(taken from the Mar/Apr 2006 issue of On Balance magazine)

The guiding principles of IT
By Guy Russ
 

How many times have we heard that 80 percent of information technology projects fail to accomplish the stated goals and come in over budget to boot? What about the stories of CEOs who realize they’ve become overwhelmed by a mix of technologies that serve “silo-ed” departments with no way to share data, much less roll it into a consolidated view of the enterprise?

As if these issues aren’t bad enough, consider the thousands—even millions—of dollars wasted on overlapping and non-integrated systems. Also consider the number of staff persons needed to manually consolidate, analyze and report on the data from these systems. The true costs of this lack of control are staggering.

How can companies control constantly evolving technology needs? How can upper management ensure that once a direction has been chosen, the full benefits of that decision are realized?

This article isn’t about the latest and greatest project management methodology, although using something consistently certainly helps. Instead, it offers four standard principles that greatly influence the ability to control IT investments. Theses principles also influence the value realized from IT. They are visibility, collaboration, discipline and commitment.

Sometimes the concepts, structures and processes involving these principles are grouped under a heading of IT governance or program/project management. Regardless of what you call them, the principles are the same.

Visibility
If you can’t see it, you can’t control it. The first step to visibility is a consistent process with measurable expectations. That process must include technology champions. It also must address how an IT investment is proposed, how benefits are calculated, what gates or checkpoints will exist throughout the life of such investments, and the type of approval needed at each gate to proceed.

The size of an organization will determine the complexity of this process. For a smaller company, the process may be as simple as a regularly scheduled IT steering committee meeting. At this meeting, members review new technology requests as well as the status of ongoing projects.

In larger companies, the process may involve approval councils aligned with business units that require documentation at each gate. Whatever the size of the organization, the process needs to be clearly defined for consistency.

Collaboration
As the process above is defined, the players must be considered. Too many times, a new application is purchased for a single department without consideration of the impacts or potential benefits to other areas of the company. Thus, the control process must involve decision-makers from all departments.

A new customer relationship management application should not be approved and managed solely by the sales department. Customer service, operations and quality departments can contribute greatly to getting the right data into such a system. They can also benefit from reports and information generated from the system.

Again, the makeup of the governing body or steering committee will be largely determined by the size of the company and the complexity of the internal organization. 

Discipline
Regardless of how well the process is designed, without organizational discipline, control will be lost. To maintain discipline, gates must be enforced. Projects may need to be cancelled or technologies exited when they fail to meet criteria for advancement or are trumped by others with greater benefits. This is most difficult in the final stages of a project or when considering the replacement of a system.

This may be the hardest principle to establish and maintain in an organization. While not required for all companies, some may find it beneficial to ask a trusted outside adviser to be part of the IT steering committee. Most CPAs have no problem with the principle of discipline, as that is a primary requirement for the profession. While hiring a full-time employee to provide the needed discipline is not an option for small companies, having a CPA or other IT adviser join the committee is usually well worth the cost.

Commitment
The final principle is that of commitment. Commitment is needed from all levels of the organization, but is most critical from the top. If the leadership of the company is not committed to controlling technology introductions and forcing IT champions to deliver on benefits, the company will realize only a fraction of the value of its investments. On the positive side, champions who do well at converting investments into assets should be recognized and rewarded.

Commitment is also needed when dealing with technologies implemented in multiple phases. This is most true for larger systems like enterprise resource planning packages. Many times a set of core modules must be implemented just to get the system running. However, these core modules may not contain the functionality that provides the key benefits for which the system was purchased. Unfortunately, implementing the core modules many times exhausts the commitment of the organization to complete the full implementation. Here again, an outside resource, perhaps acting as the overall project manager, can provide the boost needed to keep the company’s commitment strong.

In today’s marketplace, finding someone to sell you technology is fairly easy. In fact, sometimes you may wish it would be harder for them to find you. Nevertheless, the purchase is the easy part. Monitoring that investment so it meets the needs of the greater organization and maintaining the commitment to transform that investment into an asset is the challenge. Use these principles to guide you on the path of realizing the value of your technology assets.

Guy Russ is senior manager of information technology and business process services at Wipfli LLP in Wausau. He can be reached at GRuss@wipfli.com or (715) 845-3111.

 

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