In his latest post, IT project failure expert and writer Michael Krigsman beautifully summarizes the risks associated with the lack of CEO and senior business leaders engagement in information technology investments.  Developing support and engaging all of the business leaders in strategic use of IT is a problem Diamond has been studying and helping clients address since our inception in 1994.

A few years ago, we launched a broad annual study we call Diamond Digital IQ which set out to get some insights into the problem that Michael discusses and the challenges associated with connecting the enterprise’s strategic objectives with the actual business value, which often comes several years after the big ideas are hatched.  To get a “fair and balanced” view, half of the 592 surveyed are business leaders and half are IT leaders.

Here are five questions from our 2010 survey questions related to the senior business executive support for IT.

1.  Our CEO or senior-most business leader is an active champion in the use of information technology to improve our business

The promise of a fully integrated organization in which there is no “business” and “IT” must begin at the top.  Information technology (the capability) must be seen by all business leadership as both a driver of growth and a tool to improve efficiency.  While 64% of respondents agreed with this statement, it’s incredible to me that it’s not in the 80-90% range.  While I didn’t explain this in detail, the industries included in the survey are large or very large companies in banking, financial service, insurance, consumer products, etc.

2.  Our CIO is very involved in the business strategy development process

This question indicates the senior management team’s buy-in of the importance of IT at the next level of detail.  If only 54% agree with this statement, what are the other 46% doing?  An insurance executive told me a story of a claims initiative that some colleagues in “the business” brought to him which they later approved.  It involved taking images, video and audio to better understand the claims and so that more of the reviews and QA could be done remotely by experts.  Late in the project, one of the managers came back to him and admitted a big mistake that would cost them several million dollars.  Apparently, they forgot to estimate any storage for all of the digital media.

3.  Business Executives are very confident in the company’s IT capabilities

Half think that the business leaders are neutral or negative in terms of IT’s capabilities.  My colleagues Peter Weill and Jeanne Ross at MIT believe that service delivery is the basis for everything else.  I wonder if there is just some poor blocking and tackling that is at the root of this?

4.  Our CIO is recognized as a BUSINESS leader, not just as a leader of IT

Over half of the responses say that the CIO is not recognized as a business leader.  I’d be interested to know how this correlates with the CEO’s stance on IT (question #1 above).  I would also like to know how these CIO’s spend their time versus those who are seen as business leaders.  (I will write another post soon on the how a CIO spends his/her time.)

5.  The CIO lacks productive working relationships with the Business Leaders

Forty-seven percent say they are neutral or negative on the CIO-business working relationship.  Since these are the people we surveyed, they should know.  I’d be interested to know your experience in good and bad day-to-day working relationships and techniques you or others have used to improve them.

The value gained from IT in an organization depends on everyone’s ability to understand it and access it.  The attitude and culture required to embrace IT starts at the top.

In response to the last post on the sad state of IT planning, one commenter noted:

This planning is deeply flawed, even if you “fix” it as described. An effective organization is not a collection of competing interests, and IT is not a resource to be divvied up. Where is the organization’s overall strategy and goals in this scenario? How will organization-wide improvement occur when projects are isolated into departmental silos?

These are all good questions and I think hint at the underlying frustrations that business and IT leaders have in connecting and balancing short-term and longer term organizational investments within and across business units.  In fact, my friend and progressive IT thinker Chris Potts said “that’s why there shouldn’t be an IT budget at all.”

Most large organizations got large through organic and/or M&A based growth, driven by entrepreneurial leaders who, by definition, have competing priorities.  Very few companies I have worked with in 20+ years of consulting have struck a successful balance between enterprise level and business unit investment priorities, IT included.  That is NOT to say that they are not successful companies, but that the individual business needs have driven the majority of investments, with ERP and BI investments as a few exceptions.

Eliminate Wasted Effort, Then Improve The Process

As the commenter pointed out, reducing the waste in IT planning doesn’t “fix” it, but it does begin to free up management time that can be better spent leading the work and building a better planning process that aligns and balanced business priorities.  So, I look at improvements in 2 steps, reducing the waste and improving the process by driving it from and aligning it to the business.

The design of a better IT planning process is not a one-approach-fits-all proposition.  Many factors are in play that will impact the approach and maybe more importantly, the interplay of the enterprise planning with the individual business unit and functional planning.  Like it or not, all organizations do not drive operational planning and investments top-down into each unit.

I work with two different insurance companies of similar sizes ($10B+) and complexity.  However, each has a significantly different model for setting strategy and prioritizing IT investments.

Regardless of the organization style and culture, it is possible to vastly improve IT planning by driving it from the business. Many organizations I have worked with like the terminology “business capability” as the lynch pin to link a high level set of objectives to a more granular set of things a business needs to be able to do. I describe more about business capabilities in the post A CIO Can’t Do More With Less.

Maybe we will someday be in a place where there are no IT plans or IT budgets.  But, in the meantime, we need to pay close attention to the time we waste trying to figure out what the business wants and instead, become part of the business planning process.  Maybe IT’s engineering roots can help the business become more rigorous and repeatable in planning and together, create a better approach to multi-year and annual planning.

Think back a few months.  It’s August and you are starting to marshal the troops for the annual pilgrimage to the mecca known as the annual IT budget.  You arm each of the IT leaders with a template, spreadsheet, and other tools with which they will collect the requests from the various business areas – customer segments, product businesses and corporate functions.  Depending on your organization, you may also start collecting some sizing data for each initiative – costs and benefits.

Once each of the field operatives are done collecting, then the real fun starts.   Each of the lists are then consolidated into a big list and additional details are added with the goal of prioritizing them against some kind of framework (that may or may not already be agreed to).  If the business value data hasn’t been collected, some basic sizing data is added.  Then this list often gets massaged several times in IT leadership meetings.

Just about the time that the CIO and his/her team is getting a feeling for the size and shape of the business-driven list, the CFO starts sharing the available budget (we’re somewhere in the October time frame now…) and the CIO gets to go back to the group to report that (again) we can’t fund all of the projects that have been requested.  In fact, we can probably only do about one-third of them.  The remaining planning time, maybe into January, is then applied to further prioritizing, sorting, iterating and finally telling many of the business users that their requests didn’t make it.

Yes, this is an extreme case, and no, everyone’s organization doesn’t work this way.  But, many companies I have worked with have long, reactive and wasteful planning processes.  In fact, in Diamond’s 2009 Digital IQ survey, companies reported that they spent 240 man months performing IT planning.  I’m certain that this time is not all productive – we can do better.

Agile IT Planning, Then Agile Business

Addressing this problem is a two-step process.  First, we need to eliminate the wasted steps in IT’s approach to planning.  The key to this is to begin with the end in mind, as follows:

1. Develop a draft of the plan before asking for additional inputs.  It’s ok to have gaps and placeholders but it’s critical to set the boundaries up front.  This draft should be developed by the CIO and his/her leadership team – 5-10 people max.
2. Agree upon scope and other planning assumptions, including how much time will be spent in each phase, who will participate and how much money will be available, even if the definitive budgets aren’t set yet by the CFO.
3. Communicate the draft plan, planning process and expectations to business and IT stakeholders so they know what you expect from them.

Typically, I see some forms of #2-3 but very few organizations draft a plan before going out and soliciting business input.  I think this is one of the primary jobs of the CIO/IT leadership that is often skipped and substituted with “tell me what you need next year” in the name of business-IT collaboration.

Once the gathering, analysis and prioritization work (and time) is eliminated for the initiatives that would never make it anyway, you can focus on adding some time back into planning, but focus it on more productive things, which I will cover in my next post. [Part 2 – How to Fix IT Planning]

I had the opportunity to speak to 100+ of India’s top CIOs yesterday at the 10th Annual CTO Forum in Beijing – it’s been a great event so far.  I thought I would share the presentation I made that builds a case for 4 CIO leadership priorities to take into next year’s planning (or maybe before).

I know that just looking at the slides is never as good as participating in the discussion, but have a look and let me know what you think.