Running IT Like a Business

A few weeks ago, I caught up with Robert Webb, former CIO of Hilton Worldwide and Equifax before that.  Rob has recently been named CEO of TBM (Technology Business Management Council ), a non-profit organization of CIOs who work together to define a decision-making framework and set of best practices for running IT as a business.  Rob, along with CIOs including Tim Campos of Facebook, Mike Benson of DIRECTV, and Larry Godec of First American, came together in 2012 to help CIOs improve their ability to provide value to their businesses.

What do you see as the single most pressing issue currently facing CIOs?

The pace of technology innovation is accelerating, and with it comes a broad democratization of technologies. This means that business executives can buy new technology directly from vendors, which jeopardizes a company’s ability to take an integrated approach to its technology investment strategy.

The real challenges is that CEOs and business unit presidents tend to see all of the promise of new technology investments, but they don’t see the challenges that lie in operationalizing that technology. They only get part of the story.  Suppliers tend only to talk about the benefits of their technologies, not the hard work and complexity associated with migration from the current to future state.   The days of suppliers going around IT to sell to the business must come to an end.

The single most pressing issue facing CIOs, therefore, lies in their ability to create “oneness” with their functional peers.  In many companies, functional leaders differ in their perspective on the right direction for technology; they are not on the same page.  The onus is on the CIO to take full responsibility for that conversation and to communicate in a way that allows that business peers to understand the trade-offs and benefits of investment options.

CIOs must be mindful of governance, data management, information security, and how cloud fits into their overall architecture.  This means that the CIO has to lead “rate of investment” discussions around, for example, how quickly the company will embrace the cloud.  The question then becomes:  how are you measuring your rate of investment in cloud versus on-premise?  What is your strategy for moving to the cloud?  What services will move first, second and third?

We have been talking about CIOs’ need to talk about technology in business terms for a long time now.  Why does this continue to be so challenging?

When we look at ourselves as an IT profession, we have to realize that we have not yet come far enough in our knowledge of finance.  We need to partner with business executives, but without a common knowledge, a lingua franca shared among all of the company’s executives, we will not get there. Without a common measurement for costs, services and performance, we are really talking about apples, oranges and grapes.  And while it would be great if other functional leaders would learn the language of IT, it is not going to happen. IT needs to take 100 percent responsibility for communication around expenses and investments.

What advice do you have for CIOs?

1. Develop expertise in finance.  For CIOs today, knowledge of finance is as important as knowledge of technology.   You need to develop this knowledge yourself, but it would also be helpful to hire a CFO of IT.  This senior executive reports to you and plays a strategic role in developing a common language with which to communicate IT investments.

2. Develop a strong partnership with the finance organization. CIOs and their CFOs do not always see eye to eye, but the quality of that IT/finance relationship can be key to the success or failure of an IT investment strategy. 

3. Develop a lingua franca with your business partners around how you will value technology investments.  This is where the TBM Council comes in.  The TBM Council is a nonprofit organization founded in 2012 by 15 F500 CIOs.  Today, we have over 980 members including 350 CIOs.

We are a group of like-minded CIOs who share best practices around running technology as a business.  We have developed a number of different operating disciplines including cost transparency, business alignment, IT service optimization, and budgeting and planning.   For each discipline, we have created standardized methods for understand and communicating IT supply, demand, investments and services.

The framework covers everything from email to complex applications like finance, HR and even customized applications like revenue management. TBM gives CIOs the ability to understand and communicate where the spending occurs and link that spending to the performance.  Our framework helps CIOs drive a service oriented culture and performance based culture. 

For example, how do you benchmark your existing infrastructure costs? How do you benchmark rate of IT investment in areas that are differentiating to your business?   Our goal is to allow CIOs to look across a wide range of industries and ask: What should my costs per seat be for email?  What is my rate of investment in cloud based technologies? How much of a burden do I have because my legacy ERP system has heavy customization?

If CIOs can understand their infrastructure costs in this much detail and communicate them to their finance executives, we can all get ahead of the “IT problem” and enjoy an integrated, high-value approach to IT.