CXO

Is your IT department in good shape?

This author is not a huge fan of complex frameworks, because they get misunderstood and misused, so he offers a very simple and practical way of accessing the current state and potential future of your IT organization.

After publishing the first entry in this series a couple of weeks ago, I received e-mails urging me to write more on the subject and asking, in particular, how to tell if the IT organization is in a "good shape." Well, this piece is about the initial assessment and the first steps.

I am not a huge fan of complex frameworks, because they get misunderstood and misused, so here's a very simple and practical way of assessing the current state and potential future of your IT organization. I call it "IT Viability Map."

I want you to think about your own IT organization along these two dimensions:

  • Excellence in execution ("Doing"). This dimension simply reflects how well the IT organization delivers its services, such as running the business systems, managing projects, supporting users, development of new applications, and so on, as applicable.
  • Generation of strategic value ("Thinking"). This dimension is about the alignment of the IT organization with the rest of the business. Does IT generate relevant ideas and projects that further the business strategy? Does it organize itself to deliver excellent value to the company? Does it empower and inspire other departments and functions?

Plot these two dimensions perpendicular to each other as shown in Figure A, and you have a nifty pane diagram with four quadrants.

Now imagine that you're the CEO (or an equivalent) of your organization. It may be a pleasant or not so pleasant thought, but bear with me. Just visualize yourself looking at your IT department from the helm, and ask yourself, which quadrant does my IT belong to?

Figure A

Quadrant

Quadrant 1 - Poor execution, little strategic value.

Urgent resolution required. You can give the CIO a chance to fix it, or bring on external help or a new CIO, or seek to outsource. In its present capacity, the IT department is neither a good doer nor a good thinker, and it's a drain on the company's resources.

Quadrant 2 - Excellent execution, little strategic value.

The lights are up, and this is good news. However, you want less handholding, dramatically improved innovation relevant to the company's business, improved business sense and solid decision making, and the ability to exercise strategic thinking.

Quadrant 3 - Poor execution, high strategic value.

IT is in synch with the business. It generates ideas that make business sense, understands the current priorities and speaks the language that everyone else can understand. It needs discipline and possibly skill augmentation. This IT department is worth an investment of the company's time and money.

Quadrant 4 - Excellent execution, high strategic value.

This is a dream team, with great business thinking abilities and high quality of service delivery. It's agile, effective, and efficient. It's easy to justify further investment because of the high ROI.

What quadrant are you in and what are you going to do about it?

The O-word

I am talking about outsourcing of course, the word surrounded with as much hype as stigma, the source of a never-ending stream of stories flowing into my mailbox from organizations big and small, mature and not. Outsourcing can be often viewed from the helm as an attractive alternative to a resident IT department, for two possible reasons:

  • Cost savings
  • Reduction of non-core activities.

The truth is that mere excellence in execution does not insulate your IT department from outsourcing considerations. Today, IT organizations belonging to the second quadrant are a commodity service, and as expected in a commodity market, the cost is the driving decision factor. Since they fail to generate strategic value, they are automatically deemed a non-core activity, and make a great outsourcing candidate.

How to start the transition

Transitioning into the fourth quadrant will take time, and the best time to start is now.

To be competitive and to grow, IT organizations need to invest in staff development. In my opinion, this is the worst managed area today, because it's often reduced to provisioning of training along the lines of basic needs, directly related to a staff member occupation: more of programming for a developer and more of networking for a network administrator. Classroom learning is not always reinforced with hands-on application and evaporates in a matter of months if not weeks.

Training budgets are also the first candidate for cutbacks when the going is tough, and is subject to misuse in budget-driven organizations, where there's an impetus to exhaust allocated funds on just about anything because they would not be available again next year if not fully utilized.

One of the most common objections I hear when I talk about the need to develop the "Thinking" dimension of IT organizations and the requisite business skills, is... you guessed it... "We love what you say but we have no money for training."

Learning is largely an experiential process and we learn through a variety of ways, of which classroom training is only one. It's highly effective only when the newly acquired skills can be practiced. To develop business skills in a corporate setting does not require an immense investment (which, by the way, would have offered an excellent ROI), and they can be practiced straight away.

If you're running an IT organization, why not use these ideas to start away? Watch the status of your department grow in the eyes of the rest of organization as you do that.

  1. Develop communication skills and promote cross-learning at the same time, through frequent staff presentations to peers on best practices, subject in which they are experts, books or articles they saw useful, and so on.
  2. Frequently discuss business environment, priorities, the company's strategy, recent events and other business topics with your staff. Don't assume they're familiar with terms and concepts. Educate, share, and ask for their opinions.
  3. Promote the culture of openness and transparency and encourage questions about business decisions. In the absence of such culture, people tend to develop their own, often incorrect, interpretation, or just declare the decision "stupid."
  4. Invite heads or senior staff of other departments to come and speak to IT about their respective functions, the work they are engaged in, current priorities and concerns. Such sessions are very effective in promoting mutual understanding and awareness.
  5. Hire a coach who will work with you and your staff (athletes have them, and so do successful organizations). For a modest investment, you'll be able to dramatically improve your learning process.
  6. Hold "open door" events and invite the rest of organization to see IT from inside out. This will promote trust, appreciation, and understanding.
  7. Invite guest experts to speak on a variety of business topics, from how to read financial statements to what marketing is all about. If your facilities permit, invite other departments and split the expense.
  8. Adopt the "train the trainer" model: send one person on a course and have him or her teach this same subject internally.
  9. Read good business press as relevant to your location and industry, forward to your staff, and instigate an insightful discussion.

What are you waiting for?

Ilya Bogorad is the Principal of Bizvortex Consulting Group Inc, a management consulting company located in Toronto, Canada. Ilya can be reached at ibogorad@bizvortex.com or (905) 278 4753

About

Ilya Bogorad is the Principal of Bizvortex Consulting Group Inc, a management consulting company located in Toronto, Canada. Ilya specializes in building better IT organizations.

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