Re:Think: Aligning with the business stakeholders

This has been the holy grail for decades for IT across all enterprises. Over the years, CIO’s have constantly tried to align with businesses, with partial success. But the gap seems to be ever widening.

Compounding the problem was the Robert Solow’s productivity paradox of information technology. As per Robert Solow, productivity increased between 3 to 4% due to mechanization and automation, and has dropped to 1% after information technology (For a more details: https://ccs.mit.edu/papers/CCSWP130/ccswp130.html). Though other economists tried to question the credibility of the productivity paradox, it has remained etched in people’s mind for over three decades.

Though there have been multiple theories proposed in support or in opposition to Robert Solow’s productivity matrix, if we look primarily from an IT perspective, till now most of the IT has been focused on

-         Business change due to technology –examples abound like the way procurement is managed or movement from checks to ATM to online payments

-         Reduction in costs – IT has consistently looked at reducing the costs of operations

Both the above have led to higher profitability, and enabled the enterprises to become global. But in both these criteria, it would be difficult to measure productivity.

Even our internal IT metrics measure cost savings as primary measure for new projects or development.

Due to the focus on cost savings, many business units who have welcomed IT in the initial years are now weary, as every IT project leads to decrease in their operating annual budget outlays. With IT, some of the business units budget has transferred out of their control to shared services and other corporate functions. This in turn puts a squeeze on their budget utilization flexibility for improving sales or production or undertaking their internal productivity improvement projects.

It is time, IT realigns it focus from cost savings to effectively using its powers to enable productivity and business growth.

When was the last time, IT had a discussion with Sales and discussed we can work with you in improving your sales by 5%, or improving your per purchase order value by x%, or discussed on a sale process by giving insightful information that has been gleamed from internal data, other structured and unstructured data sources to provide the competitive advantage.

To achieve this objective, IT needs to work in cohesion with a by-product of its own success the shared services center to provide innovative solutions for business growth and thereby leading to increased productivity.

(note: This is the first of three part series as we explore it in more depth)