Getting It Right

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It’s been 40 years since the
advent of modern IT, yet few
companies do it well. If you
stick to three central
principles, you can turn IT
from a costly mess into a
powerful weapon.

Getting IT Right

by Charlie S. Feld and Donna B. Stoddard

copying or posting is an infringement of copyright. permissions@hbsp.harvard.edu or 617.783.7860 Reprint R0402E

NO
TC
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It’s been 40 years since the advent of modern IT, yet few companies do it well. If you stick to three central principles, you can turn IT from a costly mess into a powerful weapon.

Getting IT Right

DO

COPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.

by Charlie S. Feld and Donna B. Stoddard

Of all the members of the executive committee, the CIO is the least understood—mostly because his profession is still so young. Over
the centuries, the fields of manufacturing, finance, sales, marketing, and engineering have evolved into a set of commonly understood
practices, with established vocabularies and
operating principles comprehended by every
member of the senior team. By contrast, the
field of information technology—born only
40 years ago with the advent of the IBM 360 in
1964—is prepubescent.
This generation gap means that, in most organizations, the corporate parent—caught in the linguistic chasm between tech-speak and
business-speak—has no idea what its youngest
child is up to. Management too often shrugs its
shoulders, hands the kid a fat allowance, and
looks the other way. Later on, the company
finds it’s paid an outrageous price for the latest
technological fad. Instead of addressing the
problem, many companies just kick the kid out
of the house.
The result in many major corporations is

that IT is an expensive mess. Orders are lost.
Customers call help desks that aren’t helpful.
Tracking systems don’t track. Indeed, the average business fritters away 20% of its corporate IT budget on purchases that fail to achieve
their objectives, according to Gartner Research. This adds up to approximately $500 billion wasted worldwide. Such waste—most egregious in industries
like transportation, insurance, telecommunications, banking, and manufacturing—is a direct result of the fact that IT has so far operated
without the constructive involvement of the
senior management team, despite the best intentions of CIOs. Over the years, IT departments have enthusiastically fulfilled requests by different corporate functions. In the process, companies have created and populated dozens of legacy information systems, each

consisting of millions of lines of code, that do
not talk to one another. As the data from discrete functions collect in separate databases, more and more resources are required merely
to keep the systems functioning properly.

copying or posting is an infringement of copyright. permissions@hbsp.harvard.edu or 617.783.7860 harvard business review • february 2004

page 1

G etting IT Right

period, makes appropriate investments directed toward near-term cost reduction, and generates a detailed blueprint for long-term
systems rejuvenation and value creation.
A Simplified, Unifying Corporate Technology Platform. Such a platform replaces a wide variety of vertically oriented data silos
that serve individual corporate units (HR, accounting, and so on) with a clean, horizontally oriented architecture designed to serve the
company as a whole. This is similar to selecting standard-sized pipes and connectors for a city plan.
A H ighly Functional, PerformanceOriented IT Organization. Instead of being treated as if it were different from the rest of
the firm or as a loose confederation of tribes,
the IT department works as a team and operates according to corporate performance standards. Like interlocking gears, these principles
work together and must be consistently applied. If they mesh well, each reinforces the others. If...
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