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Managing IT As An Investment
For far too long, the authors argue, IT has been incorrectly viewed as a separate part of the enterprise; a distant silo, relegated to the status of a âoecost center.â Instead, the authors make the case for transforming IT into a âoevalue centerâ â" a mission-critical member of the business enterprise, managed as a strategic asset.
In order to get there -â" and to maximize IT value -â" the authors say organizations must realize that âoeIT is inseparable from the business and requires complete alignment with business goals.â Then, they have to admit that thereâ(TM)s âoeno such thing as an IT project.â
âoeIT is no longer a cost center and a growing number of highly successful firms are recognizing this,â the authors say. âoeIT is an investment and should be managed as such to increase revenue and profits. No matter what size project, IT is a member of the business team and should be accountable and responsible.â
Getting past old-world ways of thinking can be difficult for business and IT-minded folks alike; such transformations are often riddled with unexpected organizational change management issues. Moskowitz and Kern do a nice job of exploring some of these difficulties at a high level, but leave plenty of room for in-depth exploration by other authors.
They introduce readers to âoeConsequence-Based Thinkingâ in Chapter 2, a concept that promotes decision-making based on desired business results, rather than on the IT problems you face. The authors explore ways you can avoid âoethe Right/Wrong trapâ (situations in which humans forfeit the desired consequences for the privilege of being right), develop jointly produced business cases (âoea technology case is not sufficientâ), and help each department in your organization contribute to the success of the enterprise mission.
In Chapter Three, âoePartnering,â the authors illustrate the importance of creating a team that will support the goals of the enterprise. âoeIt is key that members of IT teams see themselves and their work as core to the business itself, and not view the IT function as an appendage of the business.â As this happens, the authors say, âoeothers will view them (IT) as critical and necessary partners that can be trusted to provide solutions that donâ(TM)t merely serve a process, but truly serve business outcomes.â
Business partners must change the way they think of themselves as well. Business must think of itself as âoea partner with, rather than a customer of IT,â the authors say. They recommend the development of formalized contracts that spell out responsibility and accountability for all involved; a âoecommon vocabularyâ (to help get everyone in your organization, regardless of role, on the same page); and provide words to the wise for management: âoemanagers will never have as much information as people on the front line.â
Sizeable emphasis is placed on the importance of jointly developed business cases, which the authors say, âoeforces IT and business to engage in continuous dialog in order to ensure success.â Jointly developed business cases can help align IT with business objectives, and have the additional benefit of âoemoving the business agenda forward and creating partnerships and understanding.â A sample Business Case template is provided as an appendix.
Chapter Five, âoeStrategyâ makes the case for building a big-picture strategy that âoestresses an enterprise point of view over seat-of-the-pants, silo thinking.â Organizations without an enterprise strategy often end up creating what the authors call âoeislands of automationâ that will later need to be integrated.
Strategic thinking is a skill and not something that comes easily. It involves adopting new processes and changing the way we think about our jobs. By adopting a âoeBusiness Strategy Formation Processâ that relates an enterprise-to-an-individual and an individual-to-an-enterprise, the authors say organizations can make âoeconsistent decisions that incorporate foresight.â
Chapter Six, âoeThe Small Picture,â provides guidance on communicating the âoebig pictureâ to âoesmall pictureâ folks by answering the question: âoeWhatâ(TM)s in it for me?â Chapter Seven discusses ideas for setting up and managing IT departments as âoevalue centersâ while Chapter Eight, âoeHuman Capital Managementâ deals with issues of people management, individualism, and job satisfaction.
Chapter Nine, âoeInvesting In Values,â provides a brief overview of the importance of values, which the authors define as the âoeguiding principles and basic beliefs that are fundamental assumptions on which subsequent actions are based.â The authors provide several models to help you make which value decisions. They also discuss how to reap âoethe hidden harvestââ"the rewards delivered through collaborating with others toward a common, understood and measurable goal, benefits not realized through traditional, inside-the-box thinking.
While Managing IT as an Investment is indeed a value-added resource, reading the book is not enough. Youâ(TM)ll need to do a little homework before you go tackling a major change in your organization. Youâ(TM)ll need additional guidance not provided in the book to help you decide whether your IT and business staffs should work in the same physical space to help reduce communication barriers and establish a sense of âoeteamâ; if you should re-organize your management structure so both IT and business team members report to the same manager; how you should communicate information about your project in order to create project evangelists; and whether your reward structure needs some revamping (is IT currently rewarded for âoeon timeâ delivery as opposed to delivery of quality solutions that deliver the highest return on investment possible?).
Despite these weaknesses, Managing IT as an Investment: Partnering for Success is an excellent addition to both business and IT literature. At only 150+ pages â" 10 chapters, followed by 4 value-added appendices â" you can read the entire book in an afternoon. The book is well worth the effort. Includes case study information and references to other published works. Perfect for those involved in paradigm-shifting projects where strengthening the relationship between IT and business can help ensure success.
Scott Abel is a content management strategist. Look for his column, The Content Wrangler, on ePrairie.com. You can purchase the Managing IT As An Investment: Partnering for Success from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.
This reviewer can't even write like a human being; it's all consultant-speak and management jargon. The review is a value-subtracted blather center.
I'm sure the topic of how to build computing into a business is timely, and interesting, but it doesn't sound like this book or this reviewer have anything useful to say. Otherwise they would have used English.
Shame on Slashdot for giving this consultant a front-page post to pad his resume with.
A customer service representative will be with me shortly.
To achieve the highest levels of profitability, the authors say, IT organizations must be well-tuned and in alignment with the goals of the enterprise to which they belong. Who'd have thought, eh?
People with their heads down writing books fail to look around them, they are inevitably 3-4 years out of date, and their advice always smells like old socks.
This book would have been great in 1998, but in 2003 it's useless. More and more software is a commodity, and not an investment any more than electricity or coffee is. "Treat your coffee machine as a partner". Well, maybe.
The truth is that commercial software companies still live by over-selling their wares, and it's an untenable business.
"Heironymous' Law", which I proposed a day or so ago, states that software costs fall by half every 18 months. That ERP system which cost $1M in 1998 should now cost 32K$.
And that's the truth, folks. Only asses still pay $1M today. And for those asses out there, I have this great coffee from 1998 too, only $500 per cup!!
Ceci n'est pas une signature
As soon as I see a reviewer or a book talk about 'overcoming old-world ideas,' it enters the garbage pile.
Businesses need to change, yes. They need to grow and adapt, undoubtedly. HOWEVER, it seems like every quack who can string two sentences together is writing a book on somehow integrating or embracing IT into your company, in a way that damages the long term outlook for the company. In fact, business "management" for the past three years seems to have been nothing more than destroying companies for the sake of bumping up the short-term stock value.
But I digress.
Trying, as this book and this reviewer do, to place IT as either a special division or a profit centre without looking at the individual company is silly. It's very simple:
1) If you're an IT-based company, then IT is (part of) your core business.
2) If you're not an IT-based business, then IT is infrastructure.
Maybe what we REALLY need to do is stop looking at IT as a single department, and slice the appropriate IT roles into the existing departments when they fit. For a car company, web development has a whole hell of a lot more to do with the advertising department than it does with the internal service call tracking group. Why are we sticking them together, then?
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
As soon as I see a reviewer or a book talk about 'overcoming old-world ideas,' it enters the garbage pile.
Overcoming old-world ideas... sounds a lot like "P/E ratios of 90+ are the way of today! The rules have changed! It's all about potential and thinking OUTSIDE OF THE BOX!" That was just four years ago...
The meat of it is that there's a valid need for management to analyze how IT spending itself is being analyzed. As time goes on infotech plays a greater and greater role in the fabric of the whole business, and where the return is on that investment needs to be carefully determined. Hasty analysis will always lead to fingers pointed at IT's budget.
And as far as fragmenting IT... IMO that just makes it much harder for things to get done efficiently, company-wide.
So long, michael. Don't let the door hit you...
"It's no secret. To win at business, you must perform better than your competition. Better. Stronger. Faster. You get the picture."
Nonsense. There are plenty of ways to "win" (I take it this means "succeed" here) in business. You can be innovative and first-to-market. You can take advantage of your opportunities. You can distinguish yourself from your competitors by targeting and appealing to a different audience. There is no one formula for success in any industry.
"Better/Stronger/Faster" is typical lame management/MBA hype. I wouldn't trust a book review from someone who speaks in these kinds of cliches and rash generalizations.
This phrase ... "Instead, the authors make the case for transforming IT into a âoevalue centerâ â" a mission-critical member of the business enterprise, managed as a strategic asset." is very interesting.
If the author gives clear concise examples of how to do this with FULL ROI models and detailed analysis, this book would be of a tremendous value for IT and business people. It seems that certain IT projects are more difficult to quantify in a P/L statement vs. a typical business project. Thus, IT is a difficult beast to get a handle on.
For instance, how do you value data security? We'll there's lot's of "ways" to do this, but a lot of the valuation is in the risk vs. cost. And cost many times is only valued IF something happens, such as a breach. (With certain laws, requirements are given - but this then falls into the cost section not the value-center) The point is that when running a business project, the costs (salary, overhead, materials, inventory, insurance, etc.) can be nailed down to the penny and the price can they be set to make a profit.
As for "strategic asset" is your network a strategic asset? Most likely not, it's like the buildings you work in, a requirement to do business. At least managers can see the building and space. Many have a tough time with the things you "can't see" like bandwidth. So, it would seem that IT is broken down into an "infrastructure" or cost area and a strategic area. A strategic area being something that can drive value (e.g. CRM, DataMining) and even these things have dubious ROI. Read CIO or any type mag and you have CIO's claming 110% return on investment. I've seen some of "ROIs" and they are more subjective and art rather than fact and science, between the NPV used to nailing down the true costs over time.
If there was a standard, consistant, true ROI model, then the author's can move towards the "value-center". If the author also goes into how to manage and IT portfolio, this is of value. If they haven't done either of these things, then it's still just piled higher and deeper. I'll reserve judgement until after reading the material.
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