#3 IT is part of a capability -- Twelve things every business leader needs to know about IT

If only the business understood IT, then the company would get move value out of IT." This statement is a common belief among IT professionals. Understanding begins with the basics, framed in a language that is acceptable to the audience rather than the teacher.

Talking about IT using the language of organization, its role, what it does, position, etc provides a starting point for teaching the business about IT. Using this staring point here are a twelve things that every business leader needs to know about IT.

#1 - IT is horizontal

#2 - IT is a hybrid organization

#3 - IT is part of a capability (this post)

#4 - IT applies information to replace cash, capital and operations (next post)

3. IT is part of a capability

It's easy to see IT systems and technology as apart of your business. Being ‘apart' can readily become ‘a part' that is separate from the rest of the way the enterprise works. Business leaders get this view when IT is separated from the rest of the enterprise in terms of being a separate organization, separate projects, separate operations, etc.

When business leaders recognize that IT is horizontal (#1) they see the potential to use IT to connect the enterprise. When they see IT as a hybrid organization (#2) they recognize that IT plays a role in running, growing and transforming the enterprise. Using this third view -- the capability -- business leaders see how the parts of IT mix and are integral to the way they work.

IT is part of the resources a company uses to create its outcomes - that is a definition of an enterprise capability.

Traditional notions of Information Technology (IT) break down when you think of IT in this way. IT breaks out into Information, Applications and Technology to create tighter connections between business processes, business rules, human capital and outcomes. Breaking IT out into these constituent components facilitates leaders seeing these connections clearly, rather than thinking of them bundled into something called I.T.

The capability works and performs based on integration of all of its components shown in the figure below





Being part of a capability means that IT needs to fit with the People or Human Capital aspects of your enterprise - the organization, jobs/roles, skills, competencies. IT also needs to fit with the design of the Processes in terms of processes, rules & metrics. IT operates in the context of Facilities and Equipment people use to execute the processes.

Build capabilities that reflect the way the company works, rather than building components that employees need to fit together on the fly in front of customers.

So What?

Being part of a capability gives executives more options in terms of what to change in order to raise performance. Too often, companies have pulled only one level - often the technology lever to create change. This covers over performance issues in a silicon wrapper reducing benefits realization potential as the changes address symptoms rather than the root cause of performance issues.

In an enviroment where enterprise performance is at risk, executives need multiple approaches to change. Changing business processes, job descriptions, facilities layouts (Kaizan) all provide a way to change the way you work without the time and cycle time of an IT project. CIOs and IT executives should encourage taking a broader perspective and looking to raise performance through a combination of means rather than just technology.

IT benefits from managing technology as part of a capability in two ways.

First a coordinated change approach reduces benefits realization risk as the company builds a comprehensive approach to addressing business performance. Coordinating changes across the elements of a capability mitigates technical complexity, cost and delays.
Second, the CIO gains a value based approach for managing IT demand by encouraging the enterprise to make changes to processes, jobs, etc before changing technology. Following this approach concentrates IT on addressing that cannot be resolved through changing other elements of a capability this concentrates IT where it is needed most and where it can do the most.

IT is part of a capability. IT is neither solely responsible for business performance issues, nor is it the sole source of a solution. Business leaders who learn to manage the capability as a whole, using each element where it is most appropriate will get more out of the business and IT.