The disconnected CIO

Why do some CEOs consider CIOs and IT managers as non-strategic to business success, asks Bassam A Samman, CEO and founder of CMCS, and a professional expert on risk and project management?

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By  Bassam A. Samman Published  May 1, 2006

|~|samman200.jpg|~|Samman: Organisations today face the risk of CEO-CIO disconnect, which could damage business.|~|Organisations today are facing the risk of CEO-CIO strategic disconnect. This is the result of an absence of ways to evaluate how prospective IT investments can help meet company objectives. There is neither a tangible method to demonstrate the value IT delivers to the business nor an easy method to show the business what to expect from IT investments and when.

Such a disconnect could have a drastic effect on an organisation's business objectives resulting in projects that are not aligned with the business strategy, inadequate funding for projects, delayed decisions, delayed projects, improper projects selection, improper resources allocation, cancelled and terminated projects, operational inefficiencies, unrealistic expectations from the business and a devaluation of IT in the eyes of the business.

Addressing this risk has become a pressing need. IT investments are crucial for an organisation's growth, as they are the key for supporting the organisation's strategic goals relating to the development and enhancement of business processes to satisfy stakeholders' needs and requirements. These processes typically cover areas relating to accounting and finance, customer service support, human resources, asset management and maintenance, sales, inventory management, marketing, order and invoice processing, order fulfilment, R&D and product development among others.

Delivering strategic goals requires decomposing the goals into objectives that are SMART (specific, measurable, agreeable, realistic and time/cost bound). This will allow the CEO along with his strategic team to analyse and formalise the different strategies for the organisation to pursue achieving their desired vision.

Strategies will identify what initiatives or action plans should be taken to reach the selected objectives. Consequently, determining and evaluating alternatives that support the organisation's objectives, selecting the best alternatives and identifying critical issues are key considerations.

While such an approach ensures a better chance of delivering to meet goals, delivery itself remains a problem. On average, only 33% of organisations that have a strategic vision manage to realise the same. Delivering action plans requires the organisation to invest money and resources in order to execute them, so the expected benefits can be realised when the products or services deliverables go into operation.

An action plan should be managed as a project, with people as well as other resources brought together to meet specific objectives within a finite period of time by carrying out a set of planned activities. Project management is a science which views each project life cycle as a group of five processes: initiating, planning, executing, controlling and closing a project. During these five processes, nine areas of knowledge will be managed covering scope, time, cost, quality, human resources, communication, risk, procurement/outsourcing and integration of those areas.

The successful management of a project will increase its chances of achieving its objectives; nevertheless, this might not be true of the business benefits, for which the project was taken. Project objectives are usually measured against time, cost, quality and scope; whereas, business benefits will be measured against the return on the investment made. For example, a billing software project might finish ahead of schedule and below budget, but it might fail to operate successfully. ||**|||~||~||~|To overcome this problem, CEO, CFO, CIO and other CxOs must align the IT investments with the strategies that have been formalised. Project Portfolio Management (PPM), as the name implies, is a collection of projects and other initiatives that are grouped together, allowing them to be managed as a portfolio, to facilitate the effectiveness of that work to meet strategic objectives.

PPM allows an organisation to analyse different 'what-if' scenarios. These could include: balancing value against risk; properly and efficiently allocating scarce resources; building the link between project selection and business strategy; achieving balance between long and short term projects, and high risk and low risk ones; better communicating priorities within the organisation, both vertically and horizontally; and providing better objectivity in project selection.

The successful implementation of PPM will provide the organisation with the solution to the causes of CEO-CIO strategic disconnect. For example, the issue of not having means to evaluate how prospective IT investments can contribute to the achievement of a company's objectives, PPM will now allow the CEO to have a comprehensive understanding of how IT investments or projects will impact the business (risk versus reward) in order to influence/direct the right decisions.

The PPM will provide CxO's with customisable scoring criteria to jump start project prioritisation efforts, compare and analyse options using what if analysis, side by side, and waterline to fully understand trade-offs and communicate comparative information to others to ensure the right decisions are made.

As for the problem of no tangible method by which to demonstrate the value IT delivers to the business, PPM will allow everyone in the organisation to understand the measurable contribution that IT investments makes, and the value it delivers. The PPM will provide CxO's with the tools to capture critical data for decision making using workflow enabled request management functionality, communicate comprehensive and critical information for awareness and proactive issue resolution, and demonstrate IT's contribution to critical stakeholders by tracking key business performance measurements.

Finally, the problem of the absence of an easy method to show the business what to expect from IT investments and when; PPM will now allow anyone in the organisation to find the status of their project and spend less time reporting status, and get credit for all of the work he/she is doing. The PPM will provide all those involved in managing and delivering IT investments with an enterprise project management tool to consolidate all those projects into a single database. This will promote predictability of future project outcome based on today's results and actions; visibility by tracking and analysing projects Key Performance Indicators; effective collaboration between team members when delivering scope; accountability for taking actions; and confidence when taking decisions.

Conflicts and disagreements within an organisation are largely attributed to priorities and needs mismatch, PPM is the approach for the CIO to map CEO priorities and needs into the IT Investments to be delivered, and thus proactively treat the risk of CEO-CIO strategic disconnect.

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