Global CIO: Prove IT's Business Value To Your CEO -- Or Else
CIOs face relentless pressure from CEOs to prove, in financial terms, the business value of the IT team and the IT budget.
Your first year as CIO has shown mixed results. You've made some nice contributions in speeding up applications development and unlocking the potential of virtualization. But you've been either unwilling or unable to connect your team's performance and compensation to the business value the IT organization delivers. In the absence of that visibility, Chris, how can I as CEO get an accurate fix on how you and your team are doing? How can I know whether to promote you to the Executive Committee -- a role I believe a strategic CIO should have -- or fire you?
This need to tie IT performance and compensation to business value has a profound impact on this company's ability to succeed with customers and succeed with shareholders -- and outside of that, what else matters? Before the end of the quarter, you need to complete the "Business Value of IT" analysis that we have discussed and that I have championed on your behalf. If you don't, then you'll have proven that while you're a solid senior director of IT, you're just not qualified to be CIO.
I need a CIO who can clearly and simply show me, in plain language, whether the $85 million we'll spend on IT in 2009 is helping us or dragging us down. And that is unacceptable. Let me repeat this question because it's the only one that matters right now for you and me: What specific business value is the company gaining from spending $85 million on IT under your leadership?
At the Management Committee meeting yesterday, you cited a "Salary Survey" report from InformationWeek, and from all of the interesting statistics you pulled from that study, I want to focus on two that are particularly relevant to our company. (1) Last year, 43% of IT staffers felt strongly secure in their jobs, while this year only 32% feel as secure; and (2), nine out of 10 IT pros believe their career path is as secure or more secure than most other professions.
First of all, Chris, it's not your job to be worried about their feelings of "job security," but it sure as heck IS your job to let them know whether they're creating value for the company or doing irrelevant busywork. Second, it's also your job to know that yourself. And third, it's also your job to get me that information as well. Here are four quick examples:
BI project: We spent $9 million in the past 15 months. What's the quantifiable impact on revenue? Customer retention? Up-selling? What's the ROI, Chris?
Notebooks to netbooks: Nine months ago, you said this would reduce overhead, simplify administration, lower security risks, and increase productivity. All I've seen is a very tired PowerPoint slide showing that buying 200 netbooks would be less expensive than buying 200 notebooks. Where's the analysis of business value, Chris? Was it a success that should be expanded, or a mistake that we can learn from?
Data warehouse project: You said the big trend here is for enterprises like ours to give customers and partners the opportunity to do more self-service and analysis by seeing what's going on with the products they purchase from us. Are we cutting incoming service calls from partners? What are customers doing with the warehouse, and are those users buying more?
Project Web 2.0: We got a lot of people excited about new ways to engage with customers, and we have lots of cool links and tags on our sites, but where is the evidence that this is enhancing revenue, lowering costs, delighting customers, and helping our sales team find new and better leads?
This inaugural episode of Business Matters explores the subject of leadership with former Air Force Brigadier General John Michel, the Chief Strategy & Innovation Officer and President of MV International.