Profitability: The IT Strategy-Corporate Innovation Link

How do innovative companies plan their IT? If Marriott International‘s approach to IT strategy is any indication, such plans bear little resemblance to how most companies align their IT and business strategies. And they’re both more and less complex than what you’re used to.

Marriott has a three- to five-year technology roadmap that the IT department uses as a tool for coordinating IT investments. But the company’s IT strategy, says CIO Carl Wilson, is the same as its business strategy. That is, the company’s technology plan isn’t based, as so many are, on upgrade cycles to legacy systems or vendors’ product roadmaps. It’s based on which technology investments are going to help the company become more profitable.

This is not the no-brainer it appears to be. A recent Boston Consulting Group survey of senior corporate managers found them to be largely dissatisfied with the financial results of innovative initiatives. Because these days technology is critical to many innovations, we asked one of the study’s authors how IT could help improve the situation. One of his recommendations was to think of ways technology could help the company financially. Wilson says the relationship between business strategy and IT strategy at Marriott used to be “rather fractured.” What changed? “We spent a lot of time educating ourselves about how the company made money.”

Maybe that’s one reason why respondents to the BCG survey named Marriott the most innovative company in the travel, tourism and hospitality industry (others on the list include Virgin Group, Hilton Hotels, Starwood Hotels & Resorts and Southwest Airlines. CIO has also recently recognized Marriott and Hilton as innovators, giving each a 2007 CIO 100 award).

Marriott has also made a deliberate effort over many years to encourage non-technologists to become technology literate. Senior business leaders at Marriott are introduced to new technologies through a high-level user group. “When new things are coming on the horizon they [can] get their minds around it,” says Wilson. And start thinking about how they might be able to use it.

Thus, Wilson opens his IT department to pressure from the business to adopt lots of new tools. But there are a lot of people in IT who still think this is a bad thing, or at least that it should be merely tolerated not encouraged. And based on what I’m hearing, in a lot of companies CIOs talk the talk, but don’t follow through to ensure their staffs treat business colleagues as peers when it comes to IT decisions. Wilson seems also to have accomplished the trick of encouraging end user participation in IT decisions and achieving buy-in from them for corporate IT standards. He says they’ve done it by being straightforward about the costs of managing an infrastructure that’s too diverse. It even sounds as if he has managed to diplomatically postpone any decisions about supporting the iPhone, suggesting to me that eventually, its security problems will be resolved.

Getting to that point didn’t happen overnight. But now, Wilson says of his role, “I feel more like a shepherd.” Guiding–not the only one deciding–the technology direction of the company. (Wilson says more about the evolution of IT and business strategy in this column)

I heard a similar message from Chris Potts, director of consultancy Dominic Barrow, who argues that companies miss out on good ideas for how to use technology when they rely only on IT departments for their technology strategies. (Potts, a former enterprise architect, also has a column

on the subject, here.)

Here’s where I’m going with this: Pulling together an IT strategy has always been complicated. Now it’s more so because there are many more cooks who want to throw something in the pot. You can’t just say no if you want your job to remain relevant, so you’re going to have a lot more discussion and negotiation about what becomes part of the IT plan. But it should be simpler, too because the decisions about where IT is going come down to answering some fairly straightforward questions: How can technology help you sell more products and services? How can it improve your operations? How can it make employees more productive?

If your IT strategy is indistinguishable from your business strategy, or you’re trying to make it so, I’d love to know what it looks like, and how you’re going about putting it together.