Success has many fathers, failure is an orphan. But when it comes to business transformation projects, failure is not an orphan, instead it is unfairly identified as the offspring of the single parent: IT.
However, now is not the time to complain about prejudice but to assess how best to approach the biggest project of all. Even a definition of a business transformation project can sound painfully ambitious: “combining strategic, process and organisational change and technology development resulting in substantial financial benefits.”
"The CIO has an important role to play in supporting, encouraging and sometimes triggering business transformation, but never leading it"
David Burden, group CIO, Royal Mail
Business transformation does not happen every day as organisations are unlikely to embark on such a disruptive set of tasks unless forced to by inflected market conditions, merger and acquisition activity, a major geographical move or because other outside forces make it the best survival option. Whatever the context, the idea of business transformation places CIOs at the heart of a paradox. Rightly or wrongly, opinion is that the personality type that makes a great CIO means they are both ideally suited and hopelessly ill equipped to deal with business transformation. In tandem with this there is the old saw that CIOs must look beyond the datacentre and learn about the business in order to provide value. In a business transformation project this is unavoidable and key to success.
It is time to break down a few preconceptions about what IT can deliver and where it sits in the business transformation process. “The fundamental point is that business transformation should be led by line business leaders. The CIO has an important role to play in supporting, encouraging and sometimes triggering business transformation, but never leading it,” says David Burden, group CIO at the Royal Mail. “That leadership must come from the business managers who will stand or fall on the results of the transformation. Depending on the scale of the transformation that can be anyone up to the CEO. If the business transformation is confined to the IT organisation then clearly the CIO – or one of his direct reports, should lead it. However this is very rare. Almost all business transformation today will involve IT and much of it will be enabled by IT.”
So CIOs are unlikely to be asked to be the driver of change but will be asked to “make it happen”.
The first challenge is at the planning stage. CIOs cannot afford to be overwhelmed by the sheer scale of business transformation and must avoid becoming insular.
CIO leadership skills
Do you have the soft skills to engage with other business areas such as sales and marketing?
Do you understand the personalities of the people you are dealing with?
Do you understand exactly what is required of IT within the transformation?
To overcome resistance, be prepared to communicate with those affected in person.
Avoid assumptions at the planning stage.
The transformation may mean changing more
than you think to accommodate different cultures and different laws.
Be sensitive to people’s insecurity. For example, people in the minority company following a merger.
Assessing the power of the centre versus the power in other groups is critical to understanding the chances of success.
They will not be able to ignore the broader issues beyond the technology rollout or they may miss the bigger picture and neglect key factors.
This may be way outside the comfort zone of most CIOs. The skill sets of a successful CIO, those of analysis, process, procedure, testing and accuracy are the bedrock of a successful transformation. However the soft skills, those of communication, empathy and engagement, are perceived as being alien to IT professionals who are seen as abrupt cost cutters. IT people are task oriented with key strengths and skills that are analytic, scientific, process and procedure in nature and solution and technically focused. IT culture is based on testable hypotheses but in the middle of business transformation CIOs will be put under pressure to make assumptions without the specificity that they are used to.
A business transformation project means that the CIO and their team may be scattered throughout the organisation and will be interacting with other departments among people who are suspicious of IT and sceptical of change. They will not have IT’s attention span and will not understand its role.
For example, although IT is the enabler and therefore many CIOs may feel they should be able to remain neutral and above any politics – this is unlikely to be the case.
If business transformation is the result of a merger then expect suspicion from within the minority company. If it is driven from the centre – which is most likely – expect scepticism. If you work for an international company that is headquartered overseas you can expect a “have you seen what the Americans/Germans/Japanese are up to” attitude. Terry Dann, former CIO of Ford Financial Europe and a founding director of Woburn Consulting has rolled out business transformation projects into new territories. “My colleagues are not going to thank me for this but CIOs must put their own objectives second to those of the business. Naturally IT will have its own agenda within any business transformation project but, for example, if you are rolling out a project into Eastern Europe, it is the broader business issues that will decide the fate of the project,” he says.
“Certainly there may be huge IT considerations, such as an ERP deployment or a shift of operating system, but those are things that are part of the platform for change. There will be cases where IT may be bringing in some fantastic piece of technology that is really going to change the game, such as RFID to a logistics company, but it will mostly be enabling someone else’s vision. Addressing the cultural issues of different departments, which may be in different countries, associated with that change is key,” says Dann.
Pressure to act
When the project enters the execution phase there is likely to be a pressure to be seen to be doing something positive in the midst of a lot of disruption. That is when CIOs feel forced to rush to deploy technology and risk becoming the fall guy if it does not work and the blame game starts.
This jumping in too soon must be avoided at all costs. “IT exists only to support business objectives and CIOs must focus on business success,” says Dann.
“If the technology doesn’t deliver in a business transformation project then the research and analysis wasn’t good enough. If the correct research was done about the performance, scalability and interoperability issues then timing should not be a factor. There should be no real excuse for failure and it shouldn’t fail, if the IT team is worth its salt.”
CIO must-dos in business transformation
Have clear lines of responsibility in the steering group and within IT.
Make sure that the IT components necessary to support the business transformation are well defined early on, properly funded and that there is strict change control.
Set a realistic timetable – 90 per cent of failures are due to optimism not realism.
Be led by the business not by IT considerations.
Do not let IT be pushed into rolling out technology before the business is ready for it.
Retain the core of the programme team to conduct continuous monitoring of the changed processes.
Ken Rutt is the CIO of Barnsley Council. Last year Rutt began a 10-year, £70 million transformation project to equip the town for the 21st century. Rutt believes that not being overambitious and developing a roadmap set with clear milestones should deliver success.
Rutt knows the honeymoon is not yet over but the council is confident that it is in control of the technology rollouts and having negotiated a ‘neat exit’ – it can either buy out the shares of the joint venture company set up to deliver the transformation or extend the contract for a further five years – it will deliver the promised benefits.
“Another fundamental point about transformation is about responsibility,” says Burden. “Clearly people from the IT organisation must be integral to the business transformation project and be represented on the steering group. If the project is big enough – for example if the CEO or another executive board member is the sponsor – and the role of IT is significant, the CIO should be a member of that steering group.
“The project director runs the transformation project, reporting to the project sponsor, not to the steering group or project board – only government agencies using a ‘spread the blame’ methodology like Prince 2 adopt this approach – with predictable results.”
Burden clearly believes that Prince 2 opens up the prospect that if more than one person is at fault then no one is to blame. But he also concedes that it is at least an attempt to provide a project management method to address coordination of activities and resources, scheduling communication, cost measurement and progress.
Avoiding the blame game
In any failing business transformation project, IT is a target but experienced CIOs will know that there are three IT factors that often cause problems: poor user interface design in IT components, lack of training for users of new systems and poor initial performance and stability.
Avoid taking the hit. As Burden says: “The IT system will always be blamed unless it is very, very good.”
Barnsley, South Yorkshire, is a traditional mining town with a desperate need for regeneration. The council planned to tackle this through an ambitious programme to change everything from how the population interacts with the council, to attracting investment by reinventing Barnsley as a 21st century market town. This provided quite a challenge for CIO Ken Rutt, since Barnsley is a town where, after the local authority, the next biggest employer has just 1,000 workers. Rutt planned to shift from what was a “fairly poor base of IT infrastructure – including a server infrastructure that was unreliable” – and introduce an electronic document management system as well as a major SAP Financials rollout. “SAP was not without its teething problems but it is a big product and we are starting to get benefits from it,” says Rutt.
The project scope involved establishing an electronic post office; developing web applications and deploying broadband access across the town. The council also wanted to implement a desktop refresh strategy to equip officials with new laptop and tablet PCs and turn 13 secondary schools into eight learning centres, equipping them with a modern IT infrastructure.
If this wasn’t enough, the council also planned to negotiate the outsourcing of a large number of staff; and consolidate several sites into a new purpose built office with 800 users. After an 11-month tender process, instead of outsourcing the project or handing over control to an outside supplier, the council decided to set up a joint venture company with chosen supplier Bull Information Systems. The new company, Bull TCL, would take on a 10-year, £70 million project, guaranteeing to either improve services by a financially measurable metric or it would meet existing service levels at a measurable 20 per cent cut in costs. Bull TCL would create employment for local people and reskill over 100 outsourced workers transferred to it. The plan was to build a commercial services portfolio which can be offered to other organisations with any profits generated being shared with Barnsley council – which retains a 20 per cent shareholding in the joint venture. The council’s infrastructure was scattered over several sites with “a server for every system” some AIX but many NT servers. “We had a proliferation of NT servers, but not the team inhouse to deliver the necessary service. Bull TCL has brought in third-party contractors and the money saved is being reinvested in projects such as the electronic document management system,” says Rutt.
“At the desktop and laptop level we took the decision for a three-year laptop and four year desktop refresh programme.” The council is rolling out Hyperwave EDMS. Rutt says: “We have 800 streams of information covering everything from planning applications – which are now scanned on receipt – to housing benefit information, so an electronic document management system is key. We are moving away from a file and save system and working to move to a much more structured approach to how we keep our information.” The council now employs an expert in record management and is putting in place a workflow information system, which for example will guarantee that users such as social workers are always working to the latest version of a document.