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September 27, 2010

It’s time the business learned to speak the language of IT

Gary Flood looks at some new work by Arthur D Little and Volvo on business-IT alignment

By Cbr Rolling Blog

One of the key questions in IT leadership is how to improve the communication flow between the line of business and the IT function. For all the brow-beating and Maoist self-criticism we go in for on our side – viz, the endless lecturing we give you about learning to speak the language of the business, about how to manoeuvre to be taken more ‘seriously’ as a business person/player – fault lies with the other side, too.

How many CEOs have you met who have no problem laughingly describing themselves as IT illiterates – an admission you’d find alarming if they substituted the word ‘accounting’ or ‘marketing’ for technology?

At least sometimes, Mountains need to move to Mohammeds and the business is obliged to put some effort in and understand what IT is, isn’t, can, can’t and possibly, maybe incredibly, could be forced to do to really transform the organisation.

Hence our interest in a new vision by Arthur D Little, which has teamed up with Volvo to talk through some interesting ideas about how to get IT on the executive agenda.

The management consultant has worked closely with the latter to develop an IT solution portfolio management model designed to help companies re-position IT within their organisations, based on the contention that "IT should be a weapon of choice in the business development armoury, rather than just an operational cost centre to be tolerated".

To really succeed in our increasingly tough business decade, the board must start seeing the IT solution portfolio as a competitive company asset not, to use that dreaded term, a cost centre. At the same time, IT has to pull its socks up too; as a Volvo representative puts it, "[Internal IT] must make the shift from a legacy burdened project based approach to a business driven portfolio approach," (Olaf Tellefsen, Director, Group coordinator for PD and PLM at the Volvo Group CIO office).

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In effect, IT has been left to the technologists, leaving many companies with a legacy IT solution portfolio that is cost- or technology-, not business-value oriented. As a result, argue the pair, "a significant imbalance in the understanding of costs versus business value of IT related investments" is the norm.

Nothing world-shaking so far, but this is the key sentence for me: "Part of the issue stems from the limited level of business know-how among IT executives who may not be aware of the risks that companies are exposed to whether they are competitive, financial or market-driven" (our emphasis).

Ways to break this log-jam include hiring a "business-driven" CIO who is able to recommend courses of actions to the executive management team that leverage both technology and business knowledge, seeking to identify what best practices are needed to master the solution portfolio to drive significant areas of IT spend and guide the make/buy/collaborate choices that CIOs make daily, backed up by detailed financial valuation models that bring clarity around the business agenda and the technologies that comprise the IT asset.

As a result, "IT can be managed in such a way that it becomes a powerful executive weapon not only for the CIO but for the company itself as it expands into new markets and geographies," encourages Anders Johansson, Principal in Little’s Technology & Innovation Management Practice.

A lot of this makes sense to us at CBR; we encourage you to read the full report here ( Better: send the link to your MD.

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