In my last article I looked at the tasks facing those in the position of chief information officer. When the CIO position does not function effectively, however, the issue boils down to a problem of management, not the individual ability of the CIO.
And when it comes to information technology issues, company executives tend to have little to say apart from asking whether things might be done in a more inexpensive way.
Dangers of a Hands-off Approach
Executives need to be firmly aware of how that sort of hands-off stance can lead to major problems. As I mentioned in the previous article, it is asking too much to think that a CIO can generate tremendous results, and there is no guarantee that companies will attain the desired results. It is necessary for other executives to be proactive.
At the same time, though, there is need to be aware of the underlying reasons for executives’ general lack of interest in IT and their difficulty in offering opinions on this subject.
The field of IT, which has been a part of corporate administration for the past two decades, can seem daunting, given its specialized knowledge and unfamiliar terminology. And few company executives have accumulated much experience related to this field. But let’s take a closer look at this issue.
Even if an executive were not an expert on the manufacturing process, he or she would still offer opinions regarding the construction of a new factory. Likewise, even an executive who does not specialize in human resources would offer up an opinion on employee training. So why should IT be an exception? It is simple negligence for a corporate leader not to actively engage with issues related to IT. We are no longer in an age when such issues can be overlooked.
Just Use Some Common Sense
I would say that, roughly speaking, around 70% of all IT-related problems can be responded to on the basis of common sense. That is, to put it a bit more precisely, an executive just needs to take a common sense approach when it comes to framing issues concerning IT. It is adequate for an executive to rely on an intuitive sense—built up from past experience—of what might be a bit odd or lacking.
The matter is not overly complex. It involves asking oneself the following sorts of questions:
What benefits can the use of IT generate in this particular case? Will the benefits have an impact on the work process? How soon can benefits be expected? If we cut IT investment by 30%, how much would this negatively impact the results, and what sort of risks might this generate on the business front? To what extend would we need to upgrade IT in order to cut our development time in half? Why are we relying on this particular vendor for our procurement?
A lot of company executives complain that no matter how carefully they pay attention, they can’t make clear sense of what the IT specialists are saying. But this is a non-issue. They need to simply tell those specialists to explain things in an easier-to-understand way.
Granted, many of those who work in IT tend to offer explanations that are hard to follow and lack an awareness of the need to clarify matters. This is why executives need to be unrelenting in asking them questions. That sort of persistence is one of the key attributes executives need.
The Ability to Pull the Plug
There are also things that only executives are capable of doing when it comes to IT, most notably, the ability to call a stop to a project.
In the case of IT, as in other areas, it can be hard to terminate a project once it is up and running. This is particularly true when a considerable amount of money and labor has already been channelled into the effort. More than a few projects have been seen through to the end, despite running far behind schedule and well over budget, simply because of a desire to attain whatever objective was initially envisaged.
This is a common phenomenon in the case of system-building projects. Even though systems are built as a means for generating results, in many cases the system building becomes a goal in itself at some point in time. Needless to say, in such problematic cases, even if the project is completed, it is unlikely to achieve the intended results in terms of being a worthwhile investment. This means that executives need to have the ability to evaluate a project underway and, when necessary, bring it to a halt in a well-timed manner.
Reaching a decision to treat the investment already made on a project as sunk costs is not best left to the discretion of the project leader, even if that person is also the CIO. Indeed, in most cases that person will not even consider the option of making such a decision. This is precisely why executives need to play a more prominent role in the realm of IT.
Having a Trusted Adviser Is Key
Having said that, however, deciding to write off investments as sunk costs is no easy decision. Figuring out what to use as the criteria for making the decision can be perplexing. And when an executive asks colleagues within the company for advice, the responses made are not always that helpful.
It can be particularly challenging for an executive to get a grasp on such issues as whether the level of investment and schedule for completion are appropriate, how to evaluate prospective system vendors and products, and how to best advance a project; in other words, the evaluation of what is the “going rate” for the IT industry at a given time.
For executives to address such issues, the realistic approach is to have trusted IT professions whom they can turn to for advice. Just as a company might have outside lawyers and accountants with whom to consult periodically, it is also necessary to line up IT experts who can offer advice when needed.
I would recommend that executives approach the job of dealing with IT issues by first seeking a dependable adviser and compensating them at around the same level as a lawyer.
A partner with Roland Berger Strategic Consultants LLC. After graduating from Waseda University’s School of Political Science and Economics, he worked for US-based strategy and IT consulting firms prior to assuming his current post. Has been involved in a broad range of projects for top-ranking Japanese and overseas companies, with a focus on manufacturing, distribution, and systems industries. Project background includes operations strategies, IT strategies, business process reengineering, project management offices, and support for new enterprise launches, supply chains, marketing, and other key business domains.