Tuesday, September 04, 2007

IT Mission

For some organizations, formal Mission Statements are standard fare. Some organizations even go so far as to believe them, make them actionable and something that sheds light on where they need to go.

For IT in for-profit organizations, I think the Mission Statement can be neatly and succinctly captured - We make Money. Either directly or indirectly, the mission of every IT organization is to increase profits.

Sure you can add words to dress it up. You can include something that makes HR feel warm and fuzzy like valuing employees (or associates if you are in that kind of company). You can be sure it includes fashionable words like Innovation, Collaboration, other-ation. At the end though, it all boils down to making money whether you are publicly traded or privately held. Your raision d'etre is to participate in generating enough profit to meet the company's other goals. Being good corporate citizens, helping employees to earn a fair wage, and so on revolve around profit.....but this isn't an Economics blog, it's an IT Leadership blog.

Too many CIO's and IT executives wonder why they "don't have a seat at the table" or are in some other way marginalized by the rest of the business. Every executive I know of has a set of financial goals. Ask yourself a couple of questions:
  • Do you know what your partners on the business side are tasked with achieving? If not, you are behind already.
  • Can you clearly and in business terms express how IT is (or isn't) helping meet those goals? Can your business partner??
  • What are your ideas for helping to grow the business? What does IT need to do? How much risk is there? Will something else have to give?
  • Are you meeting your current obligations? What do the business leaders think about IT's performance? Honestly? If you aren't running the existing portfolio of IT products and services with excellence it's highly unlikely you'll get to talk about anything else. Don't waste your time and that of your partners. Fix things. If the trains don't run on time, you don't get to talk about new and exciting strategic projects. At the risk of mixing metaphors, your political capital account is at risk of being overdrawn.
The further up the org chart you are talking, the less important are the bits-and-bytes, speeds-and-feeds of technology. What matters are things like revenue, customer retention and satisfaction, quality, etc. Your technology strategy, tactics and performance should be wrapped with those business metrics. Your business partners don't really care about the how's of technology, they care about the impacts on their profitability. In Board presentations, I never use technology jargon, instead I use the same language and jargon that you'd hear from the heads of Sales, Marketing and Finance.

When you can clearly define the impact on the bottom-line of that next project, you'll find your opinions are being sought out by those who need that project.


4 comments:

Tilak Nithiyeswaran said...

Earlier today I learned that I am going to be working with a new CIO. I was excited. Excited find out who this person was. I learned that his name was Patrick Flynn. So I surfed the web and landed here .. your own blog site - "Clear IT Leadership". What an appropriate subject for a CIO .. I thought.

Then I saw your photograph. The image left an impression on me. Let me tell you why .. I saw someone very unique .. unique in that I saw a successful business executive and a very confident personality. A confidence gained (undoubtably) through years of being an IT practitioner. I was intrigued to read on ..

As soon as I finished reading the set of questions that you posed in the 'ask yourselves a few questions' section ... I was sold. This article had to be written by someone with many many years of experience being a successful IT practitioner/executive. The questions were simple yet very powerful. Very insightful. Thought provoking.

As I kept reading, it also revealed the leader in you. You talked about the need to 'run the current portfolio of IT products and services with excellence'. You seem to value 'earning the credibility and trust' of your customer base. That is what leaders do. They understand that 'credibility and trust' is 'everything' in business and organize, motivate and prepare an entire organization to perform exceeding the expectations of the customer base.

By now I was really into your article. Essentially you are talking about IT helping the business to make money. That hit a sweet spot.

Some time back (almost an year and a half ago), I was invited to partipate in an IT executive planning workshop. During the initial introductions, we asked to describe a problem/concern that kept us up at night. I said what keeps me up at night was the search for the answer to the following question: "What is the Business Value of Existing IT Products and Services" ...

I have been reading and researching about this topic and have not found a simple answer. I am looking for a technique/model that can be utilized to come up with the answer within a reasonable period of time. A model that can be repeated every single day. A program that can be written to display on an executive dashboard, how much money IT made today, yesterday, last quarter or last year. It still keeps me up at night.

IT is an accelerator of business velocity. IT increases accuracy/quality. IT exposes business intelligence that otherwise will not be possible. So what is that all worth?

In our IT careers we are all confronted with the task of managing a Portfolio of IT Products and Services that already exist (before adding anything new). So how do we determine the business value of the current portfolio?

It is almost like my electricity bill. How do I know if I am getting my money's worth? I can try to determine the financial impact on my life if there was no electricity. No Computers at home, No TV, No Refrigirator, No Cooker/Oven etc ... What additional costs will I have if I lost all of the above services? Is that cost greater than or less than my electricity bill? Hmm ... that is an approach.

But life is complex. A multi-billion dollar enterprise is even more complex. So we need a simple yet powerful modelling technique to determine the 'value' of existing IT solutions. I have not found one yet.

So we resort to comparisons .. how much does a KwH cost in other G7 countries? How much does other companies in the same industry segment spend on IT as a percentage of their revenue? What percentage of their SG&A is the IT cost? All sorts of cost based comparisons. The problem is ... all of a sudden we loose the point... What is the 'Value' of IT?

New IT investments are a little easier to tackle. We have business cases that IT and the Business Partners jointly develop and validate. Hence we generally understand the return. We understand the value.

I know this is a problem worth losing some sleep over. It is also a problem that I can learn to solve by working with experienced IT practitioners like yourself.

I look foward to meeting you, working with you, learning from you and also continuing to read your thoughts on 'Clear IT Leadership'.

Congratulations on your new role and wish you the very best.

- Tilak Nithiyeswaran

Patrick Flynn said...

Tilak, thanks for the very kind comments! I'm excited to be joining the IT team at Celestica.

Your questions regarding value are good ones. Isn't it odd that we struggle to identify the value of an IT asset once it's been put into service? We really have no such problem with plant and equipment if we are in the manufacturing sector. Yet we struggle with IT as if it was separable from the process and products it supports or produces. I suspect that a big part of the problem is the intangible nature of information technology.

In any case, it's a topic of much discussion and work...and certainly much more than is possible in a simple blog comment.

Thanks for taking the time to find, read and respond to my thoughts. I look forward to the ongoing dialog.

PDavis said...

Too often mid-level managers get caught up in day-to-day tactical issues that the business strategy gets lost. "We make money." Such a simple montra - yet it gets lost in the fog of "fix it," "make it run," "keep it going" and the ever popular - "build it with what you have." How "we make money" scares me to death sometimes. For many Fortune 500 companies, it's nothing short of a miracle that we do!

Patrick Flynn said...

I think the daily, tactical focus while incredibly necessary can often lead to an inability to ever get beyond it to the innovative, strategic things that truly make a difference.

These days, I am an extreme commuter, flying 5 hours each way to Toronto. I'm using the time as think time. It's often the only time all week that I get to control in such a large block. It's also where I get the most creative, I think.