eyetoit

Thinking about IT and the Board

The point of these writings, for the most part, is to offer some insight and observations that business managers, executives and directors of (primarily) non-technology companies to help better manage the role and function of IT within their organization. In October's Harvard Business Review, there is a quite good primer on board-level IT governance written by Richard Nolan and F. Warren McFarlan.

In "Information Technology and the Board of Directors" (p. 96 in print - subscribers can access here - non-subscribers can view an excerpt) Nolan and McFarlan lay out a succinct yet reasonably detailed framework for thinking about key issues of viewing IT as part of the corporate governance function, such as:

• What is the current role of the firm's IT operation - (Support, Factory, Turnaround or Strategic) -  I have always used somewhat different labels - Cost Leadership (Support), Operational Excellence (Factory) and Differentiation (Strategic). Also, I have always excluded "Turnaround" as a independent role because it should be getting turned around to something (i.e. one of the three other types) - but from a governance perspective, the key point is that board should expect to more thoroughly scrutinize relevant issues in a case of a turnaround.
• What sort of questions should the board ask for each type of IT operation?
• How often should they ask these questions?
• What is the role of a board IT expert? (see some of my comments in "IT Savvy Board Representation" from last year)
• How do you establish an IT governance committee on the board?

There are details within the article about which reasonable people can differ, but overall it is really quite a good piece and I would encourage any senior business manager or director to read it and discuss it with their other board members.

The Danger of Illusory IT Excellence

I remember rolling my eyes in August, reading a piece from CIO Insight ("Overstock.com: Feeling the Need for Speed") on how Overstock.com's CIO Shawn Schwegman was running the rootin'est-tootin'est IT shop around. The reason was that it seemed like something out of a time capsule to the late '90's world of Internet time - in all the bad ways - big egos and an apparent dismisiveness of most of what we know about managing business-critical, enterprise-grade development and implementation.

First there was the Schwegman's chest-pounding about implementing a Teradata system faster than Teradata thought possible. How did he do it? Working harder, not necessarily smarter, seems to be Schwegman's way:

Governance by Committee vs Real Leadership

Many organizations have attempted to develop an IT governance framework, largely with the aim of better aligning IT with the business by selecting the major projects and investments for the IT organization. Since I first started seeing this trend, it seemed almost intuitively flawed to me for two main reasons

• The governance framework itself doesn't inherently provide participating business executives with sufficient interest or knowledge to best direct the IT function. The dispersion of responsibility for decision-making across a group inherently reduces individual accountability for outcomes.
• I have a fundamental suspicion of committees as a decision-making tool. My recollection from most organizational behavior research is that committees by and large operate with an effective IQ of the dullest, rather than the brightest, member of the committee.

Now, some might take issue and say that with the right performance measures and incentives, team-level training and selecting the best people, an IT governance committee can provide a reasonable crutch for a CIO unable to really align with the business. I call that making the best of a bad situation.