“The business has too many strategic projects going on, let’s look at these capital IT projects after 3 years”.
“Our ERP is outdated now, give us the cheapest upgrade option to keep it supported”
“We have a business to transform, just keep the lights on”
“Our applications are good enough, they capture transactions and provide us reports, no need for a change”
“Unless there is a hard financial ROI with a payback in 3 years, it’s a no”
I’m sure most of you have heard or seen this conversation or a form of this conversation
happen among CEO, CFO and CIO from CEO/CFOs to CIOs. And if you are a thought leader somewhere in the organization, you shake your head and are like “Darn! I hate this strategy of doing nothing” and then think if it even is a strategy.
Let’s see what are the flaws in each of these arguments.
What’s “Many strategic projects”
Issue: IT is considered as a necessary overhead evil in most organizations embedded in the CFO organization and rarely viewed as a business enabler. Most CIOs rise to the position due to their technical skills rather than business acumen or salesmanship. IT ends up being an afterthought when defining corporate strategy from landscape and operations perspective.
Capital “IT” projects
Issue: IT is a service provider to business, so there should be nothing called capital “IT” projects, esp in applications space. All applications projects need to be driven by the business, funded by the business and need to make the business efficient and agile. IT needs to partner with business during their strategy and operations discussions and show them the technology path that will enable CFO and COO to achieve excellence.
Till when to “Keep the lights on”
Keeping the lights on is important, because without the light being on, we’ll be working in the dark. But, do we want to just keep the lights on or we want to change the light bulbs to LED lights. Surely, there will be capital investment, but the business will see long term benefits in energy cost (advance applications of today come with preconfigured dashboards reducing cost of business operations) and maintenance effort (applications are on the path of eliminating product extensions and customization) hence less burnt lightbulbs to change.
How Good is “Good Enough”?
Organizations have a duty to increase the shareholder value constantly, so they need to ask themselves – How good is good enough? Even the companies that are doing everything right, take a quarter to let it sink in and then go back to the strategy war room and build the next 5 year plan. These plans stem decisions to get into new businesses, get rid of some businesses, mergers, acquisitions, divestitures and a whole lot of things for which the company needs to be agile, be proactive. If our systems record transactions and spit reports out perfectly for how the company looks like today, will they enable us for the agility we need over the next 5 years. Will we be able to split a business unit into a separate company within a target window of 3 weeks? Will we be able to build a joint venture on our systems with simply following documented processes and procedures?
So, we need to ask ourselves, How good is Good Enough…
Redefine “Return on Investment”
Bringing the shareholders back into perspective, the CEO and CFO will be in trouble if they cannot show a positive Return on Investment for
IT projectsbusiness enabling projects. But, the word “Return on Investment” needs to be redefined to something like “Value of Investment”. Most often, ROI consists of number of people who could be laid off as a result of the project, $ savings in software licensing and infrastructure. But, VOI will include things like the ability to proactively react to complex corporate projects like divestitures or acquisitions. “Return” cannot capture the monetary benefit of being able to spin off a company in 2 months instead of 3 months, years before the deal happens.
It is time when organizations view of Information Technology as a strategic partner to the business and bring Information Management to the core of their definition.
The author, Mr. Adi Singla, is an IT strategy leader with many years of experience in consulting and managing IT. He has an education background of MBA and BS (Engineering). This article is also published on Linkedin Pulse.