Wednesday, December 07, 2005

A new report from Butler Group finds that "less than 8% of the IT budget is actually spent on initiatives that bring value to the enterprise". This is not an encouraging number for those who believe that CIOs have their finger on the pulse of the business, but merely confirms other studies e.g. one from A.T. Kearney, which found that business executives perceive their IT departments to be out of touch with the business. Yet the same study found that "70% of respondents see IT innovation as important or critical to their company's success". I'm afraid that my own experience would side with the cynics. There are certainly some talented and hard-working people in corporate IT departments, but in general the management of IT is woefully out of synch with the needs and desires of the operational business executives. CIOs continually act as gatekeepers rather than enablers, often seeing their role as one of cost-cutting and standard-bearers in the fight to reduce the number of vendors, preferably to a set that can be represented on a single Powerpoint slide.

Unfortunately this is generally not what business executives need. Since exciting new business applications are unlikely to come from the big vendors that wine and dine the CIOs, the business will look to IT to bring them new ideas that technology can enable geneuine value, and help them sift out the genuinely interesting from the slideware and the charlatans. I had a conversation with a business executive in a large company this weekend, who explained that his IT department had recently made a software product from a small vendor "non strategic" in favor of a less functional one from SAP, despite some objections from him. A year later this same IT team has had to admit that his new global retail management information system cannot be delivered by the SAP technology. Just what sort of business value is this IT department delivering to its customers? People working in IT at that company can hardly be surprised when one-third of its IT jobs were recently shifted to India. If IT departments do not bring perceived value, then they are just a commodity cost as far as executives are concerned, in which case they can expect to be treated as such.

The management of IT badly needs to speak the language of business and to become more aligned to the priorities of its customers, rather than its own agendas and technology religious wars, most of which leave business people cold and are perceived as irrelevant. The status quo will see a lot more IT jobs headed towards Bangalore, and not just the low-level programming ones.

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