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IT – Business Enabler or another Functional Silo?

Posted on: 24-10-2016 12:26:571773


The Rise of the IT Silo

As an advisor and consultant to numerous businesses on implementing and maximising the value of their ERP investments, one of the more worrying facets of engagements I’ve witnessed over the last 20 years has been the increasing inability of business people, especially those from the Supply Chain, to engage, affect and influence the utilisation or development of these IT solutions. When I started in IT back in the 1980’s, it was new and exciting but it was also very much subservient to the needs of the business, where the ‘real work’ was done.  IT solutions and improvements were developed because of a pull from a business department for better reports, automation to reduce manual effort, or some form of database solution.  The major constraint was usually that IT was a department that reported into Finance, and as such was deemed a cost as much as it was deemed an opportunity.

Now, as the industry has matured and grown we are likely to find that the next CEO is almost as likely to come from IT as it is from Sales or Marketing.   Whilst IT may have changed its moniker from a very technology focused heading such as ‘Data Processing department’ to a more business related title such as ‘Business Information Systems’, they still, in many cases, have also developed their own strategy and their own agenda based around what they feel is strategically important to them.

The Lure of Shiny Things

Often IT spend their time chasing the ‘next sexy new thing’, both from a personal perspective (it’s interesting and looks good on the CV) or from a belief that this is what the business wants; when in many cases there is a rich pot of gold right in front of them from unleashing the value of existing investments in things like ERP.  However, the problem is that this uncovering this pot of gold often involves undertaking activities that they are not measured nor rewarded on, such as cross-process cultural change, user education and process conformance.   The measures are important here – where business is measured on improvements in financial and operational performance, IT is often operationally measured on its ability to quickly resolve helpdesk tickets, and strategically measured on its ability to implement projects on time and on budget.  This often leads to IT thinking it’s done a good job because it is (a) busy, and (b) just implemented the latest BI tools, but the business can be left feeling short-changed, as all it sees is the cost of IT investments but not necessarily the value.

Business Integrators or Business Inhibitors?

An IT function measured in cost incurred more than value added, leads to decisions to such as outsourcing and off-shoring which look good from one perspective (reduced cost), but viewed from another mean that the business feels short-changed and bemoan this outsourced function’s lack of responsiveness, inflexibility and general lack of understanding of their needs – and in response changes its behaviour towards them.  Also, this remotes usually translates in a reduction in the ability to successfully translate requirements into solutions right first time.  The additional time needed to translate requirements, double check the quality and manage the relationships between off-shore partners, internal IT and the business, has, in my opinion, increased the cost and complexity whilst decreasing the likelihood of a satisfied business customer.    This means that often IT becomes seen as an inhibitor rather than an enabler – leading to the business developing their own cottage industry of self-made planning spreadsheets, customer service measures and financial reports.

The Trough of IT Disillusionment

Not that this is always the fault of IT – by not engaging and involving IT in business discussions, the leadership of an organisation may inadvertently place IT in its own silo.  Take ERP systems like SAP – the business often views updating the ERP system as something separate from their ‘day job’ – rather than it being the new day job.  System go-lives are frequently celebrated as the successful completion of the project – when in fact it is the start of the journey, not the end. I have often seen this lead to the creation of a ‘perception gap’ between IT and business, or as I call it, the ‘Trough of Disillusionment’.

As with the challenge of breaking down any functional silo the key is to integrate and align their activities with the goals of the organisation so they develop a purpose that is in line with the purpose of the organisation.  As Stephen Covey once eloquently put it – “no involvement, no commitment” – so get them involved in business issues and strategic discussions about how the business can improve service / close gaps / remove bottlenecks / reduce errors / enforce processes etc., and change the measures of IT success to reflect the business value that was added, rather than just cost of usage.

You may be surprised at the outcome.

Sean Culey
Value Chain Thought Leader

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