I have just read an article on how IT should apply VC capital strategies to IT. My first reaction is that the authors have never been practitioners – they have never sat in the CIO seat. If they had, they would know that any competent CIO in large or mid-market companies have been following the principles they laid out. Maybe the ‘newbies’, those new to the CIO position find this information helpful, but I see this once again as a statement that business executives do not know how to utilize IT investments and staff.
As a former CIO and as an independent consultant for Private Equity and Venture Capital firms, I find that good CIO’s/IT Directors are in the lead on applying strategic investment thinking. Probably much more than any other operational management position in the company. We have to balance the maintenance cost/benefit with new investment every day. The key issue I find is not the capability of the CIO, it is the constraints of the change process in organizations and the balancing of time spent in the day-to-day management with strategic ‘selling’ and demand management. The CIO could learn a lot from a strong CMO on these.
As a solution to this, the CIO needs to develop a set of tools to manage IT as if it is a stand-alone business – a solution that uses Porter’s value chain applied to IT. The three priorities are demand management (CRM in business terms), operations (think of support and change management as normal manufacturing and logistics) and development (product and category management). In support of these processes, you need IT finance, IT human resources, IT facilities management, IT compliance for security and risk management,… all the departments a complete business has. This is an old adage but ‘IT should be run as a business’. The complexity of running IT can be seen when it is viewed this way.
Future posts will be structured around this, which I hope will help the newer CIO’s evaluate how to run a strong IT department and minimize their risk of becoming burned out in their job and losing interest. A few thoughts on titles for future posts are ‘An ERP for IT’, ‘IT in business organization efficiency’, ‘IT as innovators and CEO partners’. I believe IT is very capable of being a business differentiator, either in aligning costs across departments or in increasing revenue.
Management and technology consultant and former CIO in Fortune 300 companies. Currently leading the consulting practice focused on support of Private Equity organizations and their portfolio companies to allow realization of the full value of the investment.
