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July 3, 2007

In I.T., Time is Money

CIOs are usually asked to stop the spending! ...but actually they go on directing the spending of the most important currency of all.

In an interesting parallel, the McKinsey folks have been able to track the connection of IT assets to business performance not by simple cause-and-effect, but by naming the secret sauce in the middle, just as the people who discuss Operational Performance Management (OPM) have.

In OPM, the problem is often stated that something must show up to align execution to strategy. Although execution presumably exists to directly serve strategy, it often proves not to do it, and it needs an agent of some kind... a middle man. Disintermediation is not a good thing.

Well, some readers run, a bit carelessly, with the notion that McKinsey preaches better business performance through IT superiority. Picking the "execution-er's" nit, us contrarians say that while high-performing businesses may show IT superiority, IT superiority doesn't necessarily equate to getting high business performance. For starters, despite the promise of automation, we don't simply equate "I.T." with execution; nor business performance with strategy, since many companies gain even more by luck than by smarts. And instead, we think the good stuff happens in the middle (somewhere between IT and business performance).

To be fair, so does McKinsey. But to improve on their take: we like the elegant end-to-end trajectory of evolving the application of IT -- evolving it from practices (i.e., cost) to strategy (i.e. value). This line of thought is crucial to escaping the boring myopia of anxiety or thrill about "commodity" IT... And to avoid having the middle of the trajectory wallow in wishful thinking, it is necessary a la McKinsey to insert "alignment", but which here means "investment". The right investment is the secret sauce.

To put this investment in perspective, ask a business, "if you could have only one of the following -- more tools, more ideas, or more time -- which would you choose?"

On the main trajectory, investing in the best answer -- time -- will mean tracking and balancing what IT does to people versus what people do to IT. Why? For example, in execution, whether about innovation or about maintenance, time affects how people use IT; and in procedural design, people decide "how IT uses time"...

Looking for superior IT utilization? When time is granted to persons interested in trying IT, IT enablement is learned much more quickly -- which is then what allows IT to change business capacity. Without capacity, you can forget about agility, recovery, and growth.

Naturally, then, the business is strategically concerned with "buying time". So, take any organization and, in the trajectory, here is the alignment both literally and virtually: the organization's politics of "spending time" will determine how its people get the time, and thus whether its IT can actually advance the organization's strategy or not.

And guess where time is *controlled* ? Not in supply, nor in strategy, but in management. So, ultimately, in a virtuous circle, the CIO manages to ensure that time is spent on IT to actually "create more time" for the business, instead of losing it... But what is the #1 barrier to achieving this virtuous circle? Politics.

Posted by Malcolm Ryder at July 3, 2007 4:25 PM

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