Here is an example of the conspiracy of good intentions. It starts with an IT project that is approved in principle, at a cost to the business of £10m.
A year later the project is not implemented, the business buy-in remains mixed and the cost has risen to £100m.
This sounds like a story from a world that is long past. In today’s climate decision makers cannot afford to be indecisive about the money they spend on IT, can they?
Yet they are – this story is of a current project, stalled in indecision, with no one able to determine whether it is alive or dead.
Few would disagree that we are now in a different world from that of two years ago. It is a tough market, with the banks and even sovereign states calling for rescue. A crash in confidence has put a freeze on liquidity, exacerbating recessionary pressure and making prospects for recovery uncertain.
Yet IT departments have proved slow to catch on to this changed world and what it means for them.
Decisive thinking about which IT projects are essential for the future of the business is vital in this new world. Yet instead, many IT departments are still simply asking for more money to fund new and existing projects without clear decision making.
Even where they have had standstill budgets, depressed revenues have increased IT costs as a percentage of revenue. As a result, some organisations are setting budgets that exceed even Y2K levels as a proportion of revenue. Budgeted costs per employee in the public sector are similarly elevated.
Yet all main market indicators are pointing to a global growth in IT expenditure of more than 3 per cent. In the current economy, this maths does not work.
Why is it so hard to make the right decisions?
The answer is the conspiracy of good intentions. Decision making on IT has become so bound by process that sound judgment has been replaced with a system that is incapable of giving a definitive “no” or a resounding “yes”. The result is that the return to the business from IT investments is less than it should be.
In one organisation, that is typical of many, PA was engaged to help rescue a new system for its field force. Its purpose was to improve productivity.
A series of project boards had approved a progressive spiralling of costs. At each point the logic appeared defensible based on the projected savings, but in the field there was a difference of opinion on the source of productivity – was it automation or intelligence – systems or people?
The combined intuition of the organisation was delivering one message, while the audit trail of well meaning project boards slowly filtered out those challenges and presented another message.
The project was failing through indecision. It was being kept alive with money, rather than with clarity of purpose.
This conspiracy of good intentions is creating what we call IT zombies – projects and services that suck in resources, have been approved by the process, but are unlikely ever to deliver the projected benefits.
The solution is to be decisive with an IT portfolio – know where the value is and nurture it; kill the ideas and projects that are destroying value.
PA’s work with a sales organisation on a programme of system enhancements shows it can be done. The organisation had a long list of approved enhancements, all of which would deliver improved sales performance.
We ran a workshop with the sales and IT teams. We asked a simple question of each enhancement – will this change the way you work? In one afternoon, we stripped 10 per cent off the development budget. More importantly, we accelerated delivery on the developments that had real value. Decisiveness created a double win – more value and lower cost.
We think a 10 per cent saving on IT spend from an afternoon’s work is a decent return. We would expect the full cost-saving potential in most organisations to be nearer 30 per cent, with increased returns from the projects that are kept.
Achieving such benefits will undoubtedly be hard and take more than an afternoon, but they are achievable and provide a great opportunity for the IT department to contribute value in this uncertain time.
There are three steps CIOs can take to improve their returns.
The first is to set a clear ambition for IT projects to deliver on the CIO’s fundamental objectives: to make money, save money, reduce risk and grow talent. All IT investments need to align instinctively to one or more of these objectives.
The second step is to create an atmosphere which allows people in the organisation to identify projects and services that are failing. Creating the space for an IT amnesty will help the organisation quickly home in on problem areas which need further evaluation. Critically, organisations must then make clear decisions to drive those projects or services forward or cull them. There should be no room for ambiguity.
The final step is to revise the controls of everyday business activity so that they allow room for judgment. Controls need to remain, but they should allow senior managers to listen to the experts (people close to the work) and show more judgment and accountability.
That will mean adapting business processes, reducing the number of approvals and placing greater accountability with managers, in IT and in the business as a whole.
David Elton and Karl Wermig are IT and change management specialists at PA Consulting Group
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