by Peter High
Clients often ask me how their IT performance compares to world-class
organizations. The term "world-class" is a bit loaded
since it can't be measured objectively, but it can be defined
subjectively and used as a standard against which firms can measure
performance.
When assessing IT performance, many factors must be taken into
account. To get the full picture, I ask the following questions:
Is information technology central to the business? For some industries,
such as financial services, technology is at the heart of business
operations; for others, weaving IT into the business requires
more effort.
Are business leaders progressive in using technology? Some leaders
eagerly embrace technology and invest more in technological systems.
Can the organization recruit top IT staff? Favorable scenarios
include proximity to a university or a technology hub.
While these factors often lead to IT excellence, some companies
without these advantages still manage to operate at a world-class
level. One client, a US$3-billion-a-year leader in the consumer
packaged goods (CPG) industry, provides an interesting example.
Relative to other industries, CPG is in the bottom third of technology
investment, and this company is low even within this lower third.
The company's executives approach IT conservatively, insisting
on a ROI for all significant expenditures. Its rural location
limits the IT talent it can attract, further inhibiting the company
from having a natural technological bent.
Nevertheless, IT leaders at the company have pursued a conscious
strategy of turning each of these potential weaknesses into strengths.
Limited funds for technology means IT must be highly disciplined
in its spending. To ensure that each investment has maximum impact,
IT has developed a tight relationship with its business partners.
This collaboration means allocating IT spending to areas of the
highest strategic priority companywide.
The key to risk management in ERP programs (and many other business
programs) is to focus on what we don't know.
IT staff gets to know each segment of the business. They ride
with the trucks hauling products to retailers and spend time with
HR and other business units. IT can then tailor systems that best
serve each business function.
The company sells perishable goods, so late shipments immediately
impact revenues. Efficient supply chain management and systems
that flawlessly track products from development to sales are critical.
Because backup systems are vital, disaster recovery gets high
priority.
Limited budgets underscore the need to be careful with investments.
If an investment is losing revenue it is canceled quickly so the
dollars can be redirected toward higher value investments. This
requires a project and portfolio management process that tracks
investments from idea to implementation, with regular "gates"
to assess project performance relative to expected time, budget,
and scope.
Finally, due to the challenge of recruiting in rural areas, the
company provides incentives for the most talented employees to
stay. It determines which skills are needed and can be developed,
and which are best outsourced. It also establishes relationships
with local universities to identify and recruit talented students
early on through intern programs.
Through realistic assessments of strengths and weaknesses and
a disciplined approach to ensure that weaknesses and risks are
mitigated, it is possible for almost any IT department to accomplish
extraordinary things on behalf of its business and truly be world-class.
Peter High is president of Metis Strategy, a Washington, D.C.-based
consulting firm specializing in the intersection of business strategy
and IT.
Originally published in CIO
Digest, March/April 2007 , Copyright © 2007 Symantec
Corporation, republished with permission.
