Welcome to IT MythBusters, where we take your most cherished beliefs about IT and rake them over the coals. In this edition, we feature Jeanne Ross, director of MIT’s Center for Information Systems Research and co-author of books on enterprise architecture, governance and IT value. Enjoy.
Myth: You should strive to report to the CEO. Wrong. “In our recent research on top-performing organizations, we have not found any relationship between the CIO’s reporting structure and success,” says Ross. “There are stages in a company’s maturity when it is most important for the CIO to clean up project methodology and manage IT costs. This does not require reporting to senior management. Until your shop is in order and you are ready to be strategic, you don’t want to report to the CEO.”
Also, reporting structure can present an opportunity to influence a senior executive on his or her commitment to IT. Don’t squander it just to report to the CEO. “We see a lot of great CIOs not reporting to the CEO,” says Ross.
Myth: Most companies use governance to deliver IT value. Think again. “For most companies, governance is just a series of committees that people hide behind,” Ross says. In trying to get everyone involved, governance can become an obstacle to clear accountability. “You think people are taking responsibility for IT investments when they are not.”
Good governance also requires clarity of strategic priorities, which most companies are missing, Ross has found. “Every time the committee meets, they have to figure out what they’re trying to do all over again.” Have some honest discussions about strategy and focus before setting up committees and meetings.
Finally, good governance is about making everybody smarter about IT. “When setting up governance, most companies start with IT investments when they should start with implementation reviews,” says Ross. “Companies with the best governance are constantly assessing whether projects are realizing their business case.”
Myth: CIOs should own enterprise architecture. Not so fast. CIOs often wind up accountable for the entire enterprise architecture, despite not typically having the authority or vantage point needed to create one that provides what the organization needs. This leads to a disconnect. “When the CIO owns enterprise architecture, it’s a bad fit,” says Ross. “IT is being asked to do something the organization isn’t committed to.”
In reality, companies need to acknowledge that “architecture says everything about how the company is going to function, operate, and grow; the only person who can own that is the CEO,” says Ross. “If the CEO doesn’t accept that role, there really can be no architecture.”
Myth: CIOs should align their priorities to financial goals. Incorrect. Recently, more and more IT business cases focus on short-term ROI. “We have to get past this,” says Ross. “Quarterly financial goals are destroying us. IT is about the long-term strength and agility of the business. Let somebody else worry about quarterly goals; the CIO should focus on making the company great forever.”
That doesn’t mean IT can ignore all quarterly pressure, but CIOs should discourage investment that is driven by short-term thinking. “This is UPS’s genius,” Ross says. “They understand that they need low package-delivery cost and high reliability. They use those metrics to set goals, and they build systems to operationalize their business.” CIOs must push back, she says. “If we measure IT the way we measure the last advertising campaign, we’re in trouble.”