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3/11/2010
03:25 PM
Chris Murphy
Chris Murphy
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Global CIO: What's IT Worth? Northwestern Mutual Life CIO Knows

CIO Tim Schaefer's team puts hard-dollar values on IT systems as assets, and boldly says the language IT uses is important.

There's another word that matters to Schaefer, which fits this financial discussion: partner. Of course IT wants to be considered a partner with business units on projects, but it has a clear definition for that: that IT shares the business risk and benefits, including financial, from IT investments. "We should feel as bad when they aren't meeting their objectives as they do," he says.

Interestingly, the same standard applies to vendors--being considered a vendor "partner" means sharing the financial risks and rewards. None of its vendors meet that today, though Schaefer says it's possible with a couple. Instead, IT has sorted all vendors into four quadrants: commodity, operational, niche, and strategic, measured by spending and business value.

Schaefer has an advantage in getting the company to think and talk about IT as a financial asset. Assets, investments, and returns are the natural language at Northwestern Mutual, as a financial services company. But I don't think it's a stretch for non-financial IT organizations to embrace this framework, and to put hard values on IT assets.

One more thing about the words IT uses. Schaefer and his leadership team made a deliberate choice not to rename the IT department to become the business technology department, even though that's their mindset. They worried that a name change might sound superficial to the business units. Instead, they focused on how they talk about IT every day. The message alone doesn't mean a thing if the IT team doesn't act differently, by valuing IT assets and then optimizing them. But the message does matter, because it likely reflects how IT thinks about its role in the business and how business units perceive IT. And it's critical to changing the culture of the organization.

"Listen to the words you use," Schaefer advises.

Global CIO small globe Chris Murphy is editor of InformationWeek.

To find out more about Chris Murphy, please visit his page.

For more Global CIO perspectives, check out Global CIO.

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