Gnashing your teeth because your firm’s hefty IT investments generate weak returns? Most companies are in the same boat. Worse, some suffer disastrous losses owing to mismanaged IT decisions. (Witness companies that sank millions into CRM software—then discovered they didn’t need it.)

Why these fiascoes? Many non-IT executives leave key information-technology decisions to IT executives because they don’t feel comfortable enough with technology to manage it in detail. Result? IT executives make choices that inadvertently clash with corporate strategy.

IT executives should choose information-technology standards, design operations centers, etc. But non-IT executives must ensure that IT choices align with company strategy—by making six crucial strategy and execution decisions.

Strategy Decisions

1. How much should we spend on IT?
   Define crystal-clear IT goals. A vague vision (e.g., “providing information to anyone, anytime, anywhere”) can mean millions wasted on chasing elusive benefits. Then set IT funding to achieve those goals.

    

2. Which business processes should receive our IT dollars?
   Decide which IT initiatives will further your strategy—and fund only those. You’ll avoid burying your IT department in irrelevant projects.

Example:
Delta Air Lines overhauled its IT investment approach when its business units’ disparate IT systems began hindering employees’ ability to serve customers. A single question (“At what gate will my plane arrive?)” could generate 17 different answers. Delta’s response? A new, unified technology platform providing all employees with current flight and customer information. Simultaneously, Delta shelved a revenue-planning system—competition for additional IT resources would have threatened the new platform’s success.

3. Which IT capabilities should be firmwide?
   Centralizing IT capabilities can save money—but limit business units’ flexibility. Yet excess flexibility is expensive and can dilute units’ synergies. Weigh these tradeoffs.
   

Example:
After a century of operating as 200 decentralized units worldwide, Johnson & Johnson had to rethink its response to a new breed of customer with scant patience for multiple salespersons, invoices, and shipments. It introduced a centralized global desktop that provided “a single view of the customer” (e.g., standardized account numbers) and enabled cross-unit electronic communication—but maintained individualization at regional levels.

Execution Decisions

4. How good do our IT services need to be?
   Obviously, an IT system that doesn’t work is useless. But don’t let IT executives push for “Cadillac” service when a “Buick” will do. Determine how much reliability, responsiveness, and data accessibility you must have—and don’t waste money on the rest. For Dow Corning, a brief downtime—though inconvenient—wouldn’t halt production. So the company built a back-up site for use only if its system crashed for several hours.

    

5. What security and privacy risks will we accept?
   Weigh tradeoffs between privacy versus convenience. When Yale University let applicants access their admissions decision online, Princeton officials—competing for those students—accessed the site, too.

    

6. Whom do we blame if an IT initiative fails?
   The IT department is responsible for delivering systems on time and within budget. Your job? To make organizational changes that generate business value from those systems. Designate “sponsors” to assign resources to IT initiatives, establish success metrics, and oversee implementation.

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