Waterloo prof: How to bridge the IT-Business divide

Hi, I’m Joaquim Menezes Web Editor of IT World Canada, and my guest on this interview is Rod McNaughton, a professor here in the Department of Management Sciences at the University of Waterloo. Professor McNaughton holds the Eyton Chair in Entrepreneurship at the University. Part of his mandate in that position is to help students and faculty across the university to engage in experiences that enable them develop their ideas into commercializable businesses. In this interview – among other things – we will be seeking professor McNaughton’s views on the role that IT professionals can play in promoting the business objectives of the companies they work for.

Watch the video of the interview with Professor McNaughton

File type: Windows Media Video; Length: 6 minutes

Professor McNaughton, expectations from typical corporate IT departments have changed over the past decade or so. Could you comment on this shift? How effectively have IT departments been able to respond?

We have a lot of contact here at the University of Waterloo with outside technology-based firms and IT firms in particular. The trend that I see happening that’s important for IT departments over the past decade has been a move to see IT as something that services outside customers as much as it does employees within a firm.

So implication of this is that the IT department is now responsible for providing value and services to external customers – and not just the different functional or operational areas within the organization. In some organizations that transition has gone very smoothly. In others, the [company] hasn’t adapted the role or positioning of IT within its organization to facilitate the change towards servicing external customers.

In your consultations with various firms do you see any evidence that a shift in mindset is happening – from this restricted view of IT as a pure internal-oriented service to one where IT plays a strategic role in promoting business objectives?

Yes, I think there are certainly best practice organizations out there that are adapting in terms of how they see the role of IT and we see them including IT people, for example, on business development teams, providing opportunities for IT people to interact with other areas of business which are more traditionally externally focused, sharing information about new developments in IT, thinking about how they might be deployed to customers.

Innovation, flexibility, the ability experiment with new business models – all these are typically qualities associated with start-ups. How may larger enterprises manifest some of these traits?

You were asking about larger organizations that are actually adopting some of these things. Instead of providing an example of specific organization, I’d like the viewers to think a little bit about what we learn in aggregate from the dot-com bubble. That was a period of time when, because financing was relatively easy to access, a lot of business models got funded. And think about them as experiments.

Those experiments were really quite naked business models. You could see very easily how they were trying to deploy IT to deal with external customers, to create value for those customers. In things like: expanding self service, reducing search costs, those kinds of things. What’s happening now is large companies are able to look back at and learn from the experience of that era.

But today the large companies have all of the resources available to them that those startups didn’t have during the dot-com era. So they are more likely to make a success of it. They have brands, they have retail locations in place. They have they depth of human resources to make some of those business models fly, and to add it to their offerings to create value for their customers.

So you’re saying larger companies have the resources to take advantages of some innovative business models developed by startups during the dot-com era. But wouldn’t doing that be risky given that it may involve dismantling their infrastructure and processes, built up over years?

You’ve pointed out some of the downsides that larger organizations have. In academic speak we call it administrative heritage, the bureaucracies.

They have developed their infrastructure and their HR policies and their organizational structure over a long period of time – and sometimes those things are very resistant to change. So as your question pointed out, sometimes startup firms are more flexible and dynamic and can deploy IT innovations more rapidly than a larger firm could.

But what I would emphasize is what we have to do is look at – from the larger organizations’ point of view – if we realize that changes have to happen. If the organization can change its attitude to embrace the change and deploy the resources that it has built up…let them loose, let them become more flexible – then they probably would have advantages over startups who are also having to overcome all the resource and learning issues of starting up.

Today, there are a growing number of IT managers who have either recently retired or are about to – and new breed of much younger folk taking their place. What impact is this changing “demographic”, if you will, having on IT-business alignment?

With the issue of the demographics of the labour force, I think you raise a very important issue. And it’s not just one facing IT. It goes across to all of the functional areas within organizations. The demographics is such that a good proportion of the current labour force is going to retire over the next decade or so.

And this is going to create an opportunity for younger people – perhaps to even progress in their careers more quickly that they would have been able to do otherwise. If you think about the next generation of managers who are coming in to lead IT departments, for example, these are people who grew up using computers from when they were children. These are people used to being able to have electronic information at their fingertips; who are able to communicate digitally and share digital information with people.

And second, I think the educational system at a university level that they will have gone through will be quite different. We see the emergence of many programs that combine technical skills that we would normally have (say) from a Computer Science or Engineering type of degree, with management skills into the same program. So we have a great crucible really in those programs, for people whose primary interest is on the technical side, learning more about the application of those skills in the management context.

And people who are primarily interested in the business management side learning more about the technology within the program, to be able to appreciate what some of the new IT innovations can actually do – and how they can be deployed to the advantage of organizations.

Could you site actual examples of such blended courses that combine technical and business management training?

As an example of what I just mentioned, here at the University of Waterloo we are developing a number of Masters’ programs. There is one here at the Department of Management Sciences. It is an online program, so it has the benefit of being available to students who are in the workplace to advance their knowledge. At the same time, they are continuing to develop professionally in their career.

And the focus of that degree is on the management of technology. And we’ve found that the degree appeals very much to people in th

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