Ade McCormack’s “The IT Value Stack”- An Interview

Recently I had the opportunity to read Ade McCormack‘s book The IT Value Stack. In the book, Ade makes the case for stronger alignment of IT with their business customers. The book strongly resonated with me given my prior experience in corporate IT. Ade was gracious enough to grant me an interview so I could ask him some more questions about the book and gain some insights on the challenges of IT alignment with their business customers. I’m planning to post this interview in three parts and will provide a short review and final comments in the third post.

Holloway: For the people that haven’t yet had a chance to read your book, what is the single biggest problem facing traditional IT in 2008? And for a CIO facing that problem, what is the most important thing that they need to do in order to fix it?

McCormack: In my view the single biggest problem facing traditional IT is the opaqueness associated with value measurement. The inability to measure value frustrates users in general and CFOs in particular. This contributes to the tensions between users and the IT function. Many organisations see the IT function as solely existing for technology management purposes. Thus the IT function’s contribution to business strategy and business operations is non existent. Hence many IT functions under perform in respect of the value that they could potentially deliver to the organisation.

The key task for the CIO is to establish trust between the user and IT communities. The quickest way to do that is to work with the business to extract the full value from the IT investment.

Holloway: You identify “strategy entwinement” as the foundational element for driving value from IT to the business. In a business where the CIO doesn’t report to the CEO (or even to the COO or CFO), how does an IT department start to pursue strategy entwinement at the grass roots level?

McCormack: It is difficult for the CIO to influence strategy if he/she is not sitting with the other members of the executive management team. CIOs need to be on the board. Reporting into the CFO and even COO generally results in a focus on cost management rather than innovation. So again the value proposition is diminished. Ultimately the CIO cannot influence business strategy if she is not on the board. It is better for the CIO to leave and find an organisation that ‘gets IT’. Generally speaking this is what happens. The best CIOs go to the organisations that recognise the potential positive impact IT can have on their organisation.

Holloway: You talk about alignment versus entwinement. Can you explain the difference between alignment of strategy and execution and entwinement of the IT and business functions? Why is alignment not sufficient on its own?

McCormack: Business-IT alignment has been a big theme for some time. In my view alignment is not enough, as it suggests that the IT function becomes a well behaved supplier to the business. I believe that the relationship should be a partnership of equals, given how central IT is to most organisations. The IT function must be allowed to influence business strategy as much as the ‘business’.

Holloway: In your “IT Value Stack Assertions” that are derived from your book, you claim that “The IT department as a physical entity needs to end.” With that in mind, what would you say to a CIO that agrees with you about how they should begin to move towards this goal in their organization? How would you undertake the effort of dismantling the traditional IT group while improving the quality of IT services for the business?

McCormack: As technologies become simpler and the variety of technology options streamline (as a result of global standardisation) the issue of technology management will diminish. The re-emergence of software as a service now makes it easier for users to source their technology needs direct. The service element of IT will thus fall into the hands of people motivated to retain their customers. Smart CIOs will recognise this and gravitate their function away from technology management to process consultancy. In turn technologists need to morph into process consultants advising the business on how to be more effective. This would involve degeeking the IT function and migrating the DNA to one where all IT staff are effectively hybrid business-technologists. It won’t be enough to be business-oriented, we need specialists in specific areas of the business, whether that be front-office equities trading systems or air traffic control.

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