It seems that my last post, The good, the bad and the ridiculous, has generated a fair bit of discussion across various online channels and prompted a number of people to get in touch with me via e-mail to share their own CIO stories. But it is not the examples of the good CIOs that have prompted this activity. Instead, I have been sent more examples of bad and, in some cases, plain ridiculous decisions by CIOs.
Take for example the business that is developing its own app to enable staff to make claims for expenses via smartphones and tablets, which was sent to me by someone that had recently started a new role as a financial controller. A few weeks after starting their new role the financial controller was invited to a meeting with IT to discuss a “new expenses solution” that was being prepared for deployment. Although somewhat surprised that they had not previously heard about this project my contact was pleased to hear that his new employer was taking steps to streamline its expenses process and was therefore looking forward to the meeting. You can imagine what went through his mind when, instead of being given a demo of one of the many off-the-shelf solutions that exist for making expense claims, they were given a demo of phase 1 of an in-house development! And yes, you did read that properly: it was a demo of phase 1 – this was not even the full solution.
Or how about the company that is developing an app to deliver KPI dashboards to its senior management team rather than using one of the dozens of packages already on the market? In this case the IT department had commissioned a third party to perform the development for them. So, whilst not using its own resource, it has instead paid a supplier many tens of thousands of pounds to develop a product that is already freely available for a fraction of the cost and without the headache of having to provide ongoing, support, updates and adding additional features.
As in my previous article in both cases the companies in question do not have any unique or special requirements that could justify a decision to build their own applications. Their decision to build rather than rent or buy proven solutions has been driven by their CIO’s preference, or perhaps that should be bias, for developing their own solutions. And in making these decisions these CIOs are failing in their duty as the organisation’s technology leader. Not only are they selecting the wrong solutions to meet business needs, they are also ensuring that IT resources will continue to be focused on non value-adding activities: building, supporting and maintaining systems that do not provide competitive advantage.
In the digital age, the rest of the organisation wants to use technology to enable new capabilities, enhance the customer experience, create value and drive revenue. If the IT department and the CIO are focused on back-office solutions, in-house developments, support and maintenance, then they cannot help the business in these areas. In some organisations IT departments are already finding themselves bypassed by functions that have realised they need to take matters into their own hands. But some companies are still blindly following the advice of their CIO and allocating precious resources to building solutions and performing tasks in-house when perfectly acceptable external alternatives are available. These businesses are going to find it increasingly difficult to survive in the digital age, as their platforms will struggle to cope with the dynamic, fast-paced and consumer driven markets that digital creates.
To succeed as a digital business, organisations need their IT function to be focused on the areas where technology will have the greatest impact; customer facing solutions that differentiate, data and tools that provide insight and intelligence, and technologies that open up new markets or that enable new offerings. The CIO and the IT function need to work alongside the rest of the business to identify opportunities where technology can be used to create value and drive growth. It cannot do this if it is spending all of its time on building, supporting and maintaining internal solutions.
In my book, Disrupt IT, I describe this new focus for IT as part of its shift from a Technology and Service Provider to a Technology and Service Broker. The IT function no longer needs to be a service provider as solutions that could previously only be provided and hosted by in-house IT can now be delivered by vendors. In the digital age, the IT function needs to act as a partner to the rest of the business that provides and manages access to external services.
Disrupt IT also defines a framework of seven principles to help organisation build the right IT capability for the digital age. One of these principles prompts companies to challenge why their IT functions are performing tasks that could be provided by an external partner. I suggest assessing each service provided by the IT department to determine whether it is key to the organisation’s ability to differentiate, innovate or respond quickly to changes in its markets. Where a service is not deemed to meet this criteria then it should be transferred to a partner so that the CIO and the IT function can concentrate on applying technology in the areas where they can add real value to the organisation.
Had the two companies mentioned above applied these criteria to how best meet their needs for expense claims and KPI dashboards then they would have come to very different decisions. Instead of allocating resources to building, maintaining and supporting in-house solutions that do not add value, they would have selected off-the-shelf solutions. Not only would this have provided a more cost-effective and sustainable solution for these businesses, it would also have allowed more resource to be focused on growing their bottom lines.
CIOs have a vital role to play in building a platform that will help their organisations survive in the digital age. And they also have a duty to ensure that IT resources are spending as much time as possible working with the rest of the business to create value and generate revenue. They therefore need to think carefully before making a decision to build instead of buying/renting a solution.
If you have any examples of bad CIO decisions that you would like to share then please contact me. Alternatively, if you are a CIO that is looking for help changing the focus of the IT function, or if you would benefit from the support of a CIO mentor then please contact me or visit my website, axin.co.uk.