I was having dinner with a CIO who had retired after a long and distinguished career. The conversation had been mostly small talk, but suddenly a thought occurred to him, and he sat up straight in his chair.
“Why is it,” he asked vehemently, “that CIOs have to work so much harder than every other executive at making their role in the business understood?”
It was a rhetorical question, but I made an attempt to answer it anyway. “It’s partly because of the ‘magic’ around IT that I’ve described in my book,” I said. “Business executives don’t have a fundamental understanding of what IT is all about, and they compartmentalize IT and use the CIO as an intermediary. They talk to the CIO, and they rely on the CIO to translate what they need into the technical double-talk they think is used in the IT organization. It’s like the wizard role I talk about in my book; the CIO is perceived as the chief wizard, but everything inside the wizard’s organization is too mystical for business people to understand.”
“But that’s crazy,” he answered. “You don’t see the same sort of attitude toward other complicated parts of the business. Business executives go out of their way to learn all of the important aspects of finance and accounting. They don’t view the CFO as an intermediary – they know what the CFO has to do and they hold the CFO accountable for doing it. Finance is just as complicated as IT, but business people take classes in it until they understand it.”
I paused to reflect on his statement. He was right – you never hear about CFO’s looking for “alignment” with the business, nor do you hear about alignment issues in other parts of the business. I searched my brain for an answer. What’s fundamentally different between finance and IT?
I thought about the classes he mentioned. “I don’t think the classes in IT really teach the right things to business people,” I conjectured. “Introductory finance classes cover fundamental accounting principles, income statements, balance sheets, double-entry accounting, budgeting and capitalization. The more advanced finance classes cover sources of business funding, and the use of various approaches to underwrite the day-to-day financial needs of the business, and to reduce business risk through diversification and the use of offsets.”
“IT classes on the other hand,” I continued, “cover things like computers and data storage, networking and software development. If finance were taught the same way then they would teach you how to use a spreadsheet, how to close out a financial period, and how to write an annual report. IT classes emphasize tools, while financial classes emphasize principles and how to apply the principles to the business. IT principles that are important to the business – like the ones in my book – seldom get taught.”
I went on, “Finance also has a uniform way of presenting its current position – a standard scorecard using well-understood definitions of balance sheets and income statements. IT has nothing like that; there is no uniform way to present the status of IT. There is no standard for an enterprise architecture view of the systems in a business. There is no standard way to represent the status of IT projects. There is no standard for showing the state of IT infrastructure, revealing areas of risk and areas of excessive investment.”
“OK,” he answered, “Maybe you’re right about finance, but what about other complicated parts of a business? What about operations in a manufacturing business? Or research and development in a pharmaceutical company? Or even marketing in a consumer products company? There are no standard ways to show the state of those parts of a business. They’ve each got complicated things going on, but they aren’t viewed as mystical by the CEO.”
“That’s an interesting point,” I said. “Let’s go through your examples one by one. In a manufacturing business you can portray the process with a diagram showing inputs and outputs: you put raw materials in, you ‘turn the crank,’ and you get manufactured products out the other end. Sure the turning-the-crank part is complicated, but it can usually be represented in some sort of high-level process diagram, and then you can ‘drill down’ to show more and more detail underneath each part of the process diagram.”
“When a CEO looks at the diagram,” I went on, “he or she can see the fundamental manufacturing process. Bottlenecks – or limits to production – can be represented in the diagram, and anyone can see where you could invest to make the process smoother. So even though manufacturing is often complicated, in almost every case someone goes to the trouble of using a pictorial representation of the manufacturing process to convey simple information about the status. The CEO may not understand all of the technology used in manufacturing, but each piece of manufacturing equipment can be viewed by the CEO as a ‘black box’ in the diagram with inputs, outputs and operating characteristics.”
“Your second example was R&D in a pharmaceutical company,” I continued. “R&D is generally viewed by business executives using the classic ‘investment portfolio’ model: each R&D investment can be viewed as having an investment amount, a risk, and a probable return. The probabilities of the success of each R&D investment will vary greatly, but taken together, the R&D investments will generally provide a payback to the company. It’s like drilling oil wells: You know you’re not going to hit oil with every hole you drill (although you use science to help you pick the very best spots), but you know that you’ll hit oil on some reasonable percentage of the holes you drill, and that makes it all worthwhile.”
“What was your last example again?” I asked.
“Marketing in a consumer products company,” said the CIO. “Surely you’ll agree that marketing isn’t viewed as mystical.”
“Well, it’s complicated,” I said. “But again, it’s like R&D investment or drilling oil wells: You invest in various marketing campaigns, and you hope to find a few that will generate a significant increase in your sales revenue. Then you fine-tune them to maximize the revenue.”
“The trick with marketing,” I said laughingly, “is to figure out whether a revenue increase is in fact related to a marketing campaign at all. At least with oil wells, you know which wells are producing oil. With marketing, you’re never quite sure which marketing campaigns cause your sales increase. It’s mystical, all right, but it’s more like gambling than investment.”
“I see your point,” said the CIO, “but I still don’t understand why CEOs can’t relate to IT. If they can deal with manufacturing and all its complexities, and if they can cope with R&D and marketing with all of their uncertainties, then why can’t they just treat IT like any other part of the business?”
“Maybe it’s because they just don’t want to,” I ventured. “It’s like having a car mechanic to take care of your car. If you trust the mechanic then you don’t have to worry about how the car works, and so you don’t bother learning.”
“But that’s terrible,” exclaimed the CIO. “IT isn’t just about mechanics – it’s about all the data and information processes in the business. Isolating IT as if the IT organization is just a bunch of infrastructure mechanics is like closing your eyes to all of the wonderful contributions that can be made by IT throughout the business. It’s as if the CEO is assuming that everything is good enough ‘as is,’ and IT’s job is just to take requests from various business units. That’s not the way to get the most out of IT.”
“You’re right, of course,” I replied. “but in a lot of companies, the view of IT as a trusted mechanic – dismal as it is – is just an aspiration. In many companies IT is treated as a mechanic, but without the trust. That makes things even worse: You take requests, you’re not involved in business strategy discussions, and your organization isn’t trusted to deliver what’s been requested. In those companies there’s an adversarial relationship between IT and other business organizations. I’ve worked with a few companies like that, and it’s no fun.”
“I’ve seen a few of those myself,” said the CIO. “In a situation like that you have to first build a trusting relationship between IT and the business. Only then can you try to take IT into more of a strategic role.”
“So let’s get back to the original question,” continued the CIO. “Why is it that CIOs have to work so much harder than every other executive at making their role in the business understood?”
“Your guess is as good as mine,” I concluded. “But it’s a shame, isn’t it?”
[Note: I really was at a recent dinner with a retired CIO, and he really did ask the question mentioned in this article. The conversation started out the way I describe, but the rest of this hypothetical conversation took place later in my head. It’s a lot harder to come up with good answers on the spur of the moment.]