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10/5/2010
02:36 PM
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Global CIO: IT As Strategic Support Function

IT organizations should be measured based not on how efficient they are, but based instead on how efficient they make the value stream.

When I was in the military, we had a saying: "If you aren't infantry, you're support." The same is true for business.

In manufacturing, if you aren't either on the plant floor building product or out with your customers selling it, you are support. In medicine, if you aren't a doctor healing patients, you are support. In all businesses, somewhere there exists a value stream encompassing all of those things that add legitimate value to the product or service, and anything outside of that value stream is inherently "support."

Unless your business sells information services, your IT staff is in a supporting role. Period. There is no way around that, and it is time we as an industry accept it. Only in accepting that we have a supporting role can we do a better job supporting the company's true value stream.

We tend to measure our IT departments as if they have a value stream of their own, and if they did, then making them run more efficiently would help the company. But thinking that having an efficient IT department (or an efficient accounting department, for that matter) makes a company more efficient is like thinking that if every operation on the plant floor is running at 100% efficiency, so is the plant. We know that with a plant, if every sub-process were running at 100% efficiency, we'd be swimming in inventory and our plant would be a mess. You have to measure a value stream based on the efficiency of the whole process rather than based on the efficiency of the parts.

IT departments (really, any supporting role) should be measured based not on how efficient they are, but based instead on how efficient they make the value stream. They should have a big LED sign on the wall listing the impact the department has had on the bottom line (actually two: one showing the estimated impact and the other showing the difference between what is measured and what was estimated). Measure yourself and your team on that.

This sounds like a small thing, but the impact is profound. Suddenly, we open the door to the notion that there may be times when making the company as a whole more efficient might mean making the IT department less efficient. Maybe instead of having fewer databases we need to have more, in different formats, and optimized for different purposes. Maybe instead of prioritizing a project that will cut 40 hours of work time (for another support function) and save maybe 60 grand, we should focus on something that saves 40 seconds of production time and might have a much larger impact.

IT departments should always be on the lookout for waste, and this is where internal efficiencies come into play. But when you measure your IT department based on internal efficiencies -- as most of us do -- we also put internal efficiencies ahead of the organizational value stream, and in doing so we completely miss the point.

I see too many initiatives aimed at making IT run more efficiently. I'd like to see more focused on how efficiently IT can make the organization run. Everyone talks about aligning IT with the business interests. This is how you move beyond talking about it and actually start to do it.

Wallace Garneau is the EDI coordinator for The Tapco Group in Wixom, Mich.

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