Should the CIO Embrace Moore's Law? - Page 1

Oct 30, 2007

Steve O'Connor

In 1965, Intel co-founder Gordon Moore saw the future. His prediction, now popularly known as Moore's Law, states that the number of transistors on a chip doubles about every two years. This observation, made a reality by Intel, the world's largest silicon supplier, has fueled the worldwide technology revolution.

Today, this principal has become an iconic symbol for radical, continuous improvement without the continuous price upswings. What would happen if CIO’s adjust their center of gravity to Moore’s Law-style of radical improvement?

The catchphrases “running IT like a business” or “aligning IT with business” are so overused today they are almost cliché. What do these concepts really mean, and what should companies do differently to achieve these elusive goals? What if CIO’s decided not simply to run IT not just like a business, but like a commercial IT business, living or dying by the concept of continuous innovation and improvement embodied in Moore's Law? With CIOs constantly asked to do more with less, why not build that principal into the very foundation of operations?

Applying the genius and simplicity of Moore's Law to corporate IT operations is, at first blush, an impossible idea. IT executives are so mired in day-to-day tasks that they can barely see past putting out fires to figure out how to deliver a service faster, better, and cheaper.

But as a former CIO who now works on the vendor side, it seems clear that a Moore-inspired continuous improvement revolution could be embraced by corporate CIOs too. The key to achieving this lies in looking at IT business value as a process, not a one-time event. If embraced, the results could be compared to going for Lasik rather than getting a new refraction every couple of years.

The Five Lessons

I first began thinking about this when I left my CIO position to join an IT vendor. During the ensuing months, actions once seen as “best-practices” suddenly seemed to be not quite on target. I began to think about applying some of the best-practices of commercial IT in today’s internal IT organizations—in which IT is not simply a strategic part of the business and its differentiation, but actually is the business—could have great value. Here then, are five chapters from the commercial technology world success manual that should also be applied to Corporate IT.

The IT Income Statement

At the philosophical level, every CIO recognizes the need create business value, and some are actually building an IT view of income, expenses, and revenue. Many CIOs are already doing an admirable job of understanding the total cost of delivering core services and being able to define their intrinsic value in business terms such as increased revenues, faster time to market, and so on.

What is not built into the IT psyche is the concept of continuous improvement—such as halving the cost of CRM every two years. Given the constant pressure to do more with less, IT leadership must build ongoing innovation and its cost into everything.

Perception is Reality

It's all about perception. (Disclaimer: this doesn’t mean going down the path of some of our better known vendors who painstakingly build a perception far above reality.) But, speaking in general terms, corporate IT departments are notoriously weak in marketing their services. Unlike IT vendors who compete daily on price, functionality, and service, IT grudgingly accepts their relationship with "users" but rarely takes time to win them over.

Almost no corporate IT leaders segment internal customers by type of business user (i.e. power user, manager, VP, auditor) as IT vendors do, then try to understand what keeps them up at night, and address those specific concerns in their terms. If they did, it could mean being seen being a business partner rather than part of the plumbing.

For example, IT departments rarely think about the difference between the economic buyer (Capital "C") and the user (Lower-case "c"), but the vendors who serve them do. Corporate IT must design and deliver appealing solutions that improve productivity, increase business value across an entire department or company, and continue to deliver gains over time.

The value and success of IT needs to be explained to executives and power users alike. Buyers and end users don't care about the functional components or "speeds and feeds." They care about what drives success in sales, new product development, or HR. The most successful vendors have figured out how to deliver to this as well as how to help corporate IT sell the value of the total solution to both segments of the customer base.

Expanding Roles

A big lesson-learned during my transition to the vendor side is that roles vary depending on where you sit. The typical corporate-side project manager rides herd on a clearly defined project, such as installing a Web server. On the vendor side, though, the project manager is more of a general manager; required to understand everything, from make-buy decisions, and installation requirements to training, marketing and competitive analysis.

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