interesting things you have here is four infant companies: Dell, Staples, Starbucks and Vanguard. Lucent and Stride Rite have different challenges because they have histories. It’s a lot easier to be a younger company, I think. Getting alignment is simpler in a company that’s 10 to 20 years old than it is in one that’s 100 years old with PhDs and white coats.

Kozik: We’ve been talking about getting a seat at the table. I say we’re at the table, and the good news is, we’re eating dinner rather than serving it. It’s time to start acting as that business partner and working on the broader business issues. I’m encouraged, but I think we need to start turning our attention to making the business more successful rather than worrying about our discipline.

Brennan: It’s clear to me that understanding that there is no difference between IT and the business is a critical part of success, and an environment where your IT and business professionals are in sync is a great opportunity to create competitive advantage. That’s what it’s all about. That’s how investors make money and companies succeed. That’s got to happen, and I think, frankly, it’s already happening in the best companies we invest in.

Copyright © 2001 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
7 secrets of successful remote IT teams