Your book “The Power of IT” is subtitled “Survival Guide for the CIO”. Is the CIO being threatened?
De Sutter: I think so. IT and its management are still considered as something special within most organizations. IT is there because everybody knows that without it, the organization cannot survive. However, as most people haven’t got a clue about the technological and practical aspects, they consider IT to be “black magic”. Furthermore, IT people have a tendency to create expectations which – in the end – they cannot fulfill. People know that and become very skeptical after a while. A good IT manager or CIO can assess what is possible and what isn’t, given the resources at his or her disposal, and can explain this to the other managers in the organization in plain language, not in the technical jargon. The danger in this for the IT manager or CIO is that he or she is treated as some kind of outcast, without anything to say in the decisions of the organization. Good IT managers or CIOs are valued more for their business thinking and change management capabilities than for their technical knowledge.
Could you explain the four factors – liquidity of information, availability, ability to adjust, and costs – which form the foundation of competitive advantage when using IT according to your book?
De Sutter: Information liquidity stands for having the right information available to the right people at the right moment. It is the idea of “Just in Time” applied to information. Operators in the business process must have access to the information they need to do their job, when they need it, no sooner and no later. Line managers must have access to the metrics of the business processes they are responsible for and senior management should get good summaries (scorecards) in order to allow them to establish their business strategy. All this is best achieved with a company-wide architecture of interlinked or integrated systems.
Availability. Organizations are becoming more and more dependent on their IT systems, both for their day-to-day operations and for their strategic decisions. Therefore, the non-availability of a system can cost a lot of money, either directly or indirectly through damage to the corporate image. So, high availability (obtained through redundancy, avoidance of single points of failure (SPOFs) and a well organized change management) is a must. Ability to adjust or agility is another vital characteristic of a competitive organization. This can be achieved by having IT systems that are designed for change, that are, for example highly parametrical or generic and not custom-built. Finally, costs are clearly an important element in the decision process. There, not only initial costs have to be considered, but also ongoing and hidden costs, in order to have an idea of the total cost of ownership (TCO). Clearly, the – projected – benefits, not only in financial terms, should also be highlighted beforehand. Only then can a good decision about the features and the priorities be made.
How will the interaction of these factors affect the success in business?
De Sutter: In my view, these factors really complement each other. The basic idea is that focusing solely on the short term financial performance of an IT organization is not a good thing for its long-term ability to survive. Indeed, a business with unsatisfied customers is unlikely to survive, and so it is an IT organization with badly organized internal processes or one that is not able to cope with technological and environmental changes. In fact, it is the “Balanced Scorecard” concept applied to the IT organization.
What happens when these factors conflict with each other?
De Sutter: Obviously, these factors above can also be conflicting. It is one of the major tasks of the IT manager to find the right balance. For example an organization thinks it has built a “perfect” system. One could say that such a system is very good in the area of “information liquidity” as it will be perfectly integrated in the surrounding systems, it will cover all cases and exceptions, there will be a fantastic reporting environment, perfect user manuals and training, and so on. However, it will be very expensive to build such a system and it will be very difficult to hold down the TCO with it. Furthermore, such a system will probably not be easily adaptable to the changing environment because of low agility and due to the intensive maintenance that will be needed, the chances are that the availability will be low as well. And the change of such a system implies risk again. This is necessary to keep in mind, too.
How can a company balance these factors? How could a CIO find a way out of exploding costs for example?
De Sutter: The art is to build or buy systems that are “good enough” for the job, making tradeoffs in functionality, quality, and costs. Compare this to a normal household that needs to buy a car. For sure, there are better, faster, and more expensive cars but most probably the household will buy a good, midrange car that fits the budget but does the job: move people from point A to point B. The same goes for IT systems: we don’t necessarily need the best there is on the market, but the one that suits our needs for a reasonable price.
What is your understanding of an intelligent company and how can IT be made “intelligent”?
De Sutter: An intelligent company, I think, is a company that is not too dependent on the knowledge and skills of its collaborators but is in the same time flexible and robust. Here, IT can give a helping hand in the institutionalization of knowledge which otherwise is kept in the heads of the collaborators.
IT as such cannot be made intelligent, it is merely a tool. Intelligence is the ability to comprehend; to understand and profit from experience. The only way to put intelligence in a company is to hire intelligent people and have them to act in an intelligent way. One way of doing this is by providing them with the right tools, but remember “A fool with a tool is still a fool”. However, it is possible to have smartly designed IT systems that give a good support to their users. This means “good enough” with a right balance of agility, availability, integration and cost, for example.
What about the SAP solution for Business Intelligence?
De Sutter: I will give you a consultant’s answer here: It depends on how deeply involved your organization already is with this vendor. If there already is a deep, long-lasting and good relationship, I would say “go for it.” In the other case I’d rather have a look at the competition.
Isn’t IT a threat to the human beings in our companies?
De Sutter: Much like science IT is neutral as such. It is the way that it is used that can be good or bad. Here again, the soft skills of the IT manager or CIO will prevail in finding a good compromise between efficiency and humanity. We should rather think in terms of “sustainable” economies. Also, I wouldn’t like to live in a world with only big monopolies – the “winners” of the competition – but prefer a wealthy diversity of companies competing on quality rather than on quantity or market share. And the CIO can have an important role to play in achieving such diversity.