CXO

3 Questions: Enlist business units in managing the demand for IT services

CIOs should practice demand management.


By Loraine Lawson

With Susan H. Cramm, columnist for CIO.com, president of the California-based executive coaching firm Valuedance, and former CIO and vice president of IT at Taco Bell.

This interview originally appeared in the IT Business Edge weekly report on Aligning IT & Business Goals. To see a complete listing of IT Business Edge weekly reports or sign up for this free technology intelligence agent, visit www.itbusinessedge.com.


Question:
You've written that, too often, IT focuses on supply management instead of demand management. What does that mean?

Cramm: Demand management is a set of practices targeted at the goal of ensuring that the limited, scarce IT resources are focused on work that will provide the highest value for the enterprise ("the what"). Supply management is the set of practices targeted at ensuring that the work of IT is done in the most efficient and effective way possible ("the how"). Demand management includes the allocation of capital and human resources to the highest value opportunities, while supply management includes financial and human resource planning and acquisition, project/service planning and scheduling, vendor/contract management, project/service management and delivery, and measurements and monitoring. CIOs have traditionally focused attention on supply management because of user expectations—the conventional wisdom held that IT should deliver whatever their business customers wanted and figure out a way to fund the work—and their ability to influence it. Unlike demand, supply issues can largely be addressed without significant engagement of the enterprise as a whole.


Question:
How can CIOs still focus on the overall needs of the business without being held captive by the needs of the individual divisions?

Cramm: Through properly executed strategy making, it is possible to identify initiatives that require enterprise-level care and feeding. Once the strategic priorities have been established, it's possible to define a multiyear view of where IT dollars should be spent and the executional responsibilities and necessary oversight. Practically speaking, enterprise initiatives should be funded and governed "above the divisions," while the divisions' needs should be met by earmarking divisional funds and ensuring that the divisions have authority on how the funds are allocated as long as they live within their budgets and make the decisions responsibly. These so-called decision rights need to be predefined.


Question:
How do CIOs make the shift to demand management?

Cramm: The good news is that every CIO is already employing some of the demand management practices. The bad news is that progress in this area requires a lot of CIO time, since it requires modifying existing corporate behaviors and processes. For example, the company may have an established strategy planning process (or investment management process, or prioritization setting process), and the challenge is to leverage or modify the existing process so that it "works" for IT. Start by examining the current demand management practices against the demand management system I outlined in the CIO Magazine article (referenced in the March 3 Aligning IT & Business Goals). If you're starting from a situation where the IT money is centrally held, IT-enabled business plans are shaky or nonexistent, and the business customers are getting restless and the IT organization is buried, then the first thing you do is form IT priority setting groups. Getting a group started at the executive level will simplify the process, but usually IT has to establish separate groups for each business head. Once the groups are established, walk them through historical IT spend and outstanding requests to demonstrate that the requests exceed capacity. Then, work with them to develop priorities based on what they hope to accomplish in the next year. Finally, divide the available IT capital dollars into "checkbooks" and hold sessions throughout the year to help the groups reprioritize the projects as needed.

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