IT Project Management Creates Transparency, Forcing Today’s CIOs to Wear Many Hats
The Role of the CIO. With IT representing about 70% of all capital expenditures, estimated in total at over $1 trillion dollars per annum, CIOs are expected to “run IT like a business,” maintaining specialized skills and expertise in:
- Providing utility services — ‘keeping the lights on’ and running operations, service and support flawlessly
- Managing the IT architecture
- Driving and providing oversight to the discovery and development of new products and solutions
- Serving as a key strategist, offering ‘art of the possible’ ideas and concepts in the formation of corporate strategy
- Providing a venture capitalist approach in taking calculated risks based on potential IT solutions that could increase productivity, drive revenue growth, and decrease costs
- Managing and measuring the performance and alignment of the IT portfolio fund; serving a key role on the Executive Steering Committee
- Provide education, demonstrate marketing savvy, and thought leadership skills. Providing a balance between managing the status of IT investments, serving as an advocate for new and existing IT solutions, and promoting the goodness and value created by the IT organization
- Assuring that the best and brightest are hired and retained within the IT organization
- Communicating key messages pertaining to IT throughout the company, and overcoming cultural resistance
- Maintaining acceptable risk threshold levels and assuring that financial returns remain within the range of expectations
Given the many responsibilities listed above, it is not surprising that many CIOs report to the chief executive officer (CEO) and are a key member of the executive committee. It is also interesting to note that in a recent article published by CIO Magazine in a survey completed by more than 100 top IT executives, regular use of portfolio management or other project prioritization methodology ranked #1 as the most effective practice.1 And the use of IT portfolio management is paying off. According to a study, CIOs who embrace IT portfolio management have an exemplary record of continuous IT efficiency improvements, with some companies able to reduce costs by 20 - 30%. Maintaining balance and stability within the many roles that are required of the CIO has been achieved through the use of IT portfolio management best practices. The positive results include better communications, management, alignment and prioritization of IT investments within the business and the IT organization, and increased credibility and customer satisfaction with IT.
CIOs must develop business acumen and become skillful team players to win the continuing confidence of business managers. CIOs must be able to orchestrate change, focus on business process and be superb marketers. This is not a trivial task in light of the transparency that both governance and IT portfolio management create. Eliminating pet projects, requiring business cases prior to selecting an IT investment, exposing performance measurements on a frequent basis, and holding people accountable for results is a change and can be a threat for some employees. The challenge for IT is to work as a full-fledged partner, providing justification for current decisions and communicating future directions and expectations. Maintaining confidence and trust is paramount to IT’s success. This becomes critical when one appreciates the fact that, according to CIO Magazine, two-thirds of CIOs from their survey indicated that IT projects are funded from business unit budgets.2
CIOs must be proficient at change management. What once were perceived as simple changes can have profound impacts on processes, partners and integration points. CIOs rely on change management as an essential tool in the governance framework, and in all areas of the IT portfolio. The impact of change management ranges from a single change that has no impact on other assets, to changes that impact the homeostasis of external and internal conditions (corporate, business unit and divisional levels). Change management, and configuration management, provide the common threads to maintain alignment, communication and coordination in a heterogeneous ecosystem.
For leading CIOs, the engagement with IT portfolio management does not stop when projects are completed and their corresponding assets are in production. In fact, 75 percent of the top IT executives indicated that they conduct post-implementation audits.3
Governance is full lifecycle. Failing to do full lifecycle IT portfolio management is akin to using investment portfolio management to acquire investments and then never looking at their performance again. Portfolio theory mandates that investments are proactively monitored, adjusted and disposed of in accordance with investment objectives and tolerance for risk. Portfolio theory also mandates that interdependencies between components in the portfolio are identified and managed. Thus, to further the investment portfolio management analogy, an effective CIO has the responsibility, as the IT portfolio fund manager, to monitor external conditions, recognize relationships between investments (which are often inverse), and balance the portfolio accordingly. If interest rates are expected to rise, an effective investment portfolio fund manager moves resources from bonds to cash quickly; after the rates rise, the investment portfolio manager reallocates from cash to bonds. Likewise, if the economy is expected to sour, the IT portfolio fund manager pulls back on investing in systems, conserving cash. When the economy is expected to improve, the IT portfolio adjusts, investing capital in systems to support the expected release in pent up demand, factoring in delivery times. One of the reasons the notion of “on demand” or variable priced computing resonates is that it supports the IT portfolio fund managers’ requirement for rapid reallocation of computing resources.
IT will continue to increase in complexity, and the CIO’s role will continue to evolve. Regulatory changes, globalization, access to unprecedented amounts of decision-quality information, skepticism over “silver bullet” solutions, and corporate memory will temper ill-thought adoption of unproven technological solutions. Corporate and IT Governance will be the mechanisms by which this tempering occurs. Prescient organizations will adopt flexible and meaningful governance structures to incorporate new solutions into their IT portfolio and effectively contend with legacy solutions (i.e., systems that fail to provide value sufficient enough to justify their supporting costs, or systems that can be replaced by something with a more significant return).
This article has been excerpted from IT Portfolio Management Step-by-Step: Unlocking the Business Value of Technology (0-471-64984-8, April 2005), written by Bryan Maizlish and Robert Handler, with permission from the publisher John Wiley & Sons.
You may not make any other use, or authorize others to make any other use, of this excerpt, in any print or non-print format, including electronic or multimedia. The book can be purchased at www.amazon.com, www.bn.com, www.buy.com and www.walmart.com. Handler is a Vice President at Gartner, where as an analyst he reports on Enterprise Planning & Architecture Strategies. He can be reached at (619) 795-7311.
