Reimagining the IT department

Just supporting the business? Not anymore. IT leaders are helping to reinvent it

CIO Steve Olive isn't handing out any gold stars to IT for providing good PC support or networking service at Raytheon Integrated Defense Systems. Consistently reliable and excellent IT service should be a given, he says.

What businesses need and IT should be providing are innovative solutions to business challenges. That means creatively applying technology to produce goods more efficiently and at a lower cost, to sell and service more of them, and to do so at the highest possible profit margins.

It also means using IT to create new products and services and even whole new business models, says Darryl Lemecha, CIO at ChoicePoint. Because technology is embedded in just about everything a company does, "technology strategy and business strategy are now one," he says.

Kathleen McNulty, CIO at The Schwan Food, puts it this way: "It's not about IT automating the business anymore. It's about innovating it, improving it."

So, forget about IT supporting the business. IT leaders are focused on reinventing the business, starting with the IT organization.

Their timing couldn't be better, according to Gartner, which predicts that within five years, 60 percent of chief executives will make their CIOs responsible for using information as a strategic (read: revenue-generating) asset. Gartner also predicts that 40 percent of CEOs will make CIOs responsible for business model innovation.

But IT executives such as John Hinkle at Trans World Entertainment, Patrick Bennett at E! Entertainment Television and Filippo Passerini at The Procter & Gamble are all over this trend already. They are completely transforming their IT organizations, and everything is up for radical change, from how and where IT is housed within their companies to IT job titles. IT duties increasingly involve responsibility for business proc­esses as well as the technology that supports them. Also up for reinvention is how IT value is measured.

"If you want to drive a significant amount of behavioral change in an organization, it takes some big swings," says Hinkle. "Maybe that means dramatic structural change or changing what people do." At Trans World, it involved all of the above.

One of the first things Hinkle did when he came to Trans World from General Electric was abolish the title of analyst and move people in that role into the project management office (PMO), which oversees all technology and business projects as well as all business process changes for the company's 800 music stores. Project managers have developed expertise and a special rapport with the specific business functions to which they are dedicated. New projects and even systems changes go through the PMO, which uses Six Sigma project management processes.

As CIO, Hinkle oversees the PMO, is a member of the company's executive board and is deeply entrenched in all business decisions.

"I'm involved in merchandising, store planning and in every other core strategic meeting at the company," Hinkle says. "I'm expected to be very well versed in these things, and I'm also expected to answer more than the IT questions. I'm part of the strategy brainstorming."

Hinkle expects his IT team to be equally well versed in business processes, which is why every IT staffer spends a minimum of three days in the field every year, working in a store, a warehouse or a department such as finance or payroll. "That way, they know what the business really needs and how to help," he says. "You don't have a supply chain system or financial system that works in a box or a point-of-sale system that just takes money. Now we have highly integrated data flows, so every project requires an understanding of all systems and all business areas." By knowing the business, "they better understand why they might get a call [for support] at 1:00 in the morning," he adds.

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