Strategic CIO // Executive Insights & Innovation
Commentary
10/21/2011
01:01 PM
Larry Tieman
Larry Tieman
Commentary
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When IT Isn't Strategic, Bad Things Happen

How different things might have been at the likes of People Express and DHL if their IT executives had educated their senior business execs.

Senior IT leaders at all companies must educate and press their senior management teams on the critical need to develop and commit to an IT strategy that grows the business, not just maintain a cost-efficient IT operation.

I remember a discussion I had with Don Schneider, the visionary CEO of trucking company Schneider National. I had made some improvements and reduced IT department expenses by a million dollars--since Don owned the company, it really was his money. Don said to me: "Saving money is great. But remember, that is not why we hired you." He was making the point that I needed to stay focused on strategic applications of IT.

Don knew that having a very efficient IT organization is a good way to ruin a company.

Senior business executives should know that a decision not to invest in IT is itself a strategic business decision. IT is transforming more industries than ever before, and businesses that fail to make those necessary investments and transformations risk everything.

IT can also transform an industry in unexpected ways. When did the music industry start thinking of Apple as a controlling channel? When did Borders recognize that Amazon.com would be a serious threat and that e-books were for real? There was nothing Apple or Amazon did that couldn't have been done by someone else. Their inventiveness lay not in their technology but in how they exploited it to create uniqueness in the marketplace.

If IT isn't part of the company growth agenda, part of improving customer experience, and part of developing innovative new products or services, it's worse than a cost center; it's a strategic liability. And it's not a liability you can just close down or outsource to someone else and consider the job done. The decision to make IT a more efficient cost center is a decision to cede innovation to competitors, many of them newcomers, that can build their IT into a strategic asset.

Senior IT leaders needs to have this conversation with senior business leaders. If only the senior IT leaders at People Express, DHL, and Kodak had put their necks on the line for more strategic investment in IT, perhaps those companies would have gone on to bigger things.

An IT-based business transformation will mean different things to different companies. It can be a platform for growth and new businesses, as with Schneider. It can be defensive, to protect a fledgling company, the route People Express and DHL should have taken. Or it can be exploratory, and responsive when technology is changing the business model in unclear ways, as with the music and book industries.

Whichever path a company takes, the transformation must match the capabilities of the IT organization with the commitment of the business leadership. The IT leadership must work alongside the business leadership to develop and execute that business plan. Because there's yet another long list of companies that were overenthusiastic about IT, bet their business on a major project, and lost.

Dr. Larry Tieman has been a senior VP at FedEx, a CIO, or a CTO for the last 20 years. He has worked with some of the great CIOs, including Max Hopper, Charlie Feld, and Rob Carter. He can be reached at Larry@LarryTieman.com.

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Lexie Liang
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Lexie Liang,
User Rank: Apprentice
10/25/2011 | 3:31:06 PM
re: When IT Isn't Strategic, Bad Things Happen
Great stories! Thank you for sharing your insight on strategic IT as a CIO.

I believe it takes both sides - CIOs and senior management team - to use IT strategically and efficiently. More and more companies are expecting IT to be the differentiator in business competition. In order to achieve that, we need to examine our IT strategies frequently. Here are a bit of my thought on rethinking about IT effectiveness: http://www.4tegroup.com/blog/2...
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