Barriers to IT Strategic Relevance

Henry Peyret, in his 2007 Forrester article, Assess Your Enterprise Agility well describes the CIO dilemma:

• IT objectives still include only cost reduction and quality
• IT objectives rarely reflect enterprise agility objectives
• Many firms still measure IT on its contribution to cost reductions

While there are a number of current IT trends that, in theory, should improve enterprise agility — such as service-oriented architecture (SOA), on-demand services, pervasive technologies, outsourcing, Dynamic Business Applications, agile development, and off-shoring, these technologies require cross-department investment in enterprises where each business unit manages budgets separately.

A reliance on shared services inhibits change flexibility. Typical shared services like IT, HR, and procurement are often seen as inhibitors to change. While their main objective is to decrease global costs, they often do not deliver the right level of adaptability to the different business units that are facing change. These units complain that shared services provide either the same “lowest common denominator” service at the lowest price for every business unit or a higher level of service but at a higher service/price ratio that is too expensive for the “poorest” units.

Think about this as you design and scope your ERP, outsourcing or shared service initiatives.

If IT wants to be strategically relevant, it must provide business value beyond cost reduction. As you plan your initiative, are you including business functionality, process redesign, and change management that will enable strategic business value?

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