Management Memo: Explaining IT to your boss

During my consulting career, I have witnessed several CIOs trying to explain the IT business to their bosses and other members of senior management. Often, the explanations get rather convoluted and buried in complexity. There is no doubt that offering day-to-day IT services and delivering IT-based projects is a complex business, but executives do not like a detailed, complicated account of such IT matters. They prefer a relatively straightforward explanation.

Whenever I am asked such a question by a senior manager with no IT background, I use a two-layered model for the explanation. Simply put, the IT business consists of two segments which are quite different in their management and financial approach:

1. The infrastructure layer, offering day-to-day technology based services

2. The business applications layer, which designs, constructs and implements applications to solve business problems and improve business processes

A very brief explanation would then follow, indicating that the infrastructure layer consists of desktop and mobile hardware, services at the data centre, local and wide area communication networks, operating systems, basic productivity software, legacy applications sustainment, etc.

Then I move on to the business applications layer, which builds and implements software solutions that support business processes and, to some extent, decision-making endeavours. Here is where accounts are processed, bills are issued and inventory replenishments are triggered.

Differentiating the tiers

Further, I find it important to stress these tiers are two different businesses. Infrastructure delivery focuses very much on day-to-day service provision and meeting service level targets. Business applications delivery, on the other hand, is heavily project-based with expectations from the business on implementation timeframes and capitalizing on the anticipated benefits through appropriate change-management practices.

Interestingly, the financial metrics are different in these two business segments. The infrastructure layer is very much geared to unit cost (cost/Help Desk call, lifecycle costs for technology acquisitions, etc.), and organizations can benchmark their unit cost of delivery against peer groups in their efforts to continuously improve. The applications layer is based very much on a return-on-investment financial mentality. In other words, by investing certain monies in development and ongoing sustainment, what benefits will be realized and how does this compare to other investment opportunities in the organization? I find that senior managers intuitively grasp and appreciate these financial differences.

Where the CIO fits in

At this point, there is an opportunity to demonstrate the CIO’s domain coupled with the importance of business participation in other domains. The infrastructure layer — technology choices and management — is almost exclusively the domain of the CIO except in a few special situations. Of course, there would be consultation with the business on technology selections and the timing of implementations, and serious discussions with senior management about technology refresh cycles, a very important financial lever. But most decisions for the infrastructure should be left to the CIO. It is the CIO’s job to keep the organization in the technology sweet spot.

On the other hand, the business focus should be in scoping new business applications and determining investment priorities. Here is where the real organizational payoff can materialize — business analysts and senior business professionals working with technologists to enable positive business-process change. In addition, the continued dialogue between the CIO and senior business management is critical to uncovering potential strategic opportunities for IT deployment.

Like any other technically oriented business, the management of IT is complex. Like any other business, however, explaining it to non-IT management should not be. In addition, simplifying the IT model clarifies business/IT roles and responsibilities for integrated teamwork.

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–Graham J. McFarlane, P.Eng., ISP, FCMC is a consultant who has worked with IT management, both in Canada and internationally, since 1978, focusing on improving IT effectiveness. Prior to this, he spent ten years with IBM Canada.

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