InformationWeek

December 6, 1999

Secret CIO:
Are We A Cost Or An Opportunity?
How your company views information technology is a major factor in its--and your--success or failure

By Herbert W. Lovelace

Herbert W. Lovelace t's almost impossible to pick up a magazine or open a newspaper without reading about the latest dot-com venture and its astounding market capitalization. The rule of thumb is that on the day of its initial public offering, a successful one exceeds the gross national product of several Third World countries combined.

Oh, that I were to have the insight (and the connections) to invest in the right stock when it is first issued. I would worry, though--is it a leader poised on the cusp of a new age of business, or a big bubble waiting to burst? Dumb question, at least to the traders making big bucks in the market.

However, we poor plebeians who toil for our bread in the IT world, massaging tight budgets and enduring the slings and arrows of outrageous stress, think it is exactly the right query. Understanding the difference between technical hype and truly innovative ideas allows us to guide the executives in our companies in their decision-making. Our livelihoods and professional futures are in the hands of these senior managers, some of whom believe strongly that their businesses are undergoing radical change; others doubt that the Internet and E-business will have much impact on them.

Recently, I was at a CIO gathering, and one participant made a statement that caused me to sit up and listen carefully. She said that when it came to discussing common interests and concerns in the past, attendees would gather together in groups by industry. Insurance IT people would talk to insurance IT people, and all of the widget manufacturers would sit together and talk about common problems. That alignment was no longer the case.

Instead, she went on, it seems that the most meaningful differentiator was not what business you were in, but rather whether your company took IT seriously. She said that you could separate everyone in the room into two camps--those whose employers viewed IT as a cost to be controlled and those who saw information technology as an opportunity to grow the top line of the business.

I thought about what she said and realized that I had just heard a simple test that was powerful and incredibly insightful. It reminded me of a statement a colleague of mine, a friend of many years, had made in a speech that had stuck in my mind: "Those who do not learn from E-business history are not condemned to repeat it, but rather to have their companies die."

Encyclopaedia Britannica Inc. owned the most prestigious brand name imaginable--and in less than two years, its business was destroyed because company officials did not understand the power of an encyclopedia on a CD. The company's door-to-door sales force was dismantled, and the company sold. Today, the company is struggling to survive using a free Web site while hoping that ad revenue will keep it alive.

I am firmly convinced that the vision and biases of senior management about IT will be a major factor in the success or failure of the enterprise. New technology is always viewed at first as an extension of existing experience.

The car, however, is not just a faster horse. Nor is the Internet just another distribution channel to touch the customer. The key to success is leveraging technology to provide services and experiences that give you a unique position in the marketplace--at least for a while. Certainly, technology can squeeze out administrative costs (yes, the bean-counters do have a good idea), but ease of service for customers and faster, more accurate distribution are more important.

So it seems to me that as we look outward at all the opportunities that exist in our respective industries, as we talk among ourselves about the best way to educate our leaders about the impact of the Web, as we debate the value of new business models, we should take at least a few moments to look up the chain of command in our own companies and ask ourselves, "Do the people running this place get it?" Our futures depend on the answer to that question.

Herbert W. Lovelace shares his experiences (changing most names, including his own, to protect the guilty) as CIO of a multibillion-dollar international company. Send him E-mail at lovelace@home.com, and read his online column, "Ask The Secret CIO", where he will provide real--and sometimes whimsical--answers to your questions.

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