When it comes to realising the value of IT investments, the fundamental challenge continues to be getting the business engaged.
As long as the business sees anything to do with IT as a technology problem to be dealt with by the IT function, realising value will be difficult. Only when governance of IT-enabled change is seen as an integral part of enterprise governance will the issues around realising value from IT investments be addressed.
In 2007, a study by the BTM Institute found that enterprises that focus on converging their business and technology disciplines exhibit superior revenue growth and net margins relative to their industry groups and exhibited consistently greater rates of return than those of their competitors.
For boards and executives to continue to treat IT as something distinct and separate from their core business is at odds with the reality of modern business.
IT is now embedded throughout the enterprise its business processes. In The IT Value Stack, Ade McCormack says “information technology isn’t an optional extra, it is a condition of entry to most markets. It is the enabler of business sustainability.
“The CEOs who don’t get that are either in the wrong job or have done some calculations in respect of their retirement date and this reality dawning on the shareholders,” McCormack argues.
We can draw a parallel between the failure of IT investments to deliver value and the decline of civilisations. In his book The Collapse of Complex Societies, anthropologist Joseph Tainter identifies three common elements in the collapse of civilizations: the Runaway Train, the Dinosaur; and the House of Cards.
All three are evident in business IT: our adoption of technology is in many ways a runaway train, while business leaders’ reluctance to change in order to tackle the challenge qualifies them as dinosaurs. The litany of IT project failures show many investments to be a house of cards.
Traditional governance and management approaches will not tackle the challenges presented by the runaway train that is IT and, unless this problem is recognized and addressed, we will continue to build houses of cards, and suffer the consequences when they fall. Business leaders must accept accountability for the realisation of value from their investments in IT-enabled change.
Accepting accountability alone, however, is not enough. In The Wisdom of Crowds, James Surowiecki argues that we put too much faith in individual leaders or experts, either because of their position or track record, and that these individuals also become over-confident in their abilities.
It is unrealistic to expect individuals, however good they are, to have all the answers, all the time. Organisations cannot constrain themselves to the knowledge of a few individuals, or by the habits and egos of their leaders. Organisations must engage with, and tap into, the collective knowledge of all their people.
Much has been said and written about empowerment. Unfortunately, as Surowiecki says, “although many companies play a good game when it comes to pushing authority away from the top, the truth is that genuine employee involvement remains an unusual phenomenon.”
As a result, information flows – up, down and across the organisation – are poor, non-existent or “filtered”, decisions are made by a very few with inadequate knowledge and information, and there is limited buy-in to whatever decisions are made.
To quote Peter Senge, “…under our old system of governance, one can lead by mandate. If you had the ability to climb the ladder, gain power and then control that power, then you could enforce…changes…Most of our leaders don’t think in terms of getting voluntary followers, they think in terms of control.”
Effective governance of IT-enabled change must include leadership reaching out to and involving key stakeholders: retaining appropriate accountability, while supporting decisions with broader and more knowledgeable input.
Previously from John Thorp
John Thorp is a thought leader in the field of value and benefits management, with close to 50 years' experience covering all aspects of the information management field, including technical, management and executive position. He is author of The Information Paradox and lead developer of ISACA's Val IT Framework.