Since I’m always looking for better IT management techniques and strategies, I’m probably one of the few people who pays attention to all the studies and surveys reporting that organizations are still having problems managing enterprise IT resources and activities. It seems like each new study or survey confirms that most organizations are continuing to struggle with one or more of these IT management challenges:
Even though it’s been pretty much lost in all the hullabaloo over his article, effectively managing IT costs was one of the strongest recommendations Nick Carr made in his "IT Doesn’t Matter" article in the Harvard Business Review.
Why do so many organizations continue to struggle with these IT management challenges? I’m convinced the reason is because the IT management processes in many organizations aren’t very good. I frequently compare managing enterprise IT with existing IT management processes to driving a car with four flat tires. It can be done--but it’s difficult because it’s hard to steer, it takes a long time to get anywhere, the ride is very bumpy and very noisy, and you will probably end up needing costly repairs.
Why Aren’t Our IT Management Processes Working?--Or How Did We Get into This Mess?
Much like critical business processes have done, the IT management processes in most organizations have evolved over time to meet changing
conditions and to support changing requirements. When I first got involved with IT management, many of the IT leaders had accounting and financial
backgrounds. With so many accountants in charge, IT operated as a very tight ship and we were almost paranoid about justifying IT expenditures and
monitoring the performance of IT resources.
The rules for managing IT started to change in the 1980s. Enterprises began embracing computer technology as an important competitive weapon and the cost of computing power was going down, so we began to loosen up the rules a little bit when it came to justifying new systems and monitoring the performance of IT resources.
Then the PC exploded onto the scene. Suddenly, everyone had access to their own computer capabilities--and computer "experts" began popping up throughout organizations. The highly centralized and highly controlled IT functions of the past began to give way to more decentralized and less rigidly controlled enterprise IT structures. It suddenly became very difficult and very unpopular to try to enforce rigid IT standards and policies.
The loosening of IT controls that began in the 1980s became a landslide in the 1990s. By the end of the decade, we had moved into the "we can’t throw enough money at IT" era. We were spending on sophisticated enterprise systems that promised to turn every company into a successful global competitor. Then we started spending to tap into the Internet explosion so we could become successful e-competitors. On top of that, we spent untold billions making sure our systems were ready for Y2K. It was a free spending time when it came to IT.
There was another big change in the IT world during the 1990s--most of the IT leaders with strong accounting and financial backgrounds retired and many of them were replaced with hard charging IT leaders with strong technical or business backgrounds. Using IT to create competitive advantages was the driving force and tight IT management processes were pretty much a thing of the past.
Then a funny thing happened. Many organizations woke up and realized their huge commitments to enterprise systems weren’t producing the tremendous benefits they had been promised. To make matters worse, we went through the crash landing of the high-flying Internet startups and the horrific events of September 11, 2001. All of a sudden, the rules for managing IT changed again.
Carefully controlling IT expenditures and performance was suddenly a very important issue. Unfortunately, most organizations didn’t have IT management processes in place to effectively manage IT expenditures and IT performance so they started adopting the doing more with less approach to IT.
The doing more with less approach has produced some short term cost reduction benefits, but I think it’s going to come back to haunt many organizations in the not too distant future because they haven’t done anything to make sure their IT expenditures are targeted to produce the most value for the organization or to improve the performance of their IT resources and activities. It has also limited expenditures on hard to quantify security and IT risk management initiatives.
What Should We Do Now?--Or How Do We Fix This Mess?
There is a good reason why business process optimization is receiving so
much attention. It’s because organizations are able to significantly
improve productivity, reduce operating costs, improve customer service, and
optimize information flows by redesigning and streamlining their critical
business processes.
I think it’s time to do the same thing with IT management processes that we have been doing with critical business processes--start over and design processes that really work. We need to rebuild our IT management processes to focus on IT value, performance, cost effectiveness, and risk management.
Okay, that sounds good, but how do we do it? This is a highly simplified approach, but here’s what I think we need to do to put IT management processes in place to effectively manage IT resources, activities, and risks.
Establish IT Value and Performance Culture: The first thing we need to do is establish a culture that focuses on the importance of optimizing the value of IT expenditures and the performance of IT resources. That means refocusing the entire organization on the importance of making sure IT expenditures are targeted to produce the most value for the enterprise, optimizing the performance of IT resources and activities, and effectively managing IT risks.
Tap Into Financial Skills: Then we need to replace the IT financial skills that have retired over the last 10 to 15 years. We don’t need to go back to having IT leaders with accounting and financial backgrounds – but we need to make sure IT has someone with strong accounting and financial skills as a key player in IT’s management processes. The accounting and financial person can be a member of the IT management team or someone from the financial management team assigned to work with IT.
Build Structures Around Cross-Functional IT Governance: After that, we need to make IT a full partner with the rest of the enterprise. The best way to do that is to create a cross-functional IT governance structure for justifying IT expenditures, prioritizing IT efforts, and monitoring IT performance. Having an effective enterprise-wide IT governance structure in place will help to ensure IT is being used effectively throughout the enterprise and will help to build buy-in for critical IT initiatives.
Start Over and Redesign IT Management Processes: After addressing the basics, we can get started on what really needs to be done – building IT management processes that drive the effective management of IT resources, activities, and risks. Processes are needed for tracking IT resources on an enterprise-wide basis, justifying IT expenditures and resources, prioritizing IT efforts, optimizing IT performance and costs – including IT projects and outsourcing, and managing IT risks.
The processes should clearly define responsibilities and accountabilities, establish specific procedures to follow, and provide management structures for tracking the processes and initiating appropriate action when it is required.
Make It Happen: Now the easy stuff is done and it’s time to tackle the tough stuff. We have to make the new processes work. That means throwing out the old IT management processes and putting the new processes in place. Since the new processes are probably going to be more disciplined than the old processes, you will probably encounter strong resistance when people find they have to play by a new set of rules.
Believe me, it will be much easier to break down this resistance if the new IT management processes are built around a cross-functional IT governance structure because there will be much better enterprise-wide understanding of the benefits of the new processes.
It Won’t Be Easy, But It’s Worth It
I know from experience that redesigning and rebuilding IT management
processes isn’t a fun experience. It takes time, it takes effort – and it
takes a lot of commitment. There is also going to be a certain amount of
pain and frustration in dealing with IT management issues that have to be
addressed in developing effective IT management processes.
That’s the bad news. The good news is that optimized IT management processes will make life a lot easier going forward and many of the IT management challenges you’ve had to deal with in the past will suddenly seem a lot less challenging – or will disappear totally.
It’s pretty easy to spot organizations with effective IT management processes. All you have to do is ask one of their key business or financial executives about the role IT plays in the success of their enterprise. If they give you a knowing smile before giving you some form of positive answer, it’s a good bet you’ve got an organization that has already gone through the pain of optimizing their IT management processes.
If, on the other hand, they give you a frustrated frown before starting off into some tirade about the problems with IT in their organization, you pretty much know it’s time for them to rebuild their IT management processes.
How do your IT management processes measure up? Are you trying to manage enterprise IT with four flat tires? Ask yourself these questions:
If you can answer yes to most of these questions, you should feel pretty good about your IT management processes and you should feel pretty good about IT being able to help you achieve your enterprise’s strategic and business objectives.
If your answers to some of the questions are less than positive, you may understand the analogy to driving around in a car with four flat tires and it’s time to focus on rebuilding your IT management processes. Effective IT management processes can make a big difference in how IT performs and the role IT plays in the success of your organization.
About the Author
Bruce Skaistis is the founder of eGlobal CIO. He began his career as a consultant for Arthur Andersen and was CIO of a
large bank group before forming his own information technology management services firm. He has extensive IT management,
process optimization, change facilitation, and strategic planning experience with organizations in different industries.
About eGlobal CIO
Building on its ongoing research of high performance enterprise IT functions and leaders, eGlobal CIO provides
specialized IT management support to help organizations optimize their IT resource and performance management
processes, effectively manage IT risks, and develop high performance IT functions.
To read other eGlobal CIO Executive Briefings on High Performance Enterprise IT or to find out more about eGlobal CIO, you can visit the firm’s Web site at www.eglobalcio.com.
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