Partnering for Value in the Digital Universe – a Call to Action

Technology per se is just a cost – it is how the business uses technology, and manages the change that technology both shapes and enables,  that determines whether the technology contributes to business value. Over the last few decades, the way that we use technology – and who uses it, has changed dramatically. Yet one thing that has not changed is the on-going questioning of the value received from our investments involving technology. As we move into an increasingly digital universe, there has never been a more critical time to address this question.

As I discussed in a previous post - the “IT value” standoff, as long as boards, business executives and line of business (LOB) managers continue to view this as a technology issue, and fail to accept appropriate responsibility and accountability, and the CIO and the IT function either see their responsibility and accountability ending with the delivery of the technology capability, or are unwilling to “let go”, often because they have no confidence in the LOB managers to get the job done, we will continue to fall far short of realizing the full potential of the digital universe.

What has been lost in all this is the understanding  of, and accountability for managing the increasing breadth and depth of business change that technology both shapes and enables, and which is required if value is to be created and sustained! We need to change the conversation – to change it from one largely about the cost of delivery of technology to one focused on creating and sustaining value from business change.

Business value will only be realized from our increasingly significant and complex investments in IT-enabled change when complementary changes are made in the business – including changes to the organizational culture, business and operating models, business processes and practices, people’s work, and the skills and competencies required to successfully get the work done, reward and incentive systems, organizational structures, physical facilities etc.

All this is blurring the roles and responsibilities of IT and the business functions, and  giving rise to a fundamental rethinking of how IT, and it’s delivery and use is governed and managed, and the capabilities that are required to ensure and assure that the use of technology contributes to creating and sustaining business value.

In the 1998 edition of The Information Paradox,  I introduced the “Four Ares” as the key questions that must be addressed by governance. Subsequently, in the 2008 update, I introduced the Strategic Governance Framework (SGF), relating it to the then emerging digital economy, and described the 10 key management domains that must be included in any governance framework. In the remainder of this post, I will reintroduce and briefly describe both the “Four Ares”, and the SGF (somewhat further evolved since  2008). I will then use a combination of both to illustrate the responsibilities of the board, executive management, LOB management and IT management related to value.

The four “ares”

Slide1

As we said in The Information Paradox, “ Tough questioning is critical to get rid of silver bullet thinking about IT and lose the industrial-age mind-set that is proving extremely costly to organizations.  Asking the four “ares,” in particular, helps to define the business and technical issues clearly, and thus to better define the distinctive roles of  business executives and IT experts in the investment decision process. Are 1, Are we doing the right things? and Are 4, Are we getting the benefits?  raise key business issues relating to both strategic direction and the organization’s ability to produce the targeted business benefits.  Are 2, Are we doing them the right way?  raises a mix of business and technology integration issues that must be answered to design successful [IT-enabled] change programs.  Are 3, Are we getting them done well?  directs attention to traditional IT project delivery issues, as well as to the ability of other business groups to deliver change projects.”

Strategic Governance Framework (SGF)

Slide2

The first, and overarching element of the framework is Value Governance  - governance being  traditionally defined as the system by which enterprises are directed and controlled and as a set of relationships between a company’s management, its board, its shareholders and its other stakeholders.  Value Governance establishes how direction and control is accomplished within and across the other 10 elements of the framework which I refer to here as “management domains”. This direction and control will have both compliance and performance aspects, both of which must be considered. From a performance standpoint (and to some extent compliance in the case of risk) I add the dimensions of cost, benefit and risk across the Strategic Governance framework to show that these factors are not independent, and have to be taken into consideration when decisions are being taken in or across the management domains. The ten “management domains” are:

  • Strategy Management - Defining the business…mission, vision, values, principles, desired outcomes and strategic drivers to provide direction and focus for understanding, configuring and managing assets to deliver the greatest value.
  • Architecture Management - Understanding, communicating and managing the fundamental underlying design of the components of the business system, the relationships between them and the manner in which they support the enterprise’s objectives.
  • Portfolio Management -  Managing the evaluation, selection, monitoring and on-going adjustment of a grouping of investment programmes and resulting assets to achieve defined business results while meeting clear risk/reward standards.
  • Investment Management - Managing the full life cycle of an investment decision, using the business case throughout the life cycle to ensure a continued focus on value from the initial idea/concept (ideation) through to the retirement of the resulting new or improved assets.
  • Asset management - Managing the acquisition, use and disposal of assets to make the most of their service delivery potential and manage the related risks and costs over their entire life (source: Vicnet, State of Victoria, Australia).
  • Programme Management - Managing the delivery of change around business outcomes through a structured grouping of activities (projects) designed to produce clearly identified business results or other end benefits.
  • Project Management -  Managing a group of activities concerned with delivering a defined capability required to achieve business outcomes based upon an agreed schedule and budget.
  • Management of Change - A holistic and proactive approach to managing the transition from a current state to a desired state
  • Operations Management – Managing the production of goods and/or services efficiently  - in terms of converting inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services) using as little resources as needed, and effectively - in terms of meeting customer requirements.
  • Performance Management – The definition, collection, analysis and distribution of information relevant to the management of investment programmes and assets so as to maximize their contribution to business outcomes.

While the framework may at first look intimidating, it should not be seen as such. Many, if not all functions within these domains are already being done to a greater or lesser extent in enterprises today, often in many different ways, with little communication or interraction between them. It is the management of the critical relationships between these “management domains” which, if managed well, can provide tremendous strategic advantage to enterprises, but which, if not managed well, can have serious, if not catastrophic consequences. If enterprises are to maximize the value from their investments in IT-enabled change, or any form of change, these relationships need to be understood, and managed within a dynamic, “sense and respond” governance framework.

The four “ares” and the SGF

Slide3

The figure above summarizes the primary areas of focus for each of the four “are” questions, indicating where accountabilities lie, and highlights the relevant SGF domains. The key elements of this include: 

  • Managing IT investments through a portfolio of business change programmes;
  • Developing comprehensive and consistent business cases describing: the expected outcomes; ownership of, and accountability for, the outcomes; the full scope of the change required to achieve the outcomes; the expected contribution of each change to the outcome(s); risks to the achievement of outcomes; and metrics.
  • Objective evaluation criteria enabling prioritization and selection of investments.
  • Inclusive and on-going engagement of all the stakeholders affected by the change.
  • On-going Management of the “journey”, including:
    • Using the updated business case as the key management tool; and
    • A strong gating process for progressive commitment of resources to ensure that, when thing are not going to plan, timely corrective action can be taken, including changing course, revisiting/changing the outcomes, or cancelling the program.
  • Capturing, reviewing and acting upon lessons learned so that mistakes are not repeated, and value continues to be maximised.

A call to action

I don’t want to imply that all this is easy. Working with CEOs and leadership teams I invariably get pushback when I present a way forward as it is seen as complex and time consuming. Well, getting IT right is difficult! But what is the alternative? Highly visible failed investments (that can increasingly put the very existence of the enterprise in jeopardy), with even more time and resources spent trying to find what went wrong (and often where to lay blame), and the loss of potential competitive opportunities? It is imperative that the accountabilities, roles and responsibilities of the board, executive management, LOB management, and IT management are clearly defined, understood and accepted. The impact of not doing so was relatively minor when we were merely automating well-defined tasks, became more serious, sometimes disastrous,  as we moved into integrating and using information across enterprises, and will be catastrophic as we move into the digital universe.  A universe where technology is embedded in everything we do – indeed, one in which we are becoming increasingly embedded in everything technology does, and in which everything and everyone will be connected anywhere, any time, and there will be data about everything and analytics for anyone.

The CFO of a Fortune 100 company that I worked with once confided: “I know the way we are doing things isn’t working, but I don’t know a better way.” Well, there is a better way! A better way that is not simply about thinking differently about IT, although that is a necessary pre-condition, but about doing things differently. A better way that is about boards, the C-suite, LOB and functional  management, including IT recognizing, understanding and accepting their accountability for creating and sustaining value from investments in IT-enabled change and driving that accountability down through their organisations. If enterprises are to survive, let alone thrive in the rapidly evolving digital economy, the status quo is not an option. The cost of resources wasted and, more importantly, benefits and value lost, eroded or destroyed is appalling – its way past time for all business leaders to move beyond words to action!

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After all is said and done, there is more said than done!

As I have travelled around the world over the last thirty years or more, speaking to and talking with thousands of people on the topic of realizing benefits, and creating and sustaining business value from our increasingly significant and complex investments in IT-enabled change, I invariably get these three responses:

  1. You’ve given me a lot to think about;
  2. My boss should have been here; and
  3. Why aren’t we doing this?

In response to the third point, although it also encompasses the second, I decided a number of years ago to write a paper titled “Moving beyond Words to Action”, and submit it for inclusion as a chapter in a book around Enterprise Governance of IT which was being put together by a couple of colleagues of mine. In many ways, the paper was somewhat of a rant – a constructive rant, based on more years than I care to count of trying to get organizations to “get it” when it comes to the challenge of realizing the full potential of creating and sustaining value from the use of IT. I circulated the paper among a number of peers, all of whom provided constructive feedback and positive support, then submitted it to my colleagues. The good news was that they liked the paper, and thought it was much needed. The bad news was that, being academics, they were looking for more academic research for the book, and, as this was an opinion piece, they didn’t see it as a fit (although I was actually asked to write the Foreword for the book!). I was very busy at that time, so basically parked the paper and carried on with my “real” work.

However, I found myself continually going back to the paper, and, over the years since, have reworked and included much of its content in various smaller articles, and posts, and the paper in its entirety has also been used by at least one business school.

I am now, with another colleague, considering embarking on writing another book. Although the book will encompass more than that in the paper, much of the thinking behind the paper will be included. Coming off a week in New York, where I yet again heard the “Why aren’t we doing this?” question many times, I feel that this is a good time to just throw the paper out there in the hope that some readers will find it of value, and also that I will get some more feedback as we start moving ahead with the book.

The paper, the subtitle of which is the title of this post, can be found here Working Chapterv2.0 - it ends with a “call to action”, which I have included below:

Finally, if we are indeed to move beyond words, we must place an emphasis on action—on engagement and involvement at every level of the enterprise. One of the key findings presented in The-Knowing Gap is that knowledge is much more likely to be acquired from ‘learning by doing’ than from ‘learning by reading’ or ‘learning by listening’. This strongly suggests that an iterative step journey toward value management will yield, for each individual, a discrete set of opportunities for learning that, taken together across an organisation of people, form the stepping stones toward cultural transformation and the achievement of real and sustainable change. As Sun Tzu says in The Art of War, “Every journey starts with the first step.” I urge you to move beyond words and take that first step – I can’t promise that the journey will be easy, but without it, value from IT investments will remain elusive.

In reading it, do remember that it was written around seven years ago, long before the terms “digital economy”, “cloud”, “big data”, “BYOD”, etc. were in general use. Also, at the end, I discuss ISACA’s Val IT™ Framework, the development of which I led. While the framework has now been absorbed into ISACA’s new COBIT 5™, it is still available, and relevant – probably even more so – to addressing the challenge of realizing benefits from investments in IT-enabled change.

I hope that you get some value from reading the paper, and look forward to receiving your thoughts.

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The Digital Economy and the IT Value Standoff

The emerging  digital economy, and the promise and challenges that it brings, including the need to shift focus beyond reducing cost to creating value, are adding fuel to the seemingly never-ending discussion about the role of the IT function, and the CIO.  There is questioning of the very need for and/or name of the position, and the function they lead. Discussions around the need for a CDO, the so-called battle between the CMO and the CIO for the “IT budget”, and other similar topics proliferate ad nauseam. Unfortunately, most, although not all of these discussions appear to be about the technology itself, along with associated budgets power and egos, within a traditional siloed organizational context. This akin to shuffling the deck chairs on the Titanic, or putting lipstick on a pig – it’s way past time for that!  As technology becomes embedded in and across everything we do, and we are increasingly becoming embedded in everything technology does, we have to acknowledge that the way we have managed technology in the past will be a huge impediment to delivering on the promise of the Digital Economy. Indeed, it has proven woefully inadequate to deliver on the promise of technology for decades.

Recent illustrations of this include failed, or significantly challenged healthcare projects in the U.S., Australia, and the U.K.as well as disastrous payroll implementations in Queensland, New Zealand and California (you would really think that we should be able to get payroll right). And this situation is certainly not unique to the public sector, although these tend to be more visible. In the private sector, a large number of organizations continue to experience similar problems, particularly around large, complicated ERP, CRM and Supply Chain systems.

All too often, these situations are described as “IT project” failures. In most cases, while there may have been some technology issues, this is rubbish. As I and others have said many times before, the ubiquitous use of the term “IT project” is a symptom of the root cause of the problem. Labelling and managing investments in IT-enabled business change, as IT projects, and abdicating accountability to the CIO is a root cause of the failure of so many to generate the expected payoff. Business value does not come from technology alone – in fact, technology in and of itself is simply a cost. Business value comes from the business change that technology increasingly shapes and enables. Change of which technology is only one part – and increasingly often only a small part. Technology only contributes to business value when complementary changes are made to the business – including increasingly complex changes to the organizational culture, the business model, and the the operating model, as well as to  relationships with customers and suppliers, business processes and work practices, staff skills and competencies, reward systems, organizational structures, physical facilities etc.

From my many previous rants about our failure to unlock the real value of IT-enabled change, regular visitors to this blog will know that I am particularly hard on non-IT business leaders, starting with Boards and CEOs, for not stepping up to the plate. When it comes to IT, the rest of the business, from the executive leadership down, has expected the IT function to deliver what they ask for, assuming little or no responsibility themselves, until it came time to assign blame when the technology didn’t do what they had hoped for. The business change that IT both shapes and enables must be owned by business leaders, and they must accept accountability, and be held accountable for creating and sustaining business value from that change. This cannot be abdicated to the IT function.

However, having spent quite a lot of time over the last few months speaking with CIOs and other IT managers, it has been brought home to me that some, possibly many of them are just as much at fault. There appear to be a number of different scenarios, including CIOs who:

  1. “Get it” and are already seen as a valued member of the executive team, providing leadership in the emerging digital economy;
  2. “Get it”, but have been unable, and, in some cases,  given up trying to get the rest of the executive team to step up to the plate;
  3.  Sort of “get it”, but don’t know how to have the conversation with the executive team;
  4. May “get it”, but are quite happy to remain  passive “order-takers”; or
  5. Don’t “get it”, still believing that IT is the answer to the world’s problems, and don’t want to “give up control”.

The result, in all too many cases, is a stand-off where the business doesn’t want to take ownership, and the IT function doesn’t know how, or doesn’t want to give up control. As Jonathan Feldman said in a recent InformationWeek post, “..enterprise IT, like government IT, believes in the big lie of total control. The thought process goes: If something lives in our datacenter and it’s supplied by our current suppliers, all will be well…my observation is that the datacenter unions at enterprises want “the cloud” to look exactly like what they have today, factored for infrastructure staff’s convenience, not the rest of the supply chain’s.“ Until this standoff is resolved, the “train wrecks” will continue, and we will continue to fail to come anywhere near realizing the full economic, social and individual value that can be delivered from IT-enabled change.

At the root of all this is what I described in an earlier post as The real alignment challenge - a serious mis-alignment between enterprises whose leaders have an ecosystem mindset, and adopt mechanistic solutions to change what are becoming increasingly complex organisms. But it’s also more than this – in a recent strategy+business recent post, Susan Cramm talked about “the inability of large organizations to reshape their values, distribution of power, skills, processes, and jobs”. The sad fact is that, as organizations get bigger, an increasing amount of attention is spent looking inward, playing the “organizational game”, with inadequate attention paid to the organizations raison d’être, their customers, or their employees. As Tom Waterman said, “eventually, time, size and success results in something that doesn’t quite work.” Increasingly today, it results in something that is, or will soon be quite broken.

Most of the focus of the conversation about the digital economy today is on improving the customer experience, as indeed it should be – although we have been saying the same for decades with, at best, mixed success. We will come nowhere close to  achieving that success unless we put equal focus on our people, and rethinking how we govern, manage and organize for the digital economy such that we maximize the return on our information and our people.

This will require that leaders truly lead – moving beyond tactical leadership, aka managing, to strategic and transformational leadership. That we move from a cult of individual leadership – “the leader”, to a culture of pervasive leadership – enabling and truly empowering leadership throughout the organization- putting meaning to that much-abused term “empowerment”. That we break the competitive, hierarchical, siloed view and move to a more collaborative, organic  enterprise-wide view. The technology exists to support this today – what is lacking is the leadership mindset, will and capability make the change. As Ron Ashkenas said in a 2013 HBR blog“The content of change management is reasonably correct, but the managerial capacity to implement it has been woefully underdeveloped”.

I am not saying that this will be easy easy to do – it isn’t, very little involving organization, people and power is. And somehow, throwing in technology seems to elevate complexity to a new dimension. And we certainly don’t make it any easier with the ever-growing proliferation of books, frameworks, methods, techniques and tools around the topic. Many of which have evolved out of the IT world, and are, as a result, while intellectually correct, often over-engineered and bewilderingly complex to executives and business managers who need to “get this”.

So, let’s get back to the basics – governance is about what decisions need to be made, who gets to make them, how they are made and the supporting management processes, structures, information and tools to ensure that it is effectively implemented, complied with, and is achieving the desired levels of performance. It’s not about process for process sake, analysis paralysis, endless meetings, or stifling bureaucracy – it’s about making better decisions by finding the right balance between intellectual rigour and individual judgement. In a previous post, Back to the Basics – the Four “Ares” I introduced the four questions that should be the foundation for that decision-making:

  1. Are we doing the right things?
  2. Are we doing them the right way?
  3. Are we getting them done well?
  4. Are we getting the benefits?

A common reaction to the four “ares” is that they are common sense. Indeed they are, but, unfortunately, they are far from common practice! if business leadership to move beyond words in addressing the challenge of creating and sustaining value from investments in enterprise computing, social media, mobility, big data and analytics, the cloud etc. emphasis must be placed on action—on engagement and involvement at every level of the enterprise,  with clearly defined structure, roles and accountabilities for all stakeholders related to creating and sustaining value. The four “ares” are a good place to start!

 

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Reflections on 50 Years in IT- and the Pursuit of Value

SunriseIMG_2908It has been many months since my last post to this blog – the result of continued recuperation from last year’s surgery, involving a good amount of vacation travel, and a reduced work schedule.  Now however, with that all hopefully behind me, as I sit in my office looking out at the sunrise over beautiful Saanich Inlet, and the snow covered Vancouver Island mountains beyond, it seems as good a time as any to reflect on the fact that 2013 marks my 50th year working in, with and around technology. To think about what has changed, what is still changing, what hasn’t changed, and what has to change if we are to really unlock the potential value of our use of IT.

What has changed?

To cover all the changes that have occurred in 50 yrs would need a book, not a post, so suffice it to say that when I started working in 1963 for  C-E-I-R (UK) Ltd., 1401I was working with an IBM 1401, which had  a (not really published as such) processing speed  close to 10 million times slower than today’s microprocessors, 8k of storage (later upgraded, with an additional unit, to 16k), no solid state/hard drive, displays or communication capability, and no operating system (that was me!). Weighing in at around 4 tons, it needed a fully air conditioned room, with a raised floor, approximately twice the size of my living room.

Today, in my home office, I have a (now pretty old) MacBook Air with 256GB of storage, an iPad with 32 GB and an iPhone with 64 GB (I’m still not sure why I did that), and a number of printers all wirelessly connected within my house and to the world beyond through the internet. I have access to an ever growing body of knowledge that can answer almost any question I have, and, generally free through Skype, to anyone in the world I want to talk to (and see). I can manage my banking, pay bills, check my medical lab test results, organize my travel, shop, read books, listen to music, watch videos, play games, organize, edit and enhance my photographs and videos, and a myriad of other tasks. And, I can do the same from almost anywhere  - including from a lanai in Hawaii, a stateroom (we used to call them cabins) on a cruise ship or, unfortunately, now a airplane. And, of course, this doesn’t include all the other computing power in the house,  our security system, appliances, watches, cameras, cars, etc. but you get the picture. And I’m just one guy!

At the enterprise level, we have experienced extraordinary advances in computing power, storage and communications capabilities, and how we interface and interact with all this. Technology is now no longer a “black box” – it is embedded in almost all business processes, and in everything that we do. As described in a recent blog by Mark McDonald of Gartner, the technology model is changing from computing – the technology in and of itself, to consumption – how individuals and organizations use technology in ways that can create value for them and, in the case of organizations, their stakeholders.

What’s still changing?

On the technology front – everything, and at an increasingly rapid pace. We are in the middle of what I first described in a January 2012 post as a “perfect storm” of technological change, including:

  • Increasing adoption of the Cloud, Software (and just about anything else) as a Service which is fundamentally changing the delivery model for technology – and business services and, as a result, leading to seemingly endless debate about the role of the IT function and the CIO as I discussed in a January, 2011 post;
  • The explosion of “Big Data”, and along with it analytics and data visualization – here, as described by Bryan Eisenberg in a recent post, it’s not the “big” that’s so important, although it is impressive and presents it’s own challenges, but rather the shift beyond analyzing samples of data to all the data, historical data to real-time data, and structured data to unstructured data. All of which with a cost structure for using these data tools has now made it more widely available and accessible to a greater number of organizations, regardless of size. Other implications/challenges here include the need to look beyond analytical tools themselves to the creation an environment where people are able to use their organization’s date and their knowledge to improve operational and strategic performance, as described by Joe Peppard and Donald Marchand in a recent HBR article, as well as the increasing personalization of data, and the question of “whose data is it?” as discussed by my son, Jer, in a 2011 TED talk.
  • Mobility, consumerization and BYOD which are fundamentally changing how, where and when we interact with technology and access information – as described by Mark McDonald of Gartner in his previously mentioned post on the technology model changing from computing to consumption;
  • The emerging ” internet of things” (TIOT) where everything talks to everything and which, as described by Andrew Rose of Forrester in a recent WIRED UK article, brings with it unprecedented challenges in security, data privacy, safety, governance and trust.; and
  • Robotics and algorithmic computing which have considerable potential to change the nature of work as described by Sharon Gaudin in a recent Computerworld article.

This is certainly not an exhaustive list – it doesn’t, for example, include 3D printing or wearable technology, both of which will also have significant impact, and it will certainly continue to change and be added to, but it does capture the main areas where change is occurring, and the essence and magnitude of that change.

What hasn’t changed?

Back in 1998, together with what was then DMR Consulting. later Fujitsu Consulting, I wrote The Information Paradox, which described the conflict between the widely held belief that investment in IT is a good thing, and the reality that this, all to often, it’s value cannot be demonstrated. The book’s main premise was that benefits do not come from technology itself, but from IT-enabled change, and that benefits do not just happen, nor do they happen according to plan – they need to be actively managed “from concept to cash”. It put forward the view that this was not a technology problem, but one that business leaders needed to own and step up to – that realizing the potential value of IT to organizations should be an imperative for all business managers. It proposed an approach, the Benefits Realization Approach, to enable them  to address the challenge of value. In the second version of the book, published in 2003,  an Afterword built on the Benefits Realization Approach to address the essence of overall organizational governance focused on enterprise value. (A good summary of the book can be found on Basil Wood’s bazpractice blog). Yet today, 15 years since The Information Paradox was first published, the track record of so called “IT projects” remains dismal, and realizing the value promised by IT remains elusive. Why is this? The answer lies in what has not materially or broadly changed over the last 5o years, including:

  1. A continued, often blind focus on the technology itself, rather than the change  - increasingly significant and complex change – that technology both shapes and enables (more on managing change in this post);
  2. The unwillingness of business leaders to get engaged in, and take ownership of this change – preferring to abdicate their accountability to the IT function (as discussed in this post);
  3. Failure to inclusively involve the stakeholders affected by the change, without whose understanding and “buy in” failure is pretty much a foregone conclusion;
  4. A lack of rigour at the front-end of an investment decision, including, what is almost universally  a totally ineffective business case process (as described in this post);
  5. Not actively managing for value; and
  6. Not managing the journey beyond the initial investment decision.

Overall, despite all that has been written and spoken about this challenge, and the growing number of frameworks, methodologies, techniques and tools that are available, we still have  what is predominately a “culture of delivery”  – “build it and they will come” – rather than a “culture of value”, one that focuses on creating and sustaining value from an organisation’s investments and assets. For more on this , see my recent APM UK paper on the topic.

What needs to change?

In work I have been doing with Joe Peppard, we have identified 8 things that business leaders, starting with the CEO, need to do. These are:

  1. Don’t see IT as something separate from your core business – technology today is embedded in, and an integral part of most, if not all parts of your business processes.
  2. Don’t focus on the technology alone – focus on the value that can be created and sustained through the business change that technology both shapes and enables.
  3. Do recognize that you are ultimately accountable for the overall value created by all business change investments – and ensuring that accountability for the realisation of business benefits anticipated from each investment is appropriately delegated to, and accepted by, other executives and managers.
  4. Do demand rigorous analysis of every proposed business change investment, whether or not IT is involved. Ensure that you and your team know and can clearly define expected outcomes – (value), that there is a clear understanding of how that value is going to be achieved, that all relevant stakeholders have bought in to the required changes, and that they are capable of making or absorbing them and delivering on the expected outcomes.
  5. Do recognize that the business case is the most powerful tool that you have at your disposal to manage business change investments – insist on complete and comprehensive business cases, including desired outcomes, benefits, costs and risks, and clear explanation of how each benefit will be achieved with unambiguously assigned accountabilities, supported by relevant metrics.
  6. Do recognize that benefits don’t just happen and rarely happen according to plan –outcomes and plans will change – don’t think business case approval is the end of the story. Mandate that the business case be used as the key operational tool to “manage the journey”, updated to reflect relevant changes, and regularly reviewed.
  7. Do know if and when it’s time to stop throwing good money after bad, or when there are better uses for the money and “pull the plug.”
  8. If your CIO doesn’t “get” the above points, and hasn’t already been talking to you about them, get one who does and will!

So, what is it going to take to make these changes happen? For myself, I am going to continue to try to make a difference – but more directly, and more directed. Since the initial publication of The Information Paradox, I have travelled the world presenting to, talking and working with many hundreds of organizations and tens of thousands of individuals. Some of the organizations have heeded these ideas, embraced  a value culture, and continue to thrive, many have taken some of the ideas across the organization, or all of the ideas in parts of the organization with some success, and others have tried but slipped back. There are many individuals who tell me that my ideas have changed their lives – sometimes resulting in success, in other cases simply greater frustration in that they understand what has to be done but can’t make it so. At the end of many presentations or discussions, I almost invariably get the same two comments. The first – “You’ve given us a lot to think about”, to which I always reply “Great, but what are you going to DO about it?”  The second comment, which in some ways answers my question – “My boss should have been here”. Getting the “boss” to come to listen to anything that has an IT label has been, and continues to be a challenge as I discussed in my last post. Where I and they have been successful, it is only when we have got the attention, understanding and commitment of of the Executive Team. It has become quite clear that without this commitment, the best we can do is tweak around the edges – and that is just not good enough.

So, it’s time to be more direct – getting this “right” is not an option for business leaders – it’s their job and they cannot be allowed to shirk it. The CEO, supported by the Board and Executive Management Team is accountable for ensuring that effective governance is in place around IT decision-making, with specific focus on value, as well as for the selection, oversight and optimisation of value from the portfolios of business change investments and assets. This should be a condition of employment, and grounds for immediate dismissal if they with fail to do so.

It’s also time to be more directed – to get the message directly to business leaders – a shareholder or taxpayer revolt would be a good idea, but, turning 70 next year,  I can’t wait for that. I will however be working to get in front of more boards, or organizations of directors, targeting articles to more business-oriented publications, presentations to more business-oriented events, and targeting presentations, seminars and workshops to business executives.

We can, and must all play our part in this. In my case, in addition to getting more active on this blog, I am currently working on articles in business journals, as well as executive briefings and workshops – I will be co-instructing one of these, Value Management Master Class: Enterprise Governance of IT for Executives and Senior Managers, with Peter Harrison from IBM at the University of Victoria in Wellington, NZ on April 11th & 12th. If you’re interested and live in the area, or would like to visit Wellington – a beautiful city, you might want to consider this opportunity, or – even better – encourage your bosses to do so.

 

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IT…What’s in a Name?

We have a serious “labelling problem” with IT. A few years ago, I was in Melbourne, Australia delivering a lunchtime address on “Meeting the Challenge for IT-Enabled Change” to CEDA (The Committee for Economic Development of Australia). CEDA’s membership includes business and political leaders, and their speakers include CEOs and Prime Ministers, so I saw this as a chance to really get my message across to the “right audience”. However, before starting, I asked for a show of hands from everyone from the IT function – about 90% of the hands went up. Seeing IT in the title, the CEOs had sent their IT guys.

When I started working in this field in 1963, what is now generally referred to as the IT function was described using terms such as Automatic Data Processing (ADP), Electronic Data Processing (EDP), and Computer Services. Over time, this has evolved to Information Systems, with the Data Processing (DP), or Computer Centre Manager role evolving to that of the CIO. Regardless of the name, when we use the term IT, it is the “T” that gets most of the attention, and, as in the case of the CEDA example, leads business leaders including CEOs to assume that anything to do with IT is the domain of the IT function.

While naming may appear to be a cosmetic or semantic issue it is much more than that. Names both create perceptions and carry baggage. The IT name, rightly or wrongly, is, as discussed above,  perceived as being about technology, which usually immediately leads to thinking about the costs of technology, and the name also carries a lot of baggage resulting from the long litany of “failed IT projects”.

It’s not just the non-IT folks that have to change here. On another occasion, I was facilitating a workshop around Value Management with members of the Seattle Chapter of the Society for Information Management (SIM). After the conversation had gone yet again one down a technology “bunny hole”, I made the comment that the organization’s name was SIM, not SIT. In Canada, we have the Canadian Information Processing Society (CIPS) – I guess that’s a bit better but processing doesn’t quite capture it. In Australia, and in the UK, they have the Australian and British Computer Societies  – that’s even worse! I can remember, several lives ago, interviewing a senior business manager to find out his requirements for a new system – he stopped my line of questioning, saying “What’s this all got to do with you computer guys?”

A few years ago, Forrester and HP tried to address this name issue by introducing the term Business Technology – the problem here is that they got rid of the wrong word. It’s not the technology that’s important – that’s not worth more than you could get for it on eBay, it is the change that the technology both shapes and enables that is important, change of which the technology is only a small part. Much, if not most of that change is enabled by better access to better information and better use of that information, increasingly, turning it into knowledge.

Let’s review a few other terms – data, information, knowledge and, yes, wisdom:

  • Data is just “stuff” – stuff that has to be collected, stored etc.
  • Data + meaning = information which can be acted on
  • Information + experience = knowledge which can result in better informed actions
  • Knowledge, over time, becomes wisdom which can become “conventional wisdom”, or just plain old “common sense”

Reinforcing my belief in parallel universes, a day after I had taken a first cut at this post, and the terms above, I came across  this explanation via Andy Blumenthal, Division Chief, US Department of State (not verbatim) from Dr. Jim Chen. I include this here both to reinforce, and provide a more elegant version of my efforts.

  • Data: This is an alphanumeric entity and/or symbol (ABC, 123, !@#…)
  • Information: This is when entities are related/associated to each other and thereby derive meaning. (Information = Data + Meaning)
  • Knowledge: This is information applied to context. (Knowledge = Data + Meaning + Context)
  • Wisdom: This is knowledge applied to multiple contexts. (Wisdom = Data + Meaning + (Context x N cases)).

In both of these versions, information is the linchpin. Data feeds it and knowledge and wisdom come from it.

So, back to the name. Increasingly today, the role of the CIO, and of their function is being questioned. There is also discussion on changing the meaning of CIO to Chief Innovation Officer. While certainly an improvement on some other proffered meanings including “Career Is Over” and “Challenge Is Impossible”, I don’t believe this is either necessary or wise. The CIO should be the Chief Information Officer, but their role, and the role and name of their function must change – moving from providing infrastructure to being a broker of services (both internal and external – and increasingly external). With this new role, Business Units must accept responsibility for defining the requirements for, meaningful use of, and value creation from these services, with the CIO (and their function) as a trusted partner, helping the other parts of the business:

  • optimize value from existing services;
  • be aware of and understand new value opportunities shaped and  enabled by current, new or emerging technologies,and the scope of business change required to realize value from those opportunities; and
  • evaluate, prioritize, select and execute those opportunities with the highest potential value such that overall business value is maximized.

The two key words here are information and services, so let’s forever drop the term IT function, and refer to it as the Information Services function. This is certainly not earth-shattering – I have worked in and for Information Services functions in the past, and quite a few are still called that today. But, for whatever reason, we have adopted as common usage the term IT function (all too often just abbreviated to IT) – it’s time to put that name, and all the baggage it carries, behind us and move on.

Finally, I am not suggesting we totally eliminate the term IT – there are and always will be the technology aspects, and a there is technology industry. But that is on the supply side. On the demand side, the focus should be on the use of that technology – on Information Services.

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Effective Governance – Aligning Culture, Strategy and IT to Create Value

Over the last two decades, I have worked with many organizations, led the development of a number of frameworks, methodologies and techniques, written a book and numerous articles, and give more presentations than I care to count on the topic of delivering on the promised value of IT. While I would like to think that I have made a difference, and know that in more than a few cases I have, there is still have a long way to go. Frameworks and methodologies are necessary, but not sufficient to address the challenge of realizing the full value potential of IT-enabled change. Last year, I authored a thought leadership report with the Benefits Management SIG of APM UK entitled Delivering benefits from investments in change: Winning hearts and mindsThe main message of this report is that we need to move beyond the current culture of delivery – build it and they will come, to one of value, and that this will require a new, and more effective approach to governance that promotes and supports such a culture.

A number of articles I have read over the last few days have caused me to further reflect on the relationship between value, culture, strategy and IT, and the role of governance in bringing this all together.

The first of these is a Fast Company article, Culture Eats Strategy For Lunch, in which Shawn Parr contends that culture is “often discounted as a touchy-feely component of business that belongs to HR”, whereas in fact “It’s not intangible or fluffy, it’s not a vibe or the office décor. It’s one of the most important drivers that has to be set or adjusted to push long-term, sustainable success.” Paraphrasing Shawn, it is culture that can install and nurture a feeling of “common purpose”, as described by Joel Kurtzman in his book of the same name, by providing focus, motivation, connection, cohesion and spirit. I came across a somewhat different , but reinforcing view of “common purpose” in a Cutter Consortium blog by Carl PritchardCommander’s Intent and Corporate Guidance. The concept of “commander’s intent” originated in the German military almost 200 years ago, in reaction to disastrous defeats. Defeats resulting from ”malicious obedience” by the troops in the field to the tight control exercised from the top (sound familiar?). It’s premise is the, rather than apply such tight command and control, leaders should provide a clear sense of the outcomes they seek and the parameters they will accept – a “common purpose”, then give subordinate leaders freedom and flexibility in planning and execution. It’s a trusting relationship between manager and subordinate and, again, one that has clear application to the broader business environment.

The next article from strategy+business, Seven Value Creation Lessons from Private Equity, reinforces the importance of a culture of value, stating that “Companies are in business to create value for their stakeholders…” and that “A select number of them get it right…”. I would broaden these statements to include all enterprises, be they in the private or public sectors, for profit or not-for-profit (by choice, that is!). Unfortunately, most enterprises don’t do a good job of this. The article suggests that all enterprises could improve their performance by “following seven imperatives from private equity to build a value culture regimen”.  These are:

  1. Focus relentlessly on value.
  2. Remember that cash is king.
  3. Operate as though time is money.
  4. Apply a long-term lens.
  5. Assemble the right team.
  6. Link pay and performance.
  7. Select stretch goals.

While, as the article states, “Private equity firms enjoy a number of natural advantages when it comes to building efficient, high-growth businesses…, the article goes on to say “the best practices of top-tier PE firms still provide powerful and broadly applicable lessons” - my experience would certainly support that view.

Unfortunately, the problem for many enterprises starts with the first imperative above. A fundamental problem here is that in many enterprises there is limited understanding of what constitutes “value” for the enterprise, or how value is created. As Daryl Plummer said, in a recent Financial Times article Don’t go chasing ghosts in the cloud, discussing how to measure the value of the “cloud”, ROI all too often becomes the surrogate for value. Again, while his comments are specific to the “cloud”, they have broader application. ROI is usually totally focused on direct financial impact, while value in fact comes in many different forms. As the French actor and playwright, Molière, said ” Things only have the value that we give them”. We need to take a broader view of value – one where we recognize that value:

  • expresses the concept of worth;
  • is context specific, dynamic and complex;
  • can’t always be measured in financial terms;
  • to one person may not be valuable to another;
  • today may not be valuable tomorrow.

A clear and shared understanding of value is, or should be the foundation for a sense of “common purpose”  – providing the guiding light for why we do things, and how we do them.

My thinking about the next topic, strategy, was triggered by an Executive Street article by Joe Evans, Integrating Business Unit Strategies into a Synchronized Corporate Strategic Plan. Strategies, whose primary objective should be to to create and sustain value, are often poorly defined and even more poorly communicated. One study, described in a 2008 Harvard Business Review articleCan You Say What Your Strategy Is? by David J. Collis and Michael G. Rukstad, found that most executives cannot articulate the basic elements of strategy of their business – objective, scope and advantage – in a simple statement of 35 words or less – and that if they can’t, neither can anyone else. Joe contends that as businesses grow increasingly complex, with multiple, often globally dispersed, divisions and units supporting diverse lines of business, strategic planning models must adapt and change beyond a “command and control, one size fits all” approach if optimal results are to be realized. Linking back to “common purpose”, and “Commander’s intent”, the corporate strategy for a large and diversified business should serve as the umbrella strategy that provides overall structure, goals and measurement – the outcomes they seek and the parameters they will accept. Business units then have the freedom and flexibility to develop and execute their strategic plans under that umbrella, such that their results are consistent with, and contribute to overall corporate strategic goals. This approach leaves the accountability for leveraging intimate knowledge of customers, competitors, employees and culture to the business layer closest to the action – to the “troops in the field”,  allowing the flexibility to plan autonomously while remaining aligned with the overall corporate strategy and goals. One word of caution here – the more complex the business, and the more multidimensional the strategies, the more they may become interdependent –  to avoid falling victim to the “law of unintended consequences”, there must be effective communication and coordination between the business units to ensure that such interdependencies are recognized, and managed.

So, you might well be asking at this stage, where does IT fit in all of this? While I would argue that IT, in and of itself, delivers no value, how we use IT – the change that IT both shapes and enables can create create significant value. With the pervasiveness of IT today, embedded in more and more of what individuals, societies and enterprises do, it is a key element of most business strategies, and investments. Yet, the track record of actually realizing value from those investments is far from stellar, and the IT function, specifically the CIO, is often in the position of having to justify or defend IT’s contribution. While there is certainly still room for improvement in the IT function, they can only be held acceptable for the delivery of IT. The business, the users of the technology, must be ultimately accountable for defining the requirements for, meaningful use of, and value creation from the services that the IT function provides. If they are to deliver on this accountability, business leaders must adopt an effective, value-driven approach to governance that promotes and fosters a culture of value – one which incorporates:

  • A shared understanding what constitutes value for the enterprise, how value is created and sustained, and how different capabilities contribute, or can contribute to creating and sustaining value;
  • Clearly defined roles, responsibilities and accountabilities of the board, executive management, business unit and delivery function management in the realisation of benefits and business value from investments in IT-enabled change;
  • Effective governance processes and practices around value management, including business case development and use, investment evaluation and selection, programme and project execution, asset management, with active benefits and change management; and
  • Relevant metrics integrated into the business which monitor the effectiveness of the approach and encourage continual improvement of the relevant processes and practices.

There are many resources that can help business leadership in adopting such an approach. One such resource, the development of which I led, is the Val IT Framework from ISACA, which is available for free download.

 

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2012 – A Perfect Storm in IT!

One consequence of a 3 month hiatus, forced initially by surgery and concluded more voluntarily with much needed relaxation in Hawaii, is that I have had time to actually read and digest much of the material that, all too often, I only have time to quickly scan – and then rarely get back to. Amongst all this material was a considerable amount of prognostication on 2012 trends. In many ways, little of this was new, but collectively, it does amount to a “perfect storm” that challenges the way we as individuals, societies, and enterprises – small and large, public and private, look at, use and manage technology, including both the demand and supply side and, probably most importantly, where they intersect. In this post, I will briefly discuss the elements of this “perfect storm”, add the one element that I find to be conspicuously missing from the dialogue, and discuss the implications of both.

  1. The “cloud” – the dream of the “information utility” has been around for decades, and now, with the “cloud”, while there are still significant governance, security and privacy issues to work through (some real, some “noise”),  this is now closer to being a reality.
  2. The data explosion, “big data” – I read recently that 90% of the data in the world today was created in the last 2 years – this exponential growth of data is creating both enormous challenges, and great opportunities – on the technology side, developments include the rise of Hadoop, and recent announcements of Dynamo DB from Amazon, and Big Data Appliance from  Oracle, as well as the growing need for new data visualization and “data scientist” skills.
  3. Analytics, particularly real-time analytics – some of the technologies mentioned above, and indeed those below, are fundamentally changing the analytics landscape. Huge amounts of data – structured or unstructured, can now be analyzed quickly, and data can increasingly be captured and analyzed in real time. The challenge here is to resist the temptation  to succumb to analysis paralysis – to know what information is both relevant and  important, what questions to ask, and to think ahead to what actions might need be taken as a result of based on the answers to these questions.
  4. Mobility – services can now be accessed, data captured, information found, and transactions performed from almost anywhere – other work locations, coffee shops, restaurants and bars, at home, in other countries, in taxis, trains or buses, on airplanes or even on a cruise ship – limitations of distance and time have been virtually eliminated. The challenge here, apart from the security and privacy issues that are common to most of these points,  is to be able to find the “off” button in an increasingly, always on, 24/7 world. On an individual basis we need to maintain a work-life balance, and from a business perspective, “burn out” seriously erodes the effectiveness and value of  their most critical resource – people.
  5. Consumerization, including BYOD and “app”s – while it could be argued that these 3 could each merit their own category, I have chosen to “lump” them together as, collectively, they represent a further significant shift from the traditional “technology push” world, with the IT function in a control mode as the gatekeeper, to the “user tool pull” world with IT, potentially – if they get it right, in a facilitation role as a service broker.
  6. Social Media – this is, to some extent, simply one “flavour” of the previous 2 elements, but a very significant one, with potentially huge implications. While much of the attention to date has been on controlling social media, enterprises are increasingly using it as a communication channel, and beyond that, to tap into it to find out what their customers, and employees are thinking. Here, one challenge/opportunity that I see how we can use social media to improve performance  by tapping into the collective knowledge within organizations – “crowd sourcing” input into decision-making and, as a result, making better-informed decisions, and having employees feel more connected with, and empowered by their organizations.

In all the discussion around the elements of this “perfect storm”, much if not most of the focus had been on the IT function needing to respond more quickly to deliver and/or support capabilities in these areas. There has been much less discussion of how the use of these technologies will be used to lead to positive outcomes – creating and/or sustaining  individual, societal and enterprise value – or of the changes that will be needed in the behaviour of individuals, societies and enterprises if that value is to be realized. If we as individuals and societies are not to become “the tools of our tools”, and enterprises are not to continue the increasingly expensive and value-destructive litany of IT failures, we need to shift our focus from the technology to how we manage and use the capabilities that the technologies provide to increase the value of our lives, our societies and our enterprises.

I don’t make these comments as a later day “luddite”,  rather my focus on value is driven by many decades of frustration at our being nowhere near to realizing the individual, societal and business value that intelligent and appropriate use of technology can create. We will not close that gap until we – as individuals, or leaders in society or business, take “ownership” of how we  use technology, based on the outcomes that are important to us, and the value that we seek to create and sustain! In the enterprise world, this has fundamental implications for the roles and accountabilities of business executives and line of business managers, and for the role of the IT function, as discussed in 2 earlier posts, The Future of IT, and Value from IT – There is a Better Way!

In closing, in the context of individual and societal value, 2 areas that I have long had an interest in, and that I will be watching closely this year are healthcare and education. While we shouldn’t expect seismic shifts in either to happen quickly – it’s just not the nature of the beasts, the ground is starting to move. In healthcare, much of this is driven by the funding crunch, with increase focus on eHealth, based largely on “meaningful use” of EHRs, as well as an increasing number of apps such as Phillips Vital Signs Camera for the iPad. In education, with some exceptions, it is still somewhat more of a grass roots movement, although Apple’s recent iBooks 2 and iTunesU announcements, and organizations such as Curriki may well be  changing this. What I believe we will see here, over time, is an evolution beyond eHealth and eLearning to iHealth, and iLearning, with individuals taking increasing “ownership” of their own health and education.

 

 

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A Value-Driven Framework for Change

In an earlier post, The Future of IT, I mentioned the Strategic Governance Framework, introduced in the Afterword of the revised edition of The Information Paradox, and that over the next few months, I would be introducing this framework (which I now refer to as the Strategic Enterprise Governance Framework). Well, it has taken much longer than I had intended, but in this post, one that I must admit is somewhat drier than my usual posts, I introduce the Framework, and briefly describe each of the ten major elements that it comprises. In subsequent posts, I will describe the individual elements, and the relationships between them in greater detail.

Although more than a decade has passed since the The Information Paradox was first published,  the nature of enterprise value—and how to achieve it—continues to be a subject of much discussion. It is clear that the failure to realize business value from investments in IT-enabled change described in the book is a symptom of a wider malaise—one that presents managers with significant new challenges. The fact is, the track record for implementing any major change successfully continues to be  terrible. Although arguably more visible with IT, the same applies to any large-scale investment or change.

One of the root causes for this poor track record is the woeful inadequacy of current governance approaches to manage what is, in most cases, “an uncertain journey to an uncertain destination.” All too often, current practice results in a lack of understanding of the desired outcomes, and the full scope of effort required to realize the outcomes, not knowing what to measure, not surfacing and tracking assumptions, and not sensing and responding to changing circumstances in a timely or well-considered manner.

In the Afterword,  I described how our thinking and practices had evolved beyond the Benefits Realization Approach introduced in the first edition, to a broader strategic governance framework – a framework for overall enterprise governance. Since that time, I have further extended the framework, as illustrated below, from the original seven elements to ten.

The first, and overarching element of the framework is Strategic Governance  - governance being  traditionally defined as the system by which enterprises are directed and controlled and as a set of relationships between a company’s management, its board, its shareholders and its other stakeholders which.  Strategic Governance establishes how direction and control is accomplished within and across the other 9 elements of the framework which I refer to here as “management domains”. This direction and control will have both compliance and performance aspects, both of which must be considered. From a performance standpoint (and to some extent compliance in the case of risk) I add the dimensions of cost, benefit and risk across the Strategic Governance framework to show that these factors have to be taken into consideration when decisions are being taken in or across the management domains.

The nine “management domains” are:

  • Strategy Management - Defining the business…mission, vision, values, principles, desired outcomes and strategic drivers to provide direction and focus for understanding, configuring and managing assets to deliver the greatest value.
  • Asset management - Managing the acquisition, use and disposal of assets to make the most of their service delivery potential and manage the related risks and costs over their entire life (source: Vicnet, State of Victoria, Australia).
  • Architecture Management - Understanding, communicating and managing the fundamental underlying design of the components of the business system, the relationships between them and the manner in which they support the enterprise’s objectives.
  • Programme Management - Managing the delivery of change around business outcomes through a structured grouping of activities (projects) designed to produce clearly identified business results or other end benefits.
  • Portfolio Management -  Managing the evaluation, selection, monitoring and on-going adjustment of a grouping of investment programmes and resulting assets to achieve defined business results while meeting clear risk/reward standards.
  • Project Management -  Managing a group of activities concerned with delivering a defined capability required to achieve business outcomes based upon an agreed schedule and budget.
  • Operations Management – Managing the production of goods and/or services efficiently  - in terms of converting inputs (in the forms of materials, labor, and energy) into outputs (in the form of goods and/or services) using as little resources as needed, and effectively - in terms of meeting customer requirements.
  • Management of Change - A holistic and proactive approach to managing the transition from a current state to a desired state.
  • Performance Management – The definition, collection, analysis and distribution of information relevant to the management of investment programmes and assets so as to maximize their contribution to business outcomes.

While the framework may at first look intimidating, it should not be seen as such. Many, if not all functions within these domains are already being done to a greater or lesser extent in enterprises today, often in many different ways, with little communication between them. It is the management of the critical relationships between these “management domains” which, if managed well, can provide tremendous strategic advantage to enterprises, but which, if not managed well, can have serious, if not catastrophic consequences. If enterprises are to maximize the value from their investments in IT-enabled change, or any form of change, these relationships need to be understood, and managed within a dynamic, “sense and respond” governance framework.

In subsequent posts, I will describe each of these domains, and the critical relationships between them, in greater detail. In the meantime, I encourage you to think about the state of governance in your organization, or in organizations that you are working with, and consider:

  • Are all the management domains included?
  • How completely and effectively are they covered?
  • Are they dealt with holistically, or within silos?
  • How well are the relationships between the management domains, or between the silos covered?
  • How effective is the governance of these domains and relationships in sensing and responding to changes in today’s complex and rapidly changing environment?
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Value from IT – There is a Better Way!

I have just returned from a hectic, but very successful couple of weeks in Australia. There I had the opportunity to meet with and talk to many people, including many CXOs, on the topic of “Delivering on the Promise of IT”. Overall, I was encouraged that there is more awareness of the need to do better when it comes to managing IT investments, but discouraged that there is still little awareness of how to do so, and even less appetite to take it on. As always, at the end of many sessions, a frequent reaction was “you have given us a lot to think about.” As I continue to say, we certainly need to think before we act, but thinking cannot be a substitute for action. A couple  of people echoed a comment that my friend Joe Peppard from the Cranfield  School of Management in the UK told me he had had from a senior executive of a European bank – “I didn’t know there was a better way.”

Well, there is a better way! As originally presented close to 15 years ago in The Information Paradox, proven Value Management practices exist, including, but certainly not limited to ISACA’s Val IT™ Framework, including:

  • Portfolio Management – enabling evaluation, prioritization, selection and on-going optimization of the value of IT-enabled investments and resulting assets;
  • Programme Management – enabling clear understanding and definition of the outcomes and scope of IT-enabled change programmes, and effective management of the programmes through to their desired outcomes;
  • Project Management – enabling reliable and cost-effective delivery of the capabilities necessary to achieve the outcomes, including business, process, people, technology, and organizational capabilities; and
  • Benefits Management – the active management of benefits throughout the full life-cycle of an investment decision.

This is illustrated in the figure below.

If enterprises are to successfully adopt and meaningfully use these practices, their leaders will have to change their behaviour. They will need to acknowledge that this is not an IT governance issue, it is an enterprise governance issue. Further, they will have to evolve from an enterprise governance model rooted in a culture of delivery (of technical capabilities) to one based on a culture of value – creating and sustaining value from investments and assets (for more on this, see a recent paper that I wrote with the Benefits Management SIG of the APM in the UK). In the IT context, this means recognizing that we are no longer dealing with “IT projects”, but with increasingly complex programmes of organizational change – change that is often both shaped and enabled by technology, but of which the technology is only a small part.

They should start by focusing on the business case. The business case sows the seeds of success or failure. Most today are woefully inadequate – based on “delusional optimism” and “strategic misrepresentation” (aka lying!), resulting in:

  • limited or no clarity around desired outcomes
  • limited or no understanding of the scope (“depth” and “breadth”) of change required to achieve the outcomes;
  • failure to balance “attractiveness” with “achievability” (including organizational change capacity, project and programme management capabilities); and
  • limited or no relevant metrics (both “lead” and “lag”).

In the context of IT, business cases must be owned by the business, and for any type of investment, used as a living, operational management tool to manage the full life cycle of an investment decision, and supported by the value management practices outlined above.

Again, in the context of IT, as Susan Cramm states in her book, 8 Things We Hate About IT, this will require  a significant  realignment of roles, responsibilities and accountabilities related to IT. There must be a partnership in which:

  • The IT function moves from providing infrastructure to being a broker of services (both internal and external – and increasingly external) while retaining responsibility and accountability related to fiduciary, economies of scale and enabling infrastructure;
  • Business units accept responsibility for defining the requirements for, meaningful use of, and value creation from these services; and
  • The IT function, as a trusted partner, helps the business:
    • Optimize value from existing services;
    • Understand the opportunities for creating and sustaining business value that are both shaped and  enabled by current, new or emerging technologies;
    • Understand the scope of business change required to realize value from those opportunities (including changes to the business model, business processes, people skills and competencies, reward systems, technology, organizational structure, physical facilities, etc.; and
    • Evaluate, prioritize, select and execute those opportunities with the highest potential value such that value is maximized.

The challenge here is not a lack of proven value management practices – it is the “knowing – doing gap”, as described by Jeffrey Pfeffer and Robert Sutton in their book of the same name. We know what to do, and (should know) how to do it. Yet, so far, here has simply been little or no appetite for, or commitment to the behavioural change required to get it done, and stick with it.

The cost in money wasted and, more importantly, benefits and value lost, eroded or destroyed is appalling. It’s way past time to move beyond word to action – the status quo is not an option!

There is a better way!

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The Siren Call of Certainty

In Greek mythology, the sirens were three bird-women who lured nearby sailors with their enchanting music and voices to shipwreck on the rocky coast of their island. The term siren call, from which this derives, is described in the Free Dictionary, as “the enticing appeal of something alluring but potentially dangerous”. In today’s increasingly complex and interconnected world, it is the siren call of certainty that is luring many organizations into failures akin to shipwrecks, particularly, although not limited to their increasingly significant investments in IT-enabled change. More accurately, it is their failing to recognize, accept and manage uncertainty, that leads to these wrecks.

Yet again here, what we have is a failure of governance, and of management – a failure that starts with how strategic decisions are made. In a recent McKinsey paper, How CFOs can keep strategic decisions on track, the authors make the point that “When executives contemplate strategic decisions, they often succumb to the same cognitive biases we all have as human beings, such as overconfidence, the confirmation bias, or excessive risk avoidance.” My discussion here covers the first two (excessive risk avoidance essentially being the opposite of these, and equally dangerous). Executives are often so certain about  (overconfident in) what they want to do that others are unwilling to question their certainty or, if they do, they are dismissed as “naysayers” (and quickly learn not to question again) or the executive only chooses to hear those parts of what they say that confirm their certainty (confirmation bias). I must admit that I have probably been guilty of this myself, in language if, hopefully, not intent, when I have told my teams, “I don’t want to hear why we can’t do this, I want to hear how we can do it.” What I really should have added explicitly was “…and then tell me under what conditions it might not work”.

To resist the lure of the siren call, we require an approach to strategic decision-making  that is open to challenge – one in which multiple lenses are brought to bear on the decision, where uncertainties, and points of view contradictory to those of the person making the final decision, be that the CEO or whoever, are discussed, and where individual biases weigh less in the final decision than facts.

I am not suggesting here that uncertainties should prevent investments being approved, if they did we would never do anything. I am saying that they should not be buried or ignored – they must be surfaced, recognized, mitigated where possible, and then monitored and managed throughout the life-cycle of the investment. This means acknowledging that both the expected outcomes of an investment, and the way those outcomes are realized will likely change during the investment life-cycle. It means managing a changing journey to a changing destination. Unfortunately, once again the siren call of certainty also gets in the way of this.

When investments are approved they are usually executed and managed as projects, all too often seen as technology projects (I use the term broadly here). In a 2010 California Management Review article, “Lost Roots: How Project Management Came to Emphasize Control Over Flexibility and Novelty”, authors Sylvain Lenfle and Christoph Loch, discuss the history of Project Management, and suggest that the current approach to Project Management promises, albeit rarely delivers, greater cost and schedule control, but assumes that uncertainty can be limited at the outset.”

The origins of “modern” project management (PM) can be traced to the Manhattan Project, and the techniques developed during the ballistic missile projects. The article states that “the Manhattan and the first ballistic missile projects…did not even remotely correspond to the ‘standard practice’ associated with PM today…they applied a combination of trial-and-error and parallel trials in order to [deal with uncertainty and unforeseen circumstances] and achieve outcomes considered impossible at the outset”. This approach started to change in the early ’60s when the focus gradually changed from ‘performance at all costs’ to one of optimizing the cost/performance ratio. Nothing inherently wrong with that, but along came Robert McNamara who reorganized the planning process in the Department of Defense (DoD) to consolidate two previously separate processes – planning and budgeting. This integration was supported by the Program Planning and Budgeting System (PBS), which emphasized up-front analysis, planning and control of projects. Again, nothing inherently wrong with that, but the system resulted in an emphasis on the complete definition of the system before its development in order to limit uncertainty, and a strict insistence on a phased “waterfall” approach. The assumptions underlying this approach are i) as decisions taken by top management are not up for discussion, the PM focus is on delivery, and ii) rigorous up-front analysis can eliminate and control uncertainty – these underlying assumptions are still very much part of Project Management “culture” today.

Again, I am not saying here that there is no need for sound analysis up-front – quite the contrary, I believe that we need to do much more comprehensive and rigorous up-front analysis. What I am saying is that, no matter how good the up-front analysis is, things will change as you move forward, and there will be unexpected, and sometime unpredictable surprises. We cannot move blindly ahead to the pre-defined solution, not being open to any questioning of the outcome (destination) or approach (journey), and focusing solely on controlling cost and schedule. The history of large projects is littered with wrecks because, yes, there was inadequate diligence up-front, but equally, or even more so, because we failed to understand and manage uncertainty – forging relentlessly on until at some stage, the project was cancelled, or, more often, success was re-defined and victory declared.

The article suggests that “Project Management has confined itself in an ‘order taker niche’ of carrying out tasks given from above…cutting itself off from strategy making…and innovation”. Many organizations, particularly those embracing agile development approaches, do apply a combination of trial-and-error and parallel trials in order to deal with uncertainty and unforeseen circumstances, and to achieve outcomes either considered impossible at the outset, or different from those initially expected. But, as the authors say, “these actions happen outside the discipline of project management…they apply [these approaches] despite their professional PM training.”

The tragedy here, with both strategic decision making, and execution is that we know how to do much better, and resources exist to help us do so. Strategic decision making can be significantly improved by employing Benefits Mapping techniques to ensure clarity of the desired outcomes, define the full scope of effort to achieve those outcomes, surface assumption, risks and uncertainties around their achievement, and provide a road-map for execution, supporting decision making with an effective business case process, and by applying the discipline of Portfolio Management to both proposed and approved investments. The successful execution of investments in the portfolio can be increased by moving beyond the traditional Project Management approach by taking a Program Management view, incorporating all the delivery projects that are both necessary and sufficient to achieve the desired outcomes in comprehensive programs of change. Many of the elements of such an approach were initially discussed in The Information Paradox, and subsequently codified in the Val IT™ 2.0 Framework.

We know the problem, we have the tools to deal with it – what is still missing is the appetite and commitment to do so.

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