Monday, July 13, 2015

Myth #3: IT is not Core Business

This post is the third and final piece of my series on "The Three Most Harmful Myths Companies Have About IT".
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In 2005, I was just finishing the first year of my term as the CIO for a multi-billion dollar energy company in Texas.  It was our regular practice to have a monthly all-day meeting of VP and above employees. During these meetings we would discuss issues and future strategies for the company.  Although not required, each of us was given the opportunity during the day to present and talk about topics that we deemed important to the company.  During one of these sessions I decided to share my opinion on how important IT had become to the viability of the company.  My goal was to highlight the criticality of IT, in part to pave the way for some projects I had in mind for mobility and information security.

I stood up in front of the group of 30 or so people and said, essentially:

"In many ways we have stopped being a pure energy company.  With the amount of automation we have installed, combined with our reliance on digital data to drive our processes, many could consider us a technology company that just happens to produce energy as a by-product of the information we create."

Although I had expected to create some "buzz" due to the controversial nature of my comments, the result was more akin to enduring a barrage of rotten tomatoes followed by a chorus of boos.  I had anticipated a negative reaction, so I then followed up by saying:

"I'm not trying to reinvent our identity.  Yet, I would challenge anyone in our group to name a part of our operations, whether in the office or field, that could remain viable longer than 36 hours without any functional IT."

At that point, the head and senior vice president of our fossil generation group stood up and said:

"Christopher, we successfully ran all of our operations long before computers were in the mix.  If required, I could run this business indefinitely with nothing but pencils and paper."

At that point I sat down and let the conversation run on to other topics.  Yet I never wavered in my belief that IT had become indispensable to the operations of my company.  Because IT was necessary to facilitate every facet of our business, I could literally see how we had become completely dependent upon information technology.

Now, one decade later, we find ourselves in 2015.  If IT was important 10 years ago, it is absolutely and completely interwoven into everything we do today both in business and our personal lives.  As I was thinking about how to illustrate this point and which examples to use, the answers literally fell into my lap on July 8.  Three very significant events happened, all on the same day.  Rather than spam you with multiple links, you can get a summary right here.

On 7/8/15 United Airlines, one of the world's largest airlines and a $39 Billion entity, had its entire fleet of jets grounded due to a "glitch" in their scheduling software.  At the same time, trading on the New York Stock Exchange (NYSE) was suspended for several hours due to an undisclosed "technical issue".  And finally, the web site of the internationally renowned Wall Street Journal, was unavailable for almost half a day.  If you asked the executives and more importantly the customers of these businesses how important IT was to their viability on July 9, the answer would be a resounding, "MISSION CRITICAL!"

Now let us take a look at just a few other examples of the reliance of business upon information technology.

1.  Amazon.com - Probably the most important e-commerce (or regular commerce for that matter) retailer on the planet, everything this company does is based on some form of IT. Whether it's the front-end portal, the sales & banking system, or the logistical planning module, information technology is its lifeblood.

2. UPS/FedEX - How do you think all of those packages get delivered overnight or within two days?  It's through complex algorithm-based management of multiple components throughout the entire distribution networks of each company.

3. Walmart/HEB/(insert your grocery store here) - The average gross margin for products sold in a grocery store is just about 1%.  How can an entity operate on such a razor-thin line of profitability?  It is accomplished by automated tracking of inventory and a pricing system that can be adjusted dynamically.  It takes complicated information technology to make it all work.  Try doing that with a pencil and paper!

The truth about the importance of IT is all around us, in everything that we do.  Yes, the world can survive with information technology.  But the truth is that almost nobody wants to live in that reality.  If you need proof, go to a third world country where people live in shacks with dirt floors.  I've lived that existence and I can tell you with a level of certainty that almost anywhere you go in the world, no matter how poor, you'll see that everyone has at least a cell phone.  Even the most humble of us will find a way to integrate modern IT into life.

Myth #3, this myth, is perhaps one of the easiest, yet most dangerous fallacies that companies believe, even today.  The belief that IT is not part of "Core Business", and thus cannot and should not be integrated in the strategic planning and management of the organization, can lead to problems on an enormous scale.  And at the very least, it can lead to blind spots and many missed opportunities.

After July 8, I hope that at least three major businesses have begun to see the light.  Has yours?

Monday, July 6, 2015

Myth #2 - Great IT Talent is Easily Found or Replaced

This installment is the second in my series of the "Most Dangerous Myths Businesses Have About IT".

As I touched on with my first myth, it is not easy for people outside of IT to understand just how their company's technology and software work.  To be completely fair, it is also difficult for IT professionals to gain knowledge outside of their specific domain.  More specifically, it would be quite unlikely to see a networking specialist have much skill in database administration.  Conversely, you would be hard pressed to find an ERP functional specialist have any abilities whatsoever to configure a firewall.

These examples bring us to our first point.

Because the components of IT are hard to understand you can imagine how difficult it is to properly scope a job description.  Without listing the important components of the required job or having a way to describe how the position is attractive to potential candidates, it is very difficult to even begin the hiring process.

Many process-based approaches to problem solving are based on an assumption that, in order to reach a solution, the problem must be well defined.  When trying to solve the problem of recruiting great IT talent, having a less-than-thorough understanding of the requirements is not a recipe for success.

     Most companies struggle to attract great IT talent because they cannot accurately define the qualities that they are seeking

Now on to the second point.

Not everything is as it appears.  There are so many resource writing guides and keywords from which to choose that it is relatively easy for candidates to create a glowing resume.  Say that the job description for the candidate search is well crafted and appropriate for the position.  The end result will most likely manifest in a large number of resumes pouring in.  For certain companies, a single job posting can generate hundreds of resume submittals.  Quite a few of these resumes will look very attractive, at least on paper.  So the question then becomes one of finding the most qualified candidates from the entire pool of resumes.  A behavioral interview can help determine "cultural fit", but it does nothing to assess the actual skills a person possesses for the role.

Unless the position is purely management or "people facing", the individual's skills must be evaluated against the requirements of the job.  How many companies do you (the reader) know that have the ability to do role-based assessments that are comprehensive enough to determine the level of technical fit?  In my experience it is quite rare for finalist candidates to receive a truly comprehensive assessment of the important, job specific skills.  When I see failed hires, many times it was because the person talked a great game but could not perform at the proper level after being hired.

On to the final point.

After about 20 years of experience within information technology, I've become a firm believer that the vast amount of productive work, or the work that is meaningful to the organization, comes from about 15-20% of total IT staff.  To quantify, for every 100 IT workers in your firm, the bulk of the productivity you receive is generated from about 15-20 people.

There is nothing wrong with having average employees.  They are the individuals that (mostly) do the work which is required to keep operations running.  However, these are not the people who can innovate or further increase the value of IT in a way that makes a company more profitable.  Some managers try to compensate, when they don't have top performers, by hiring a lot more average player.  That never, ever works.  The lifeblood of an excellent IT organization is the group of top performers.  They are the "go-to" resources whenever a problem is not routine or average.  If you have them, great, but if you don't it's likely your firm employs a large number of contractors.




Think about what I'm saying in terms of this graph.  Most of the IT resources you have/hire (without utilizing the principles outlined in "The Talent Triangle") will be average.  Yet in order to have IT services that are valuable to the company today and tomorrow, you need those 15% on the right end of the curve.

The problem with getting that elusive 15% to come to your company is several fold.  First, they are going to be quite expensive.  Then, because they are so talented it's likely that the companies that they are servicing are not going to make it easy for you to lure them away.  Many of these superstars already recognize what they are worth and have gone into consulting.  After all, why work for $100,000/year when you can consult, on your own terms, and make 2x-5x that amount?

IT talent is always available, just not the kind that you really want.  One of the traps companies fall into most often, especially when they already have these excellent resources on staff, is that they are easy to find on the open market.  Of course this leads to a belief that there is no need to take special steps to ensure that the great IT talent already in-house requires no special treatment.  After all, if that talent was to leave it could be quickly and easily replaced.  SO MANY companies only learn after the fact how wrong these beliefs turn out to be.

The best cure for regret is to understand how to avoid it in the first place.