Reprinted from TrustedPeer
Meet the Expert
Chairman, SCC Sequoia
- 50-year career split 50/50 between serving as an IT executive and as an IT consultant.
- CIO for Xerox Data Systems, American President Lines, and Interim CIO for QANTAS, Lam Research, Tencor Instruments, Tri Valley Growers.
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Management of IT for Competitive Advantage
Chairman, SCC Sequoia
- Ninety-five percent of CIOs provide sound, but basic, IT support rather than true competitive advantage.
- Trustworthy sources in the industry will tell you that maybe only one in 20 CIOs rise to the task of providing more than basic IT service. That is, about 95 percent provide a cost-effective, reasonably reliable but not very exciting service to the company. They make sure that shipments are on time and so forth. It’s the other 5 percent, and there are people that will say it’s less than 5 percent, who rise above that and do things that make a good company great.
The idea is to enable a company to rise above its competitors who are trying to do just the basics themselves. That requires companies to have a solid foundation in IT, and then improve the organization, process and people in ways that enable the company to be more competitive. You must have the foundation first – you can’t just have a great vision and have a horribly inefficient IT shop.
- Company leadership expresses a need for an IT department refresh.
- Sometimes a CFO or COO is just uncomfortable with their IT shop. They aren't IT experts, and they feel a need to get an independent judgment on whether things are operating well. Often, they are concerned about the budget or about a big project that seems to be going nowhere.
The fundamental skill a company needs is successful experience in running IT shops. The operative, most important word there is successful. What defines successful? Simple: Do the users like it? The user community should be reasonably happy campers. The goal in such a situation is to resolve the specific problem while setting up an organization and system prepared to solve the next round of problems.
- Rigid, uncommunicative or insular IT departments.
- Sometimes a key problem is the culture within the IT shop. If a shop has become highly hierarchal, is not very communicative with its user community or if there is a culture of, “We never admit that we’ve made a mistake,” some changes will be needed. Such problems normally are reported by the client, usually the chairman, CEO or the president.
The fix is to re-organize the department and its personnel and to change the rules of operations to be more transparent and directly linked to the user community. The goal is to free up innovation and creativity linked to the company's products, services and strategies while reducing barriers within the firm.
- IT departments drift into inefficiency and ineffectiveness.
- Some of the common problems are not a problem in the conventional use of the word. It’s just that an IT department may have grown to a point that maybe it needs some better software or something like that. Similarly, a problem could be growth without a plan. In many cases, a company may have what looks like a toxic mess, but what it has isn't all that bad. The real problem is that, over time, the pieces have begun not to fit together very well.
That calls for a plan to rationalize the organization. In one case, a major firm had been spun off from a much larger company, and it ended up with a whole mess of systems. They just had too much for what they were doing. The solution was to prune the systems by two-thirds.
- Mergers and acquisitions create IT department merger problems.
- Merging with or acquiring another firm requires an objective, complete and rational look at the affected IT departments. In addition to assessing how well the respective departments operate, there can be issues related to the transfer and sharing of data.
Sometimes the logical recommendation is: It ain’t broke, don’t try to fix it. I know of two companies that were being acquired which had pretty good IT shops. The preferred action for each: Don’t muck it up. In some cases, such evaluations may be made before an acquisition. In others, the contracts may be signed, but the acquiring firm needs an objective assessment to move forward.
The value of that objective assessment can be seen in a case in which a San Francisco firm was buying a Dallas company. Management of the acquiring company was pretty well convinced that the IT shop in Dallas was better than the IT shop at headquarters in San Francisco. They hadn’t really studied the situation, but they had let their impression sort of permeate the corporate headquarters, and two of the top IT people in San Francisco had already quit. In reality, the situation in Dallas was a mess. The objective assessment gave the chairman the solid evidence he needed, and he was able to undo the damage, including hiring back the two people who had left and reestablishing the San Francisco operation before it really got out of hand.
Management of IT for Competitive Advantage: Common Problems