Why you need to convert IT consumers into investment partners

Remember the ’70s?  Way back then, IT was a mainframe that sat in some room somewhere. Only two people had a key to that room, and nobody else really cared. Flash forward about a decade, and IT was a limited set of systems irrelevant to the vast majority of employees and customers. Today, technology belongs to everyone. All of your customers and all of your employees use all of your technology all the time.

The challenge, of course, is that the suddenness of this revolution in technology adoption did not give the IT organization enough time to evolve into a “comfortable integration” with the rest of the company. This lack of comfortable integration has led to some strange phenomena including:

• Shadow IT;
• The “everyone is a CIO” phenomenon, where most of your employees think they can do your job better than you;
• CIOs being responsible for driving adoption in areas where they cannot possibly have as much influence as other executives;
• Weird new executive hires like “Chief Innovation Officer” and “Chief Digital Officer,” which, in my opinion, are Band-Aid fixes that will vanish once we figure out how to integrate more comfortably.

Out with your old IT operating model

As usual, I have questions:

• When technology all of a sudden belongs to everyone, what does that mean for IT? 
• When technology is your company’s differentiator, how does your IT operating model change?
• When technology is the business, how is technology leadership distributed across and through the enterprise?  
• How much more responsibility can IT take on? How long can the center hold?

In this short blog, I can’t hope to address all of these questions (nor define the meaning of life or solve world hunger, for that matter), but I can point out a critical skill for the modern CIO: The ability to convert your business partners from IT consumers to informed investment partners.  

Rethinking IT spending

Several years ago, Joe Spagnoletti, CIO of Campbell Soup Company, brought an investment management approach to IT spend. Today, he and his business partners look at four characteristics when making IT investment decisions: business outcome, operating performance, cost to serve, and risk. “We’ve educated our business leaders about how to think of an IT investment more broadly,” he says. “We show them how their current portfolio is performing so they think, ‘In a silo, this one investment looks good, but how does it look as a part of a collection?'”

Stephen Gold, EVP of business and technology operations, and CIO, CVS Health, employs the “CIO theory of reciprocity.”

“Let’s say the head of sales of a given company suggests, ‘If I had a real-time inventory management system, I could increase revenue by $500M,'” says Gold. “By the CIO theory of reciprocity, that means that if IT builds a real-time inventory management system, the head of sales should commit to taking up his or her revenue forecast by $500M. If he or she is not willing to do that, then the theory breaks down and the project should be questioned.”

IT investment is like teen fashion

For the last few years, my teenage daughters thought that their clothes were free. That’s because they would submit their new sweater requests, and dutiful Mommy would go online and like magic, the new sweater would appear on our doorstep days later.

How odd, I would think when I saw the contents of the package. This sweater looks an awful lot like the one I just ordered a few months ago. Then I got wise and gave them a budget to manage their own clothing spend. As informed investors in their wardrobe, they figured out ways to reuse last season’s sweater and focus their investments on new clothing capabilities.

It is not easy to take business partners, who are used to paying a lump allocation, and convert them into investors knowledgeable about the true costs of IT. But if technology is the business, then the IT budget does not belong to IT alone. It is time for the business to be accountable for IT investments and their return. CIOs who can make that happen will enjoy a collaborative community where everyone is focused on making the IT bang worth the buck.

What say you? Are your business partners informed investors? Do you see this as a worthy goal? How have you created an IT investment culture in your company? Post a comment or drop me an email and let me know!