Posted by Alexander Peters, Ph.D. on September 28, 2010
Earlier this year I told you the story of a business executive who told us how critical is that business — not IT — drive process improvement initiatives. Here is another interesting case my colleague VP and Principal Analyst John Rymer and I have just witnessed.
It is the story of a business organization that developed an IT strategy based on three best practices:
- The core business processes would be implemented on a single modern, flexible platform.
- The platform would be service-oriented to ensure clear accountabilities and flexibility for future needs.
- The platform development and operations would be outsourced to a shared services provider.
We reviewed the strategy 10 years after it was conceived to find out that it has not yet achieved its top strategic goal. More disturbing:
- The development investment has been far greater than expected at the outset.
- The annual cost of IT operations doubled versus the base line.
- The reliability of the processes converted to the new environment went down.
Several things went wrong. External technical architects drove many of the “innovative concepts” from inside projects while learning the company’s core processes and experimenting with new development procedures. Worse, while senior executives supervised investments in projects, no one was responsible for understanding the impact of individual project decisions on operating costs — until big bills started arriving.
The organization has now pushed the reset button on its strategy and is putting people in place who will properly guide future investments. A critical question is how much the new managers must know about the technology they guide. They are not developers, but they must be smart enough to engage with the technical staff they work with on creation of new processes and understand the larger cost implications of project investments.
What do you think? How IT savvy do business executives need to be?
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