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This chapter is from the book

This chapter is from the book

Winning the 3-Legged Race: When Business and Technology Run TogetherWinning the 3-Legged Race: When Business and Technology Run Together

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This chapter is from the book

This chapter is from the book

Winning the 3-Legged Race: When Business and Technology Run TogetherWinning the 3-Legged Race: When Business and Technology Run Together

Learn More Buy

Managing Technology Investments

This functional area focuses on the Enterprise Program Management Office (EPMO) and other technology and business executives who are concerned with ensuring selection and execution of the right business technology initiatives. The capabilities that must be developed to support this functional area ensure that the organization understands what it owns from an IT standpoint, what it is working on, and who is available. The organization must make certain that business technology investment decisions are closely aligned with the needs of the business and that technology initiatives are executed using proven methodologies and available technology and IP assets. Four capabilities constitute the Managing Technology Investments functional area:

  1. The Portfolio and Program Management capability identifies, organizes, and manages existing IT assets and projects. This capability is focused on effective program monitoring and execution. This includes the development of enterprise project and asset portfolios along with appropriate reporting.
  2. The Approval and Prioritization capability determines the criteria used for evaluating alternatives, specifying the evaluation process, and prioritizing technology investments. The creation of enterprise business cases and the definition of appropriate selection criteria and mechanisms are thereby enhanced.
  3. The Project Analysis and Design capability drives technology-enabled business improvements and leverages re-usable IT assets. This allows the integration of Enterprise Architecture (EA) and governance with a system development life cycle (SDLC).
  4. The Resource and Demand Management capability is used to quantify, qualify, and manage business technology demand and resource requirements. It supports and promulgates the process for categorizing and prioritizing business technology requests to ensure that they are consistent with required business capabilities, priorities, budgets, and capacity. This capability also guides the allocation of high-value scarce resources.

Research Insight

Professor John F. Rockart on Leadership

John F. Rockart, Senior Lecturer Emeritus of Information Technology at the Sloan School of Management at MIT, has been a student of technology management for nearly half a century. In these excerpts from an interview, he relates how business technology’s role in the organization has evolved.

"We’ve Come a Long Way"

History of business technology

"I’ve been observing IT since 1957. In the early days, the late 1950s and early 1960s, the field was not a field. It was a simple back-office functional area often run by somebody who came out of the accounting department and who was working either with punch cards or the first rudimentary computers. At that point, this person reported two or three levels down from the CFO.

"As the technology got better and better and better, slowly but surely, IT took over just about everything in the accounting department. Then came order entry procedures and basic transaction processing. At this point, the CFO became much more involved. It was not really until perhaps the past 20 to 25 years that line management has started to get somewhat involved. It was in the early 1980s that I, and some others, started to call on line management to take a stronger role.

"Starting about that time, it became important for the success of the business for IT to be involved heavily in major transaction processes. However, these could not be designed or implemented well without a full understanding of what the business was all about and how the business operated. And that understanding really had to come from business executives.

"In the mid 1980s, we started to talk to business leaders about this need and found some receptive, but not many. For about the next 15 years, we talked about starting a course called "IT for the Non-IT Executive," because we recognized the importance of line leadership. But we didn’t get much of a reception. It’s really been in the last five, six, seven years that non-IT execs have started to say, ‘I really have to understand IT.’ As a result, one of the most popular executive courses at MIT right now is ‘IT for the Non-IT Executive.’ We offer it three times a year for 75 to 100 people each time.

"Many management teams, but far from all, have now caught on to the fact that IT is just one of the tools in the business. Twenty years ago, as a line manager thought about his strategy, he focused on three major assets—people, money, and machinery. Today, since IT is now in many companies more than 50 percent of the machinery, the focus is now four-fold—people, money, machinery, and IT.

"No executive today would turn to the CFO and say, ‘I don’t understand this money stuff. Take care of it and keep me out of the loop.’ Or turn to the head of HR and say the same thing about people. But some managers today are still effectively saying this sort of thing about IT. There are far fewer of them. This doesn’t happen in most major companies any more, but you still find it in small and even some midcap companies. However, this attitude has significantly changed over the last 20 years.

The need for convergence

"One thing that is very clear to me is that the BTM approach, not just alignment, but synchronization, is correct. I would hope for convergence some day. Given the need for convergence, there is a significant need for more IT education of line managers. It’s also a reason that, at MIT, a number of the courses in the master’s program I taught were aimed at line managers or potential line managers. Students now want to understand enough about IT to get heavily involved, although they only know the basics about technology itself.

"If this is to be successful—and I refer to the entire IT revolution we’re undergoing that will make companies much more competitive—the degree of understanding of the business by IT and the degree of understanding of IT by business has clearly got to be better than it is today. I think we’re a lot better today on the understanding of business by IT, certainly in major companies. I watch time and time again where the fundamental choice of who is to be the CIO is based on how good a business person the candidate is. We’re still probably far less from there on the other side.

"We’ve come a long way from the day in which a data processing manager ran IT to a day in which there is a shared understanding at the senior executive levels that there needs to be a very close convergence between the business leaders and the IT leaders, that they each need to be, to some extent, the other guy. The IT guy has got to be a business leader and the business leader has to understand IT. We’re not at the point where each can do the other’s job. We’re still a long way away, and we will never close that gap because there’s a need for expertise on each side. In some companies, we’re coming very close to what I would call the ideal roles, dual roles to make IT work effectively in the organization."

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