Leveraging the New Infrastructure: How Market Leaders Capitalize on Information Technology

Peter Weill and Marianne Broadbent

Harvard Business School Press, 1998

Many CIOs continue to struggle with communicating the value of information technology to nontechnical colleagues. As the amount of corporate capital invested in IT increases, this inability to convey precisely what bang companies are getting for their buck can erode the credibility of the IS department, or even worse, threaten the tenure of the CIO. Why not communicate IT value in terms that businesspeople-particularly the finance folks who sign the checks-can understand?

Peter Weill and Marianne Broadbent spent eight years researching IT investments at 75 global companies. They conclude that the companies getting the most out of their IT investments are those that treat technology investments as a financial portfolio with varying degrees of risk and reward. Their book conveys the message that IT investments need to be actively managed and continually analyzed like any other portfolio of corporate assets.

To clarify their points, Weill and Broadbent define four different kinds of IT investments: informational (to increase management control, improve quality and provide better information), strategic (to increase sales and gain competitive advantage), transactional (to cut costs) and infrastructure (to reduce IT costs over time and provide standardization, flexibility and integration). The authors also define four different approaches to IT infrastructure investments, ranging from having no enterprisewide infrastructure to having an infrastructure that is strongly integrated with corporate strategy.

Weill and Broadbent find that senior managers at companies with effective IT investments have a high commitment to using technology strategically. To bolster their commitment, these managers typically attend IT council meetings themselves rather than send delegates. And if a project fails, they encourage reviews that don’t degenerate into finger-pointing sessions.

To their credit, the authors don’t offer one-solution-fits-all advice. Although the companies profiled-including Ralston Purina Co., Honda Motor Corp., Carlton & United Breweries Ltd. and the Commonwealth Bank of Australia Ltd. — have markedly different approaches to their IT infrastructure investments, the authors clearly explain why each company follows its particular strategy.

Weill is the director of the Centre for Management of Information Technology at the Melbourne Business School in Australia, and Broadbent is program director of the IT Executive Program for GartnerGroup Pacific. Yet their book thankfully lacks the techno-speak jargon and rah-rah IT boosterism found in many academic- and consultant-penned tomes. As a result, CIOs shouldn’t hesitate to pass the book along to senior managers at their companies. And it wouldn’t hurt to dogear those pages that explain why senior managers at successful companies embrace IT.