Why don’t IT people understand our business?

May 16, 2012

Executives seem to agree that IT people – technicians and their leaders – do not understand the business very well.  This causes all sorts of trouble when making financial decisions on major IT projects.  Why don’t IT people “get” the business?

1.    They’re too busy studying technology.

We all know that information technology is complex.  It’s not surprising to learn that IT people have to put in a lot of time just keeping up with the changing technologies.

But CFOs and Controllers also have to spend a lot of time keeping up with regulatory and financial standards.  That doesn’t excuse them from acquiring a good working knowledge of the industry and the specifics of the enterprise’s products and markets.  So we shouldn’t let the IT folks off the hook just because they’re “too busy.”

2.    They’re not trained in business

IT people typically come from engineering and technology training backgrounds.  These give them good grounding in quantitative methods, but don’t give them a feel for business tradeoffs.  Case studies in business are not part of a technologist’s training.  And those who have ventured into business for themselves usually have to hire someone else to manage the business aspects of their enterprise.

Maybe there’s something you can do about this.

3.    No one on the business side has invited IT to learn about the business

OK, so the IT people aren’t business-savvy when they come to work here.  Why don’t we invite them to learn about the business?  After all, we expect HR and other departments to have a basic grasp of what we do and for whom.  Why not IT?

Do you have a short self-study course on the nature of the enterprise’s business?  Or at least a summary from the 10K that is provided to every new employee?  This would be a start.  Even better would be a concerted effort to explain not only the basics of the business to IT people, but to outline the key performance indicators and other metrics that drive the business.

4.    No one rewards IT people for being business-savvy

Reward systems in IT typically are based on operational metrics rather than business-specific measures.  If you reward IT people only for achieving 99.9% uptime, then you should not expect them to focus on anything else.

Everyone in the enterprise needs to have a basic grasp of why we’re in business and what we provide, and to whom.  But IT people implement many of the systems that make business processes run, so they should have in-depth understanding of what’s important in the business and the meaning of the executives’ measures.

Bringing IT people out from behind the wall of technology and exposing them to business concepts and measures can only benefit everyone in the company.  And it will make your future conversations with IT a lot easier.

How well do IT people understand business in your enterprise?  Add your comments below.

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It’s actually easier to do the right thing

March 26, 2012

The right thing is to plan, organize and execute with long-term results in mind.  But nearly every manager is so driven by short-term metrics that they fail to account for longer-term effects of their decisions and actions.  As a result, they accomplish less for themselves and for their organizations, making them less effective and less competitive.

Here are three ways to incorporate longer-term thinking:

1. People working for you know when they’re being put at a disadvantage due to short-term thinking.  For example, if you won’t spend the capital needed to buy the right tools, they’ll keep working, but they’ll resent both the inefficiency of the work and the lack of regard it shows for them as workers.

People will find ways to correct problems and to self-organize to be more efficient if you will only give the room to operate.  This includes trusting them to find the best way to organize and giving them enough budget to execute the plan.    Your main contribution after that is to give them enough of the bigger picture so they know how their work fits in with your objectives.

2. If you’re committed to personal growth, then you need to track your effectiveness over a longer term.  Your monthly or quarterly objectives are the table stakes in this game.  Cranking out regular results will guard your job, but it won’t make you ready for a larger role unless you include a vision of what’s possible in the longer term

If you want to be seen as an emerging leader, then you have to champion longer-term growth and improvement.  To do that, you’ll need to solicit feedback and actually listen to it.  And you’ll need ways to identify short-term objectives that are actually causing damage to longer-term results.

For example, a client company refused for years to convert to better programming language tools because changing tools would make the first project to use them take longer.  As a result, they went for years at a disadvantage compared to their competitors.   Eventually, they changed – when they merged with a competitor that was already using the tools.

3. In some areas, such as product development, experimentation is essential.  You may think that Engineering is a deductive, forward-only process; but in fact a lot of development involves eliminating the unworkable by trying it out.

Once you realize that experimentation is part of the process, you stop regarding abandoned directions as a waste of time and resources.  In fact, experiments lead to better decisions and stronger platforms on which good products are based. Since the result of having stronger platforms is not visible until the next product, you could harm your product line significantly by insisting on maximum-speed implementation.

The alternative to backtracking after an experiment is to fall off a cliff – with failure of the process.  It’s better to insist on high-quality, incremental progress.  And how do you know you are seeing incremental progress?  You have to have a longer-term vision and plan to measure it against.

Once you have the vision and the plan, it’s actually easier to do the right thing.

 

How are you keeping longer-term results in mind?  Post your comments below.

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How can IT management fail to understand business goals?

January 10, 2012

“Now more than ever, IT must invest the time to understand specific business goals and translate IT metrics to reflect an impact against these business goals.  Often there is a gap between what IT reports and what is of interest to the business.”   — An Introductory Overview of ITIL V3, itSMF, 2007, p. 38

There’s been a lot written about how IT and business are misaligned.  See for example, Susan Cramm’s excellent book.[1]  But how do they get that way?  One cause is that many IT people don’t understand business.  Another is financial invisibility of IT due to budgeting processes.  But these are not the big killer causes.

I believe there are three major causes:  physical distance, psychological distance, and IT overload.

Physical distance of IT from the business leads to isolation in many ways.  One of my client companies had their IT people in a city 750 miles away from the home office.  Not only did this impose communication barriers, it meant that the IT people were living in a different culture from the home office people – even though both locations are in the United States.  Of course, when you add in the distance to some of the offshore contractors who are handling some IT services, physical distance means even more cultural distance.

Psychological distance can be caused by having objectives that don’t relate to business goals and by being managed in a “silo.”  For example, IT may report in to the CFO, and management metrics may relate only to financial performance.  As long as IT is budgeted as an operational expense, then no amount of encouragement will get IT managers to view what they’re doing as a strategic investment.  This can be aggravated by failing to include IT people in business planning.  Finally, I’ve seen IT organizations where the business tools used by the rest of the business are not in use in IT.

IT management overload is the third major cause of misalignment.  Beyond the usual overload caused by rapidly changing technology and shifting responsibilities (associated with Cloud services, for example), IT management is typically trying to do more with less budget.  As the pressure to perform increases, IT management concentrates on operational measures rather than business metrics.  In addition, technology shifts are raising the cost and complexity of legacy system support.  So IT managers tend to focus on reducing these burdens, rather than looking for new initiatives to support.

Where can we start to correct the lack of alignment between IT and business?  After addressing physical location and reporting structures, the most productive way to get alignment is with common metrics.  Look for business metrics that are relevant to concrete business results and are particularly dependent on IT service delivery.  Then make sure that IT managers understand the business metrics.  Finally, make sure that they buy in to being measured by these metrics.  To do that, of course, it is best to include them in business planning processes – and not just as number-providers.

What are your experiences with IT – Business alignment?  I welcome your comments.

[1] 8 Things We Hate About IT by Susan Cramm, Harvard Business Press, 2010 http://www.eighthates.com/

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