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The Way Business Is Moving

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Issue Date: October 2004

It is time to bridge the CIO/CEO boardroom divide

1 October 2004

CEOs and IT directors are often at loggerheads about what systems and software to buy for the business. This is based primarily on a conflicting sense of business priorities, says Richard Firth, CEO and chairman of MIP.
Richard Firth, CEO and chairman of MIP
Richard Firth, CEO and chairman of MIP
CIOs may need to jack up their business savvy if they want to be taken seriously in the boardroom, but CEOs must jack up their tech savvy if the business is to be successful.
CIOs stand accused of misunderstanding the business priorities and the way they apply these to the technology decisions they make, while CEOs underestimate the role of IT in the organisation. A recent Gartner report highlights three key aspects supporting this claim:
* CEOs do not see IT as a top priority.

* CIOs and CEOs disagree about the primary business concerns.

* CEOs and CIOs have a different approach to management.
I have asked a number of CEOs what percentage of their business is dependent on IT. They regularly respond with 10%, but when I ask them how much of the business will continue operating if I turn all of the systems off, they respond with 0%. That simply illustrates to me how low IT literacy levels are at the top of the corporate ladder.
Gartner suggests that CIOs complete an MBA or industry-specific accreditation to ensure that they gain more influence in the boardroom and are more aligned with business needs and drivers and can use IT to deliver on these. I recently read a book that forms part of a local MBA, 'strategic management concepts and cases', by Thompson and Strickland. Three points stuck in my mind:
* Crafting strategy is partly an exercise in entrepreneurship, seeking to do new things or old things in new ways, a concept that drives against the principles of best practice.

* Good strategy-making is therefore inseparable from good business entrepreneurship - one cannot fit without the other - and I can understand why CEOs and CIOs are in conflict with one another.

* How quickly companies manage adaptation to market changes, how boldly they chase business opportunities, how much they emphasise out-innovating the competition and how often they champion actions to improve organisational performance, are good barometers of a businesses entrepreneurial spirit.
These points illustrate how quickly a company can change and reinvent itself. Yet existing software buying practices in particular that we see, go back to best practice, brand and standards, not customising software to fit the business, flying in the face of what this MBA degree literature has to say.
But effectively controlling the acquisition and fit of new systems is not only about the IT director having an MBA; it is also about the CEO understanding the basics of IT. The CEO has moved away from understanding the major driver of his business. The owner or CEO needs to be involved in the business at all levels. Often a board decision is made to spend money and board members have little understanding of what they are spending it on, resulting in little measurable achievement.
Gartner has compiled a list of 10 business priorities for chief executives and IT directors.
Chief executives:
* Customers.

* Improving productivity.

* Cutting costs.

* Market share.

* Responsive organisation.

* Technology.

* Strategy.

* Core competencies.

* Innovation.

* Employees.
IT directors:
* Security breaches/business disruption.

* Operating costs/budgets.

* Data protection and privacy.

* Need for revenue growth.

* Use of information in products.

* Economic recovery.

* Faster innovation.

* Single view of the customer.

* Transparency in reporting.

* Risk management.
The list highlights that there is a fundamental difference between chief executive and IT director agendas and a fundamental breakdown occurs when CEOs, who must be entrepreneurial to be successful, are faced with CIOs who want to minimise risk as much as possible. That divide must be bridged and an MBA for the IT director and an IT course for the chief executive would go a long way to achieving that.
For more information contact Richard Firth, MIP, 011 575 1800, Richard@mip.co.za


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