S+B: Do you see this kind of framework as applicable to any functional business problem, or is it strictly for IT?
FELD: The point is to enable CIOs to make their role wider. They must think of themselves, and be thought of by others in their organization, as a systems leader and an integrator, not just a technology leader. I know this is subtle, but it’s a critical difference required for them to help their companies realize the potential that IT could have if they use it well.
Both executive teams and IT organizations themselves have, in many cases, given up on the notion that IT is really important. They’re in the Nick Carr camp and believe “IT Doesn’t Matter” [the title of Carr’s May 2003 Harvard Business Review article about the commoditization of computer capabilities], and believe that you can just outsource information technology, forget about it, and it will be fine.
S+B: You’re suggesting that as companies outsource their computer systems and lower investments, the distinctive value of IT has diminished. It becomes a utility, just keeping the lights on.
FELD: And unfortunately, this kind of thinking doesn’t come to grips with the realities of growth: that a 21st-century business model requires a modern systems model. Customers demand it, operational excellence leverages it, and speed and innovation require it. If your company has been around for 40 years, unless you’ve been on a transformational journey for both business and IT, your systems evolution will leave you with a level of complexity in your data, interfaces, and platforms that makes IT slow and expensive. Therefore, if you want some new features, the cost and speed-to-market are a disadvantage. There is nothing quick about these systems. And customers hate dealing with your complexity.
The ideas that got us to this state weren’t bad. They were the best ideas of their time. You can go through the history of your system, and see why its designers did what they did. That was simply the state of the art in the 1980s and 1990s. Senior executives can be frustrated, but they need to understand the context that got us there.
S+B: How should today’s CIO at a Fortune 500 company build a case for transformation now?
FELD: To some extent, it depends on the situation. This framework can be used in a turnaround situation, in a moment of big business change (like a merger or a bankruptcy), or in an effort to take the business and IT to the next level. It’s easier for a new CIO, who can say, “Look, let’s establish where we are so that we can measure our progress.” A CIO who has been there for 10 years probably won’t have the same opportunity and will have to make a stronger move.
The first step is to establish a clear view of your current state. What is it about this system that impedes your speed-to-market, desired customer experience, economics, or supply chain leverage? You have to ask and answer the question, Why do anything? To justify the future, you’ve got to be able to describe the end state you could construct if you were unconstrained. That gives you an answer to the question, “What will we do?” If you have an honest and accurate assessment of the current state, a compelling “why,” and a vision for “what” you could build, you can begin to change the dialogue about IT in a matter of months.
In every company I’ve seen, people have been willing to spend money. But they’re not always spending it right. If somebody wrote you a check for $1 billion, you still couldn’t rip the old system out and replace it all at once. Even if you’re implementing a big transformational system, you need to do it in phases. So the “how” becomes the next part of the dialogue. In a way, it’s like urban renewal. You’ve got to connect it back to everything else because you’ve got to live in the city while you’re rebuilding it.