Why do CIO’s have the shortest average job tenures of any C-level executive? The simple answer is because users (Line-of-Business (LOB) managers) aren’t happy with them or the performance of their organizations. Many issues contribute to this situation, but the bottom line is that CIO’s are not meeting the expectations of their peers and they get whacked for it.
CIOs offer some reasons for this dissatisfaction such as:
- IT is inherently complex and difficult
- CIOs have no control because they inherit most of their problems with the legacy infrastructure
- LOB managers are unrealistic and overly demanding (perhaps to draw attention away from their own failures)
- CIOs are convenient scapegoats for failed business strategies
- IT is chronically underfunded
and other variations on these themes. These are all issues but they are also excuses.
Other C-level executives deal with difficult processes and environments they don’t control, unrealistic demands and resource constraints. Yet somehow they persevere and largely succeed. LOB frustrations with IT are seen in periodic efforts to bring IT into their business units to escape IT control of vital business services. Inevitably however, the LOBs want IT to take over the IT function again as they confront the issues of scale and expertise required to manage modern IT infrastructures. From an LOB perspective the relationship with IT is like the old saw about relationships between the sexes: “you can’t live with ’em and you can’t live without ’em”.
The IT crisis spans all management styles, organizations, industries, funding methods and technologies. The issues between LOBs and IT are not of personalities or organizational design. The basic model of IT is broken. Specifically, there are three key problems:
- IT has no good way of claiming its value-add
- LOB managers don’t take responsibility for their use of IT resources
- Resource allocation (both short and long term) is deeply flawed
Measuring enterprise IT value-add
It is a paradox: modern enterprises run on IT systems; but the value of those systems is almost impossible to quantify. As a result, IT cannot business justify their capital budgets against the business results those systems generate. Certainly, new applications sponsored by the LOBs get supported, but how does the enterprise know if it is spending too much, too little, or just the right amount on IT? It doesn’t. And IT doesn’t know how to get the answers that executives need.
IT is a service that supports the revenue-generating businesses of the enterprise. As a service, IT can’t tell the business units what IT services are worth. Only the LOB’s can do that. The LOB knows its customers, its costs and its margins, so the LOB is the logical entity to assign value to IT services. Yet due to the way IT services are funded the LOB has no more idea than IT what IT services are worth.
IT commoditization and Service Oriented Architectures (SOA)
SOA is the latest big organizing principle for IT architecture and product development. In the past it was mainframes, distributed computing, client-server and web-based in the 1960’s, 70’s, 80’s, and 90’s respectively. SOA is a powerful concept and the details will get fleshed out as the implementers experience and solve the many problems that undoubtedly await. Yet even today the broad outlines of the business case for SOA are clear. These are:
- Accelerating demand for IT services
- Commoditization of IT infrastructure
- Automation of business processes
- Efficient utilization of IT investment
I’ll talk about each of these briefly, but the point is that just as in the earlier schema for IT architectures (mainframe, client-server, etc.) the key issue is efficient resource allocation and utilization. Unlike the earlier schema, whose end goal was an essentially static infrastructure SOA implies a dynamic IT environment where automated service provisioning and IT process automation enable application services to wax and wane with the rhythms of business requirements. Rather than over-provisioning to meet every conceivable application requirement, UC offers a model of a flexible infrastructure readily re-provisioned for changing business needs. So at its core UC is about dynamic allocation of resources, not a static re-modeling of existing resources. And the best method for the efficient resource allocation is a market.
Part II will appear within the next week. In the meantime, comments welcome.