investiledysfunction

I’d previously written a post about liking the actions of Kimberly Clark’s CIO Ramon Baez who was trying to take jargon out of the IT culture at the company.

Well, Mr. Baez continues to push things as detailed in a recent blurb in BusinessWeek entitled, Techie Charm School.  The brief article describes some of the actions he’s taking:

“The day of the nerdy tech guy may be past at Kimberly-Clark, which recently ran a finishing school of sorts to teach its IT team the finer points of corporate interaction. The two-day seminar was the culmination of an IT reshuffle that started about a year ago in which the company outsourced 80% of its tech needs. The 800 or so surviving code crunchers and software specialists were handed a new job description: Bring IT knowhow to business problems. There were pitfalls aplenty. The techies had to learn to think strategically and speak a foreign language: jargon-free English.

At first, “attrition was high,” says CIO Ramon Baez, but most made the transition. The July seminar, including tips on relationship building, topped off the training. Baez says his newly burnished tech team is solving shipping problems and forging ties with retailers. And dressing better. “Some days they even wear sport jackets,” he says.”

The attitude shift Mr. Baez is promoting is refreshing.  If the dress code changes signify that attitude shift is occurring, good for Kimberly Clark.

IT represents half of all capital spending and exceeds $500 billion annually.  So as CFO Magazine highlights “When times get tight, executives turn to their companies’ IT budgets and get out their red pencils.”  And although this sentiment seems to get expressed every couple of years, people still continue to crib about the lack of useful data around IT expenditures.

The problem is that IT budgets are rarely understood and often do not contain all the right information.  We’ve seen firsthand many instances where organizations only think about the money out of the door this year with regards to IT and they fail to consider maintenance, support, labor and other expenses.   And those expenses are no joke - they create a long tail for many IT projects.

And as the CFO Magazine article entitled “Less Bleeding, More Edge” notes “Companies are now concluding that in order to control costs, they must better understand them.”  (note:  This statement has been nominated for the master of the obvious award)

The article states that “gauging the return on investment of specific projects is an exercise fraught with peril”  as if to excuse this practice of not requiring IT investments to have solid business cases.  Unfortunately, this is a refrain heard all too often and is a cop out.  Rigorous business cases coupled with the threat of projects being killed or not funded would get at the total cost of ownership and also force project sponsors to understand and articulate the benefits and ROI of their projects and not allow them to hide behind scare tactics (”If we don’t do this, there will be a security risk” or “If we fail to do this, the reliability of XX could be impacted”) .

Unfortunately, most business case building exercises are bureaucratic romps that people go through to tick a box.  As a result, the soundness of the business case and its costs and ROI gets little real examination and projects that have no business being funded get funded.

Unfortunately, in the current climate, knee-jerk actions will be taken that will ask for cuts to IT spend.  These steps which may provide a short-term benefit do nothing for the long-term.  Organizations need to focus on getting the right data about IT initiatives and then be willing to kill poorly articulated or underperforming projects if we ever want to stop hearing about ‘out of control IT spending.’

The March 2008 Harvard Business Review had an article about Japan’s Shinsei Bank and their approach to IT which was so spot on, I thought it might be worth sharing Shinsei Bank’s philosophy with regards to IT.

Per the HBR article, Shinsei used a “path-based approach to build an enterprise IT system that would provide a low-cost, efficient platform for running its existing business but was flexible enough to support the company’s growth into new areas.”

Nothing particularly revolutionary there, right?  Sounds like a lot of typical mumbo-jumbo, and I’m sure those same or very similar words have been in PowerPoint presentations that many a CIO/CTO have created.

So the part that is actually great about Shinsei Bank’s approach are the details of how they achieve the aforementioned objectives.  Again, quoting from the HBR article.

“The approach addresses the three main challenges of an IT project: It is difficult and costly to map out all requirements before a project starts because people often cannot specify everything they’ll need beforehand.  Unanticipated needs almost always arise once a system is in use.  And persuading people to adopt and “own” the system after it is in operation is much easier said than done.

First of all, Shinsei’s realization of these as the three main challenges is very impressive.  We’ve seen far too many IT organizations put a massive questionnaire or mandate that a large requirements document be put forth before doing anything.  This is not only a waste of time, but gets you no where closer to what you ultimately want because nobody ever knows all the uses, scenarios, etc they need up front.  So don’t require everyone to detail out every requirement.  I realize this maybe called for on your project manager’s checklist, but this is ultimately not helping the project.   The last point about adoption and ownership of the system is very big as well.  Technology requirements should not dictate what solution gets selected (”There an approved vendor so we should go with them” or “We only use Oracle so you should find a solution that works with Oracle only.”  It should be IT helping to work with and guide the business to making a more informed judgement about what to select while leaving it them.  This helps create the ownership that Shinsei has created.

Let me liberally quote from the HBR article some more to close.

“The path-based principles that Shinsei applied in designing, building, and rolling out the system - forging together, not just aligning, business and IT strategies; employing the simplest possible technology; making the system truly modular; letting the system sell itself to users; and enabling users to influence future improvements - are a model for other companies.”

Ok, let me count the ways in which this is correct.  We always hear talk about alignment between the business and IT.  Besides a being completely overused and generally meaningless phrase, it really is more about creating a shared vision and moving together on that.  This way, IT cannot throw the business under the bus (”The requirements were not fully given”) and business cannot do the same (”The guys in IT move too slow and are just bureaucrats.”)

Going with the simplest technology is another novel concept.  Instead of opting for the fancy bells and whistles that technology providers often tout, go for something that gets the basics right.

And lastly, let users influence the future direction of the applications because ultimately they are the USERS of them.

It doesn’t sound all that revolutionary, but it seems Shinsei is onto something.