Forum: A New IT Value Vocabulary

In fall 2004, at one of the initial meetings of the CIO Executive Council, members prioritized their professional challenges and chose several to collectively tackle to drive positive change. One was the need to clearly explain the value that IT brings to the enterprise. In most companies, there is no institutional understanding of why IT is essential. This gap in understanding places CIOs in the position of having to defend IT to the rest of the enterprise, a situation the Council CIOs were determined to change.

“Instead of continuing to be defensive about what we do, we decided to be proactive,” says Kevin Humphries, senior VP of technology services at FedEx. The problem was that IT, unlike most other business functions, has no established lexicon to explain what it does and how it should work. Based on the decision to be proactive, a group of Council members, cochaired by Humphries, began creating a framework to describe in layman’s terms what IT does to create value.

The result, after nearly 18 months of work by dozens of CIOs, is the IT Value Matrix, which illustrates the principles and practices essential to creating, identifying and communicating IT’s value to the enterprise. The matrix identifies approximately 130 components, grouped under three key practice areas—stakeholder alignment, communication and the CIO role. It’s organized for drilling down from general to specific. For example, to achieve stakeholder alignment, CIOs need both knowledge and action. To learn what type of knowledge, you drill down one level and find four types: stakeholder analysis, political and cultural issues, technology trends and business dynamics. “If you are weak in or not paying enough attention to a particular area, you are likely to have trouble succeeding,” Humphries notes.

To make room in his office for the poster-sized version of the matrix, Agriliance CIO Steven John took down his prized, framed copy of Superman comic book No. 1. While Superman might inspire John and other CIOs to leap tall buildings, the matrix keeps them planted on solid ground.

“For me it’s an anchor, a focusing tool,” says John, who cochaired the task force with Humphries. “It’s too easy to get sucked into the black hole of day-to-day operations. This helps me focus on the strategic and the transformational.”

As intended, the matrix is a focal point for conversations with businesspeople about how IT should relate to the enterprise. Marla Davidson, CIO of the Arthritis Foundation, says her quizzical business colleagues notice her interest in areas of the enterprise that are unrelated to technology. “This tool helps me explain what is expected of me and why I need to get involved in these areas,” says Davidson.

Although the matrix was developed for Council members, they decided early on that it should be shared with the greater IT community, hence this article (see instructions for downloading the matrix on Page 70). “Its intention was noneconomic; CIOs built this simply to help one another,” Humphries says.

CIOs who have come fresh to the finished matrix have already begun suggesting improvements, such as adding a social responsibility component. Others have found new ways to use it, including Mitch Davis, CIO of Bowdoin College, who passed out copies for his discussion with the governor’s advisory committee in Maine. “The great thing about it is how adaptable it is,” Humphries observes.

One unexpected adaptation is Case Western Reserve University’s plan to develop an MBA course based on the matrix. The leadership, alignment and communication practices in the matrix are often overlooked in management education, says Fred Collopy, professor and IS department chair at Case’s Weatherhead School of Management.

The MBA course will expose future business leaders to the soft but strategic principles and practices that make IT pay off. CIOs, paired with business officers from their companies, will frame a problem for the students to research and then engage them in high-level discussions of the students’ proposed solutions. The course will be “entirely driven by topics in the matrix and the executives who framed it,” says Collopy.

Education doesn’t stop when the degree is earned, of course, and the broad array of practices the matrix depicts are being used by CIOs as development tools for current IT workers as well. For example, when a member of his staff recently asked John for guidance in becoming a CIO herself, “I walked her over to the poster and used it as a reference, pointing out areas where she had strengths and other areas she would need to develop,” he says. Which is a lot more practical—but perhaps no less ambitious—than pointing to a Superman comic and advising, “be like him.”

Seven Keys to IT Leadership

The CIOs who created the IT Value Matrix wanted it to be timeless. “We needed a way to discuss what we do in terms that would never change,” says Kevin Humphries, FedEx’s senior VP of technology services.

The leadership principles that accompany the matrix form the strategic foundation to which all matrix components are tied. The principles were articulated with input from a panel of industry veterans, including retired CIOs Patricia Wallington and Darwin John.

The principles are as follows:

1] The primary goal of IT is to align with major enterprise objectives. Every initiative must be clearly tied in a provable way to business value.

2] Because all major business initiatives are dependent upon technology, the CIO must have a voice at the table at which key business decisions are made.

3]The CIO is responsible for understanding a business’s complexities, influencing peers and presenting tech-nology strategy in terms the business can understand.

4]Technology leaders are agents of change. Transition is our stable state.

5]Communication and relationship building are as important to IT leadership as technology skills are.

6]Successful technology leadership must strike a balance between competing forces: short-term versus long-term, technology versus business focus, leading versus enabling.

7]The CIO is responsible for cultivating technology leadership at all levels.