First Person: A View from the Front Lines

REBALANCING ACTS

To thrive in the next century, CIOs need to initiate changes necessary for improving IT quality. They can start by bringing customers and vendors together.

The IT industry is out of balance. In the software industry especially, too much power has wound up in the hands of vendors at the expense of customers.

Vendors have succeeded in weakening the power of customers by often making the cost of switching from one vendor's software to that of another prohibitive.

Quality, consistency and simplicity are largely lacking in today's software.

Although change is sorely needed, software vendors will not do it voluntarily.

For one thing, vendors believe-mistakenly-that it is not in their best interests to change. The types of changes we need are usually brought about by pain; vendors are not experiencing any pain to speak of right now, and might not as long as they can continue to pass on the cost of poor quality to customers. And to a great extent, customers aren't overly concerned with the imbalance inherent in the industry either. The economy is good and there's enough fat in the system to obfuscate the waste caused by the imbalance. Yet the status quo is not sustainable in the long run because of the large percentage of waste; software projects, for example, have a more than 25 percent total failure rate.

Consequently, it's up to CIOs-who should know better than anyone the pain caused by poor quality-to instigate change in the industry. To do that, CIOs need to focus on relationships, not technical issues. That's because vendors aren't the enemy. The problems and successes in the IT industry are the work of three groups: vendors, systems professionals and end-user customers. Each group needs to make some dramatic changes to restore balance to the industry.

TREATING THE SYMPTOMS Y2K is merely a symptom of the underlying quality and management problems in the IT world. Solving Y2K, at best, results in bringing IT shops up to where they always should have been; at worst, information assets just deteriorate further and operating costs rise. The so-called "high-tech workforce shortage" is largely, but not entirely, a symptom of problems with quality and management too.

In other industries where quality lags, external competition and lemon laws can serve to bring about change. The auto industry, for example, sought improvements in quality and management practices only when its financial pain from higher-quality, lower-priced imports became too great. Lawsuits originating from unsafe and shoddy cars added to their motivation.

IT vendors and their lobbyists-powerful forces for the status quo in the high-tech industry-have done everything they possibly can to minimize their Y2K pain through legislative limits on their potential liabilities. Ethical, moral and legal questions of making others pay to clean up their mess aside-the sad thing is that this course of legislative action chosen by vendors will probably fail to achieve the desired effect of less overall financial responsibility.

But that's not the worst of it. To add insult to injury, by inviting legislative intervention into the industry, the vendor community has unduly laid the groundwork for a more complicated future. We will likely forever more have four groups to contend with, unless the original three-the vendors, customers and systems professionals-can figure out how to self-manage and rebalance the industry for the betterment of all. If these groups become further estranged from each other because of these laws, the legislative repercussions could include licensing and malpractice insurance for programmers, government-mandated standards for high-tech products and regulatory agencies that police IT operations. Impossible, you say? Ask the doctors, the auto manufacturers and the chemical companies if they thought government intrusion was impossible.

What's the solution? Is there any hope? Yes. Within the Society for Information Management, the infrastructure complexity reduction working group is establishing guidelines for how companies can reduce technical complexity and thus increase quality. The group-comprising systems professionals from AT&T Corp., Duke Energy Corp., International Paper and Northwestern Mutual Life, among others-hopes to engage vendors in discussions about how they can reduce complexity together. Vendors need to act more responsibly like manufacturers in other industries and strive for higher quality and interoperability among their products.

Customers, but most importantly CEOs and other end-user executives, also need to act more responsibly. They need to start managing IT like any other asset by paying more attention to IT decisions, projects and practices. But the language and cultural gap between executive-level customers and vendors is very large.

The Y2K legislation and the threat of litigation by end-user companies won't help bring vendors and customers together. Neither will the further erosion of customers' rights in the pending Uniform Computer Information Transactions Act (UCITA), an initiative intended to create a uniform body of law governing software transactions. (For more details about UCITA, see www.2Bguide.com.) BRINGING THE PARTIES TOGETHER CIOs need to bridge the information gap between customers and vendors. They are the best hope for helping customers and vendors make the necessary changes in their behavior. But first the systems professionals need to change their own behavior.

In most cases, systems professionals make short-sighted decisions, regardless of the long-term life cycle costs to their employers. The result is that CIOs create a lot of work for themselves and their techie minions in a seemingly endless cycle of scrap and buy. If it's quality that CIOs are after, they'll have to get rid of their scrap-and-buy mentality.

If CIOs don't get rid of their short-sighted focus, someone could do it for them. The dynamics of the industry are in for a change. Y2K is like a big "we let you down, big time" notice from CIOs to their employers. As a result, more technology spending could fall under the purview of executives. Already, Howard Rubin, president of Rubin Systems Inc. in Pound Ridge, N.Y., and a Meta Group research fellow, estimates that 42 percent of technology budgets are controlled by business units and not IT departments. That percentage is greater than ever before and up from 22 percent in 1994.

If executives drive decision making, they could very well become more engaged customers. While many CIOs view this shift as a threat, it doesn't have to be that way. Users and vendors need to be more collaborative. CIOs have an opportunity to become the linchpin that holds together the relationship between vendors and executives.

In the end, this is a good thing. Maybe CIOs will finally figure out "IT alignment" as well as achieve the simplification and quality improvements needed in IT environments. While standards are part of the solution, much of the complexity inherent in software is a result of vendors not communicating with each other because they believe it's best to lock in customers to their products. CIOs can help change this by thinking long term rather than short term.

Of course, incentives for CIOs will need to reflect a long-term mind-set too.

Rewards should be linked to the success of the enterprise, not the half-imaginary ROI of a specific project. If all executives want is the hot new thing or some expedient metric, that's what CIOs will give them. As CIOs, it's critical to see past the vendor marketing and partial measures and stress overall value to the enterprise.

The most effective way the IT industry has of minimizing the intervention of regulators, legislators and litigators is a willingness to change on the part of vendors and customers, and a proactive, customer-oriented high-tech workforce that brings vendors and customers together in meaningful dialogues aimed at the continuous improvement of information assets and the organizations that manage them. CIOs are the logical choice to lead this effort. Are they up to the challenge?

Leon A. Kappelman is associate director of the Center for Quality and Productivity at the University of North Texas in Denton and co-chair of the Society for Information Management's Y2K Working Group.

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