IT is an Internal Business
The advent of information technology into businesses was to crunch numbers (the first computer was a calculator). A little maturity later, IT became management information systems or MIS: The department that generated reports. Businesses came to realize the importance of information and consequently, the value of information technology in generating management reports.
In this context, the title CIO does not do justice to the role of Head of IT. The responsibility is no longer for just information. It is way beyond that. More importantly, its focus and emphasis has changed from just delivering information to delivering business value.
The Product is applications not information, not infrastructure. Applications run on infrastructure and consume, create and move information. However, they bring together all these underlying elements to create business value.
By definition, a product or offering is something that one can sell for a price, i.e. the idea of value creation is intrinsic to a product. It is not that manufacturing or customer contact centers are not important to a business. The value creation and exchange comes from a product or offering. Everything else contributes to it.
Consequently, ITs product is its applications. This is what it sells to its customer, the business.
A business succeeds or fails by virtue of its ability to create products its customers want and, to be more accurate, want to pay for.
This requires understanding your environment (customer needs and wants, competitors, partners, etc.) and your core competencies: What is it that we do the best? What is it that we lack capability in?
Profitable products result when businesses wed the two; leveraging their core competency to address a need in the environment. Hence, the key to ITs success is in identifying which applications create the most value for the business and deliver them on time and budget.
The CIOs responsibility is not to buy servers and databases or to keep the infrastructure up. Their responsibility is to envision, create, deploy and maintain applications that create value for the business. The latter requires the former but often the focus is forgotten. That is when we get IT for ITs sake.
No P&L, No CEO
By this definition then, IT is an internal business but not a profit and loss center. Its market is the business. Its profitability is buried in the books of the business. Hence a CIO, the head of an internal business without P/L, cannot be called a CEO. However, a CIO is an IT product manager.
The job responsibility of an IT Product Manager is to:
The title conveys a subtle but meaningful change in the expectations of the CIO's role. It now demands that the focus shift from delivering information systems to creating business value.
It is clear that the time has come to take a fundamental look at the role IT plays in an organization. Arguably, this ball is already in play at many innovative organizations.
The search for a new paradigm must also include a recognition that roles and responsibilities, and associated job titles, must also change. Job titles make a difference because they create a sense of purpose to their holder and, convey the roles and responsibilities to the audience.
Will a CIO who is called chief IT product manager be more successful? Probably not. However, one who understands the difference in responsibilities of the two will be.
Sourabh Hajela is a management consultant and trainer with over 18 years of experience creating shareholder value for his Fortune 50 clients. His consulting practice is focused on IT strategy, alignment and ROI. For more information, please visit StartSmartS. Or feel free to contact Sourabh at Sourabh.Hajela@StartSmartS.com .