InformationWeek

October 16, 2000

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IT Management
Who's In Charge Of IT?

By Sandra Swanson and Elisabeth Goodridge

More on management:

sidebar: IT managers face challenge from outsourcing

sidebar:IT executives bring technology knowledge to CEO posts

Backlash (9/25/00)

Top companies take many paths to the same goal (9/11/00)

CIO status doesn't guarantee a high salary (8/21/00)

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ill Seltzer wants to give up some responsibility. Seltzer, CIO of Office Depot Inc., is weighing a model for budgeting IT projects that allocates IT funds to various business divisions, such as marketing. Those divisions will then be responsible for funding their specific IT initiatives. Previously, that was IT management's job. "We're looking to move budget responsibility over to the functional areas to provide more accountability for IT funds," Seltzer says. If approved, the new model will go into effect next year.

Seltzer's plan isn't revolutionary. But it's indicative of business managers' growing involvement in IT. As non-IT executives strive to put their stamp on E-business, department heads are exercising more control--initiating projects, selecting vendors, and handling budgets for IT projects. "Every executive in an organization today wants to get something on his resumé called 'E-business,'" says M. Victor Janulaitis, president of Janulaitis Associates, a management consulting firm.

That scramble for control of E-business projects leads to a broader question about the place of technology in modern business: Who's in charge? The answer isn't obvious. The imperative to align technology and business goals has led many companies to create cross-functional teams--an effort that in some instances has generated rivalry and partisanship. Also, CEOs are taking a more active role in approving big IT projects, with or without input from the IT department. The danger: a limited view of the technical complexities and internal politics involved.

The changing nature of IT management is apparent in both dot-coms and brick-and-mortar companies. IT executives now come from all ranks of business--marketing, human resources, and manufacturing, as well as technology. Another emerging player in the IT pecking order is the chief technology officer. Equal parts technology visionary, venture capitalist, and salesperson, the CTO represents either a new breed of IT executive or a new member of the board--sometimes both, depending on the company.

Instead of fighting technology interest on the part of business leaders, some IT executives use that enthusiasm to their advantage. For instance, when CEOs and other business leaders champion IT initiatives, that support can deliver a turbo-boost to project momentum. When Bruce Nelson, president of Office Depot International, was promoted to CEO in July, he made international E-commerce his No. 1 priority, CIO Seltzer says. "He turned to me and said, 'Let's be the first in there.'" By drawing on the expertise of Seltzer, the executive VP of distribution, the head of marketing, the IT staff, and others, Office Depot expects to launch 11 international Web sites by year's end.

But a little IT knowledge can be a dangerous thing. Enamored of the short-term benefits of E-business applications, non-IT executives may become short-sighted about the broader repercussions: integration problems, stalled rollouts, even damaged morale. RadioShack Corp. senior VP and CIO Evelyn Follit says the weekly meetings of the company's strategic technology initiative committee, which includes representatives from areas such as marketing, HR, and legal, are lively, to say the least. "We've actually laughed at some of these [proposed IT initiatives] and made the proponent realize that it wasn't as smart as he or she thought it was."

After years of heralding the value of technology--a message that sometimes fell on deaf ears--Mostafa Mehrabani, VP and CIO of TRW Inc. in Cleveland, likes to see business leaders evangelize E-business initiatives. While Mehrabani doesn't expect VPs to understand routers and network topology, he does require a business line leader to champion each application project before he'll agree to it. "When you're trying to come up with technology initiatives that solve business problems, and there's pushing on the IT side but no pull on the business side, you feel like they're throwing darts at you," he says.

TRW's recent E-procurement project team was led by John Plant, executive VP and general manager of TRW's Chassis Systems, the company's largest division. Mehrabani was a member of that team, providing recommendations for vendors and implementation. During the final briefing to the executive team, Plant answered the tough questions, Mehrabani says: the project's cost, why certain vendors were eliminated, what the benefits were. "It was delightful to observe that interaction, as opposed to having the CIO trying to do a sell job on technology they should implement."

As business leaders race to capitalize on new opportunities, small department projects proliferate. As a result, vendors' target audiences are changing. At Lotus Development Corp., Ken Bisconti, VP of marketing, has noticed that meetings at the Lotus Executive Briefing Center draw new attendees: "Recently, we've seen an evolution from IT managers to today, where it's very common to see people from marketing, the VP of sales, and other business unit leaders."

Jim Shephard, an analyst at AMR Research, says software vendors' pursuit of non-IT execs can lead to "application anarchy." The problem is that IT is sometimes excluded from key discussions. And when executives don't fully comprehend the IT issues at stake, that can wreak havoc on implementation and integration.

Robert Egan, director of information services at forest products company Boise Cascade Corp. in Boise, Idaho, agrees that IT involvement in purchasing decisions is critical, and non-IT execs need to know that. "Although software vendors often try to sell directly to non-IT executives, our CEO recognizes the complexity of the issues and always insists that the IT folks be involved first."

IT Management
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