Review: IT Is Too Important to Be Left to YouBy Paul B. Brown | Posted 06-01-2004
IT Governance: How Top Performers Manage IT Decision Rights for Superior Results
By Peter Weill and
Jeanne W. Ross
Harvard Business School Press
320 pages, $35
The prose is painfully dry. The points are understated. And it's not
the sort of book you can skim and still glean most of the arguments. None of that matters. What the authors, members of MIT's Center for Information Systems Research, have done here is call for—and then show how to create—a holistic way to manage information technology.
This is not a theoretical exercise. The authors' framework is the result of studying what works and what doesn't when it comes to IT at more than 250 companies. And the differences between companies can be downright shocking. "Our research," the authors write, "shows that top-performing enterprises generate returns on their IT investments up to 40 percent greater than their competitors."
What do the best companies do differently? They start with the premise that IT is too important to be left to IT professionals. That means they link IT closely not only to overall corporate objectives but specifically to the operating divisions IT is designed to aid—and make sure the responsibility for what IT is supposed to accomplish is shared between IT and the business.
As the authors note: "We contend that enterprises with [management structures in common] perform better. For example, if the same executive committee governs both financial and IT assets, a firm can achieve better integration and create more value."
United Parcel Service Inc. shows how this can work in practice. IT-only committees (reporting solely to the CIO) determine architecture and standards, while heads of each operating unit are responsible for IT priorities. "UPS's executive team has defined the firm's four cross-functional core processes: customer relationship management, customer information management, package management and product management. A senior executive heads each core process and has full-time staff responsible for designing subprocesses and identifying IT requirements."
Once IT is thought of as it is at UPS, managing it becomes more effective, the authors contend, because the focus revolves around just three questions:
- What decisions must be made to ensure effective management and use of IT?
- Who should make these decisions?
- How will they be made and monitored?
If you approach IT the way the authors advocate, the role of the CIO changes, and so does the way CIOs are judged and compensated. Assessing the new CIO role would hinge on three factors:
- Tasks that are clearly within the control of the CIO. That might include establishing companywide systems and standards for the selection of hardware.
- Decisions and behaviors influenced by the CIO. At UPS that would mean how well IT helped the four operating officers accomplish their objectives.
- The "contributions made by the CIO as a member of the senior management team generating value for the enterprise."
Weill and Ross have laid out an effective framework, one that is already in operation at successful companies. If you aren't following it, then you should be prepared to argue why your system is better.
Paul B. Brown is the author of numerous nonfiction books, including Publishing Confidential: The Insider's Guide to What It Really Takes to Land a Nonfiction Book Deal, published by Amacom.