On Business, IT And Artificial Distinctions

Whoever started the concept of IT treating Business as a customer did a big disservice to the world. Don’t get me wrong – I grew up thinking that Business is the dog, and IT is its tail, and the tail does not get to wag the dog. My thinking has evolved a lot recently, mostly because in the last few years – I got more exposure to some forward thinking CXOs.

IT is not the only cost center in a business, and neither is it usually the biggest in head count or budgets. Yet why is it that CIOs have to treat others – from both profit centers and cost centers – as customers? How many times have you heard the head of HR or Marketing refer to their fellow  leaders as customer? IT is as much a part of business as HR and Marketing, and hence should not be expected or forced to be subservient to rest of the organization.  How many organizations can even last a week in business these days if IT did not operate with great efficiency? That being the case – why not give IT its due place at the table for decision making?

There is only one customer – the end customer who pays the bills. IT, and everyone else like Sales, Marketing and HR have to work together to delight that one customer. Any change from that singular focus to create an artificial distinction between internal and external customers is just a waste of precious time, money and resources, and rarely results in anything good.

IT is a competitive differentiator – and rest of the organization needs to understand and appreciate that. If IT does not do a good job, it is virtually impossible for rest of the organization to do internal or external work efficiently. And those companies that have better IT capabilities typically have an edge over those that do not. That being said – not all CIOs do a good job in making a case for IT to be treated on par with other parts of the organization.

In most cases, CIO budgets have shrunk over time, or have remained flat. And the vast majority of the CIO budget is just spent on keeping the lights on.  The question is – how many CIOs can spend more time with other parts of business to impact top line and bottom line, compared to the time they spend on operations? If they spend most of their time on operations – obviously, their chance of earning the respect of their peers and leaders decreases. Don’t get me wrong – ops are very important, but that needs to get into a model that sustains itself with minimal supervision. Outsourcing might be a way for CIOs to get to spend less time on worrying about ops, but that is not to say it is a magic bullet. That is a whole another topic though.

The budget constraint is an artificial one in several cases. Budget is a constraint only when there is no way to prove that value obtained through the spend is greater than the cost involved.  Some of the smartest CIOs I know of don’t worry about budgets for the most part. They know that if they approach their peers with proposals that show value greater than cost, they have good chances of securing the budget. Sadly, not all CIOs operate this way. And these are the type of CIOs who are consulted by their peers in rest of the organization on how to take the company to the next level. They are a far cry from being order takers.

Several vendors have latched on to this distinction of IT and Business big time – especially software and SaaS vendors. Their mantra these days is that “We are all about the business, and not about IT” . In some cases this just translates into “CIO’s office will poke so many holes in our offering that we will never close a sale, so we try to circumvent them by going to other parts of business and say that IT is blocking them from earth shattering progress” . In other cases, these vendors have a genuine case to go to non IT buyers directly. But from the customer’s stand point – it makes perfect sense for rest of organization to involve the CIOs office in IT buying decisions. At the very least – this will make sure that non functional requirements like security, scalability, roadmap etc will get more thoroughly checked out before issuing the PO. It should also be not forgotten that IT will probably need to live with supporting the solution once it is implemented.

There are plenty of pundits – and CIOs – out there who say that for IT to be effective, the CIO needs to report to the CEO. I have not seen any real evidence in real life scenarios to support this claim. Reporting to the CEO usually will mean the CEO just becomes a bottleneck to making several IT decisions. This is not to say CIO should not have access to CEO – he or she should of course have access. But adding an additional layer or two should not hurt all that much. CIOs mostly report to CFOs or to head of procurement in several companies. I fully expect them to report to CMOs at some companies too. As CIOs do more and more to help in front line business, I think the conventional org chart will see the impact. But the converse that org chart is what drives CIO success lacks merit in my limited experience.

That was a lengthier rant than I thought I would go into. Many thanks to my buddies who debated this endlessly today with me . Lets keep the conversation going. And sincere thanks to the client CXOs who helped change my views on this matter.