IT Must Build Value

The issue of the moment for CIOs is to find a business goal other than passing along the orders to cut the budget.

Can there be joy in joining databases? Absolutely. Especially when the new joins and resulting reports give your corporate execs information to beat the competition. Its the stuff that can make you a company hero.

Susan Jones is an information architect at Elie Tahari, a high-end womens fashion company in New York. Jones develops applications using Information Builders WebFocus business intelligence tools to stay on top of an unforgiving business in which styles are in constant flux and not having the right garment in the right store at the right time may mean loss of business and defection to another label.

I met Jones at the Information Builders annual user conference in Chicago, where she was proud to show a WebFocus project built from scratch in six months. Data thats been scanned by retailers selling the Tahari line comes in daily. When combined with information from systems ranging from mainframe databases to desktop spreadsheets, the result is a radar screen that tells executives exactly what is happening in the business.

"We had two initial objectives: first, to close some loopholes and prevent anything from slipping off radar screens and, second, to be proactive and take advantage of opportunities," Jones said in an e-mail to me following our conversation. The completion of the first objective has allowed Elie Tahari to expedite delivery to stores by 15 percent. The second stage of the project is just unfolding. The project has been far more than a joining of databases, but the development of a new database infrastructure and a view of the companys business that provided a competitive edge. It has been a genuine melding of business and technology.

Two days later, I was at the MIT CIO Summit in Cambridge, Mass. The issue of the moment for CIOs is to find a business goal other than passing along the orders to cut the budget. It doesnt take a chief financial officer or a company president long to figure out that if the CIO is only a conduit for budget cuts, that position itself should be cut.

While the CIO Summit was closed to the press, from a couple of interviews with attendees and with the event organizer, it was clear to me that the need to distinguish IT as a top-line contributor rather than a bottom-line anchor should be at the top of every CIOs to-do list. Those attending the summit were eager to hear of research on how to move IT beyond being a cost burden from Erik Brynjolfsson, MITs director of the Center for eBusiness.

"The irony of the information age is that you have more data than ever before, yet you have a poorer and poorer understanding of the real sources of value in the corporation," Brynjolfsson told me after the event. While IT can do a good job at measuring the infrastructures performance—server uptime, disk capacity and so on—it has a much more difficult time measuring the other end of the spectrum: ITs business value to the corporation, he said.

"Unless we get a better understanding of where the productivity is being created, we will keep missing the target," he said, adding that the inability to measure leads to big swings in overinvestment and underinvestment in IT.

The CIOs need to take the lead in changing the discussion from bottom-line cost cutting to top-line revenue growth was echoed by one of the CIOs attending the summit. "We have to drive top-line revenue development," Microsoft CIO Rick Devenuti told me during lunch. Devenutis position has gained prominence at Microsoft as the companys push to become an enterprise infrastructure provider has taken on increased importance. While his product decisions are preordained—hell be using all Microsoft—he has found himself having a say over product direction and being a gatekeeper in product release schedules. Devenuti agreed with the needs expressed at the CIO Summit to come up with a better way to measure the value of IT investment.

One way or another, the sooner CIOs can restore the focus of their IT departments to the concept of competitive advantage, the better off they will be. The trick in todays climate is that they may have to do this by working with existing systems rather than by adding new ones. Maybe they should grab the shuttle down to New York to talk to an Information Builders developer who is doing just that: finding value in tying together what Tahari already has rather than looking for something new.