First, my apologies – this is old news!  But I was talking to a CIO last week and he made a statement I’ve heard many times over the years:  “The company views IT as ‘the piggy bank’ – it’s a place they can reliably come to when they need to cut costs!”  This reminded me that while I’ve had the good fortune over the last 5 to 10 years to work mostly with more mature IT organizations and their ‘clued in’ CIO’s, there’s a lot of CIO’s out there who should not be running enterprise IT functions – they are doing a terrible disservice to their employers!  Hence this post, intended to prompt less capable CIO’s (and maybe some CEO’s) into action!

Back to my anecdote.  I asked the CIO (knowing pretty much what his response would be), “How does the company feel about it’s IT capabilities?”  He said, “Well, no so great, actually!  They tell us we are delivering ok from a tactical perspective, but are not creating strategic value!”  I asked, (again, anticipating a predictable response) “How engaged are the members of the IT organization?”  His response, “Well, we do have an engagement problem – IT scored quite low on our latest engagement survey.”

The ‘Piggy Bank’ Trap

This CIO is caught in a familiar vicious cycle:

  1. While they’ve done a decent job ‘keeping the lights on and the trains running,’ IT has not delivered strategic value.
  2. As a result, when the company is looking to take out costs, IT is the first place they go.
  3. Feeling vulnerable and wanting to be a ‘team player’ the CIO makes some cuts and ‘ponies up’
  4. With budgets reduced, and with IT’s position as a tactical capability reinforced, the business units don’t look for strategic IT enablement, and the IT organization doesn’t have the bandwidth or capabilities to stimulate strategic demand.
  5. Inevitably, more cuts are requested of IT (as a dependable source of budget money) and the cycle continues!

IT Must Be highly Cost Effective!

Make no mistake – IT has to run its operational side in the most cost effective manner – provable through benchmarks.  (And, as it turns out, IT operations and support is one of the most easily and accurately benchmarkable aspects of IT.)  Often, getting to an acceptable benchmark in operational costs means working with business units to consolidate disparate systems, retire ancient and non-viable platforms, and exploit newer technologies such as virtualization and cloud computing.  There’s good news and bad news in this:

  • The bad news is, it can’t be done without business cooperation.
  • The good news – it forces business cooperation!  In other words, IT is not simply acting as a piggy bank – it is working with its users to increase efficiency and effectiveness.

The good news side of this equation helps position IT beyond a ‘back office’ mystery zone of geeks and propeller-heads, and towards a valued business partner.

IT Must be Strategic

But cost effective operations is just table stakes for the real mission – enabling business growth and innovation.  Not simply helping the bottom line, but growing the top line – and even creating new top lines enabled by information and technology.  You cannot cost cut your way into this role.  If, as CIO, you find you are repeatedly getting relegated to the company piggy bank, you need to look in the mirror.  As I’ve noted before, businesses get the IT they deserve!  And the corollary to that – CIO’s get the respect they deserve.

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