By Bob Kaplan
In my decades-long career in IT and strategy consulting, I have worked with some brilliant CIOs and CEOs who have transformed their businesses through the intelligent application of information technology. I have also been witness to the thoughtless management of the information technology function in many companies, leading to operational problems, slow response to market changes, and even the dramatic loss of market share.
I puzzled over what separates these two types of companies and executives. One day when I was describing a particularly bad situation to my wife, she solved the puzzle for me when she said, “They just have no common sense. No one would do that.” Suddenly it all made sense. In the poorly managed situations, there was a lack of common sense thinking. It was not about abstract technical issues or architectures, but rather poor (or no) planning, denial of obvious facts and an unwillingness to take action for fear of political repercussions.
The following case situations highlight the importance of using common sense when it comes to IT management. These cases are all true stories, but the names have been changed, and the situations disguised, to avoid embarrassing the guilty.
Example One – You have to know where you are starting from.
HPA was brought in by the leadership of a leading industrial services company to do an assessment of the IT function. The CIO was putting significant pressure on the company to increase spending on many fronts, and yet it appeared that the current spending was not yielding significant results.
We asked the CIO for some basic information regarding the current state of IT. We wanted to see the current state diagram of the basic applications, a view of the current development projects and where each stood in terms of progress against plan, and a high-level view of the budget and where money was being spent. We were informed that there was no current state view of the core applications and that the project portfolio was constantly changing as new projects were added and existing ones put on hold as resources were juggled. The budget showed a lot of money being spent with vendors on special fees for maintenance and service on systems the vendors had obsoleted years ago.
No wonder few significant results were being achieved. The common sense theme jumped out at me. If you are planning a car trip, you need to know where you are starting from, where you are going, how you are going to get there and that your car is capable of making the trip and can be fixed if it breaks down on the way. This CIO did not know the equivalent of any of this. As my wife would say, how could they do this? The common sense lessons learned are clear. Make sure you are spending money on the basics first. Do not let systems become obsolete and incur technical debt. Have a clear view of your current systems and have a clear plan for where, how and why investments are to be made.
Example Two – You need a plan.
The CIO of this transaction-intensive Fortune 100 company decided that moving to a cloud-based architecture was the key to saving money and more rapid deployment of new systems. So far, so good. An analogy from everyday life would be a major remodel of your house. Common sense would suggest that you find a good architect, develop a plan, set a budget and put in place a way to track progress on the work. However, this CIO, with the approval of his CEO, took an alternate approach.
The CIO had an offsite meeting of his top 2,000 software engineers and with great fanfare took the stage waving a contract in his hand. He announced to the group that this was their data center contract which was set to expire in 2 years, and that it would not be renewed and all the application teams were responsible for moving to Amazon Web Services (AWS) before the contract expired. He then left the stage.
Bewildered, the teams learned that there was no plan, there were no resources to help them with the move, and they were on their own in dealing with AWS. I can hear my wife saying “No one would do that” – but he did. A year later, the predictable chaos was in full bloom when HPA was brought in by the CFO because the budgets were totally out of control. It took over a year to get the situation back under control. In addition, we discovered that some of the core applications could not even be moved to a cloud architecture. The CIO was eventually fired.
I was left wondering how such an approach could have been approved. Lack of common sense seems to be the answer. The lesson learned – have a clearly stated objective, have a clearly defined operational plan, make sure you have the resources with the talent to execute, and have a tracking system in place. Just like you would with a house remodel. It is not about technology.
Example Three – Wishing will not make it so.
HPA was brought in by a senior executive at a Fortune 100 tech company to help develop a plan to improve sales productivity through the use of “better” IT approaches and systems. Our analysis uncovered several opportunities and issues that should have been easy to fix.
First, the CRM system the company was using was nine years old and had not been significantly updated. The business on the other hand had changed significantly during this time, primarily through several major acquisitions. The result was that the data model the CRM system relied on was no longer in sync with the business. Also, not surprisingly, the user interface was viewed as cumbersome, which resulted in users developing their own “underground” workarounds (remember this is a software-based tech company). Because of the workarounds there was no overall data model for the business and putting together even routine reports was difficult.
The obvious fix, to upgrade to the current version of the CRM, was rejected as too expensive by the CEO. A lower cost competing system had been evaluated and found to be lacking in key functionality needed by the field force. However, the company decided to move to that system and hoped the needed functionality would be added by the vendor down the road.
If you are screaming “How could they do that?” you are way ahead of me. The common sense lessons here are obvious. Do not let systems become obsolete. As they say in the commercial, you can pay a little now or a lot more later. Fix things as they become less useful (or in an extreme case, break down) just as you would do preventive maintenance on any type of equipment. Also, hope is not a strategy. The end of this story has not yet been written, but it does not look like it will be a happy ending.
Example Four – Be skeptical of the “experts.”
HPA was engaged by a leading services company to help improve the sales lead system. This system generated a lot of activity handled by the field force representatives, and their bonuses were in part a function of following up on all leads sent to them within 48 hours. The senior executives felt this system was a key element of their market success, in part because the data sciences team at the company generated reports showing how effective the system was (they had designed it).
Casual conversations with field reps led us to have doubts about the value of the system since the reps (the users, and the generators of most of the business for the firm) mainly complained about their time being wasted chasing down system-generated leads that rarely resulted in new business. A deeper dive into the system showed it had many flaws and had been designed by “experts” who had little practical knowledge as to how the sales process actually worked.
The company had a culture that tried to avoid controversy, and so our observations were met with skepticism and some hostility. Two months of analysis and a seemingly endless stream of meetings finally resulted in the company accepting the fact that a major rewrite of the system was needed. Fortunately, the new system was designed with a lot of input from the eventual users.
Lessons Learned and Next Steps
What can we learn from these situations? There are a few takeaways. Managing IT from a common sense perspective means you should:
- Understand your starting point. Have a clear perspective on your core systems and how they work together.
- Have a clear IT plan stated in business terms. Where are we trying to go, how are we going to get there, and how long is it going to take?
- Make sure you have the talent and the right resources needed before jumping into major projects.
- Do not let major systems become obsolete. Do not run up technical debt – it is very expensive to repay.
- Have clear and specific tracking and reporting systems that define results in business terms that everyone, not just the experts, can understand.
Bob Kaplan is an HPA Senior Advisor with over 35 years of experience as a senior executive and management consultant. A former Managing Partner at BCG and Senior Partner at McKinsey, Bob currently counsels CEOs and other senior executives on strategy and organizational issues, primarily within the technology, media, financial services, and utility sectors. Bob has held senior executive positions such as acting CEO and acting CTO for multiple companies, including: Motif Inc., ITM Software, Silicon Valley Bank, Netliant, and Alibris. He holds an MBA from the Stanford Graduate School of Business and a BA from Yale University.