Small steps to a better IT spend
INNOVATION PROFILE PwC:ONE OF THE most frequent issues which arise in modern business is conflict in relation to IT spending. Chief executives and finance directors tend to view IT as a necessary evil, something which the company has to have but on which as little as possible should be spent.
Chief technology officers, on the other hand, tend to hold a diametrically opposite view and lament the lack of investment in IT by their companies, regardless of the amount spent.
“This is an age old challenge,” notes PwC consulting partner David McGee.
“Chief technology officers are always talking about the fantastic things they could do for their companies if they had the money but chief executives tend not to agree. There are two different perceptions of the value of IT to an organisation and this is where the difficulty lies.”
PwC carries out a Digital Intelligence survey each year and a number of key IT issues for business were revealed by its most recent research.
The major process issues identified were strategic planning, the mobilisation of IT projects, and the alignment of IT resources with the needs of the business.
The fact that this last issue was raised as a major challenge points to that divide that still exists in many organisations. “You’ve got to get the different people into a room talking to each other and get them to work together,” McGee points out.
“I dealt with a client at one stage where the chief technology officer related to the rest of the organisation as if he were a third party contractor. This is wrong. Traditional management, structuring by departments, is organised to create focus and specialisation but can result in the creation of internal silos.
“This is not helpful and we spend way too much on IT to allow situations like that to prevent it from delivering on its potential.”
The PwC survey revealed that managers are most interested in what IT can do for them rather than the technology itself. “Only the most geeky of geeks talks about things like gigabit networks.
“What people are concerned about is access to and understanding of their own data. They realise that they don’t know what they have until they put some shape on it. But the business benefit of doing that needs to be better understood.”
McGee has advice for organisations who have identified benefits for an IT project but want to overcome the disconnect between different areas.
“There are some steps which companies can take which are pretty universal and can help ensure the success of a project,” he says.
The first is to create what he calls a “burning platform”, a sense of urgency around the need for the project. “Nothing focuses the mind like impending doom,” he explains. “Sometimes there will be a ‘clear and present danger’ within the organisation but at other times it may be necessary to clarify threats as presenting real risks to the company.”
The next step may sound like basic common sense but it is one often overlooked by managements in these situations.
“You need to secure senior support from the right people for the project. This might be department heads or can go all the way up to the chief executive. The most important thing is getting the right people onside.
“There is little point in having a middle manager from the marketing department being the main champion of your project if nobody listens to him.”
Personal contact is essential. “You have got to get face-to-face. While it is possible to have teleconferences and so on, if you want to get a common understanding of what it is you’re trying to do it’s best to do it when you’re physically in the same place. You can tell a lot from people’s physical reactions. This is vitally important at the beginning of a project when you need to build that shared understanding.”
Once that understanding is built it’s a question of getting people excited about the project. “You need to fire people up and get them committed to the change. They have to feel excited and enthusiastic about it so that they will support it in the long term.”
But there is little point in getting people excited about something which can’t be measured.
Firing people up to work on something that makes no discernible difference in the end will be counterproductive.
“You’ve got to figure out a way to measure clearly what you’re doing,” McGee argues.
“In a way, you’ve got to be willing to name and shame the areas that aren’t working or delivering. That might sound a bit strong but if you are trying to change behaviours – and most major IT projects require that – you’ve got to do this. A lot of IT people have a habit of just announcing ‘we’ve gone live’ and seeing that as an end in itself. But that’s not the end at all. You have to identify the things that need to be done differently to bring down costs.”
McGee’s next piece of advice again sounds very much like common sense but it is another one of those things that get overlooked.
“Take baby steps,” he says. “You’ve got to crunch the project down and break it into bits that people can get their heads around. But you need to let them see the bigger picture at the same time. If they can only see the bit they are working on they will have no appreciation for the goals of the overall project.”
After that comes the by now almost clichéd search for quick wins, but McGee is somewhat more nuanced. “You should pick early wins that really matter. Finance people like these of course but you should also find the quick wins that will turn people on. Find out what people want and then see if you can make a difference on those things early on.”
The next area he speaks of is certainly not obvious and that is the overall governance of an organisation’s IT investment. “When an organisation looks at getting more out of IT the issue is almost always one of fixing what they’ve got,” he explains.
“And every organisation has legacy applications and systems but how do you define these? In some companies a legacy application is anything which went in before last week. Legacy applications don’t have to be old. The issue is how quickly they go out of date or need replacement. The same processes and technologies used by HR in areas like succession planning should be used for IT. You also need to use the best economic allocation model for the overall IT investment.”
And that leads neatly on to financial modelling. “You need to do a financial model for IT,” he says.
“In a perfect world reinvestment in IT would be a constant, but real projects have peaks and you need to be able to plan ahead to finance these.”
His final point is on risk identification. “You need to know where the risks are and plan for them. Good project managers know how to identify risks and will do that in relation to the project itself.
“However, the real threats tend to come from the broader environment and not from within IT itself. A good CIO is listening to the business environment to pick up risks. People are key to overall success in this regard. If you have people throughout the organisation supporting the project you can minimise these risks and greatly increase the overall prospects of success.”