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Book Review – The IT Value Stack

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The IT Value Stack: A Boardroom Guide to IT LeadershipI recently finished Ade McCormack’s book, The IT Value Stack: A Boardroom Guide to IT Leadership. The book is aimed at a fairly high-level audience and makes a case for better integration, or “entwinement”, of technology into businesses. Ade can come across somewhat opinionated but he gives you fair warning of this right up front and he has clearly put his ideas into practice enough to feel confident in them.

Ade’s premise is that IT is often viewed through a cost-focus lens or with a view to assigning blame for problems. As such, its ability to positively impact business is limited and IT can seem to be an immature business function. In particular it can be hard to assign value to IT so as to correctly manage investments in IT. Ade lays makes his case, details his process and then wraps up with a nice “to do” list at the end. The 7 steps in his model (in order of adoption) are:

  1. Strategy Entwinement
  2. Process Entwinement
  3. People Entwinement
  4. Technology Management
  5. Service Management
  6. Circulation Management
  7. Value Management

Ade’s perspective is that these must be addressed in order and that each builds on the previous. There is lots of good stuff in the book and he lays out each chapter consistently. He is clearly trying to make each chapter reach coherently stand-alone, and he succeeds, but it gets a little repetitive if you read it quickly end to end. Each chapter also has some comments on the importance of the concepts written by external experts and colleagues of Ade’s, which adds some nice color.

From a Decision Management perspective, several things caught my eye:

  • Ade talks about competitive advantage coming not from a company’s operations so much as from its ability to use its knowledge of its customers/market to make decisions (about pricing, availability, yield). He describes this as becoming an “information management” business but I would go further and say a decision management business. I think there is much to be said for starting with the decision you which to improve in mind. As Tom Davenport noted on his blog, much IT investment is made to “improve decisions” without considering what decision, precisely, is to be improved.
  • Ade talks about “Circulation Management” or the effective movement of knowledge around an enterprise. He makes the point that we are pretty good at storing and managing data and information, less so at managing and using knowledge and wisdom. He describes the typical situation as analogous to clogged arteries with lots of manual intervention and guess work. He also discusses the need to avoid repeating mistakes and to exploit what you know. Decision Management is particularly effective at eliminating manual intervention both by leveraging information effectively and by institutionalizing what your staff know as the business rules in your operational decisions. As getting real-time, automating inter-process communication and document management are all important to Ade, it should be noted that EDM is effective in all three areas.
  • Compliance is a big issue in terms of changing the relationship between business and IT groups within a company. The power of compliance to change processes comes up repeatedly – you cannot just bolt compliance on to existing processes, it must be built in. The use of declarative business rules to specify the decisions in processes you can both eliminate manual steps and ensure compliance.
  • Ade talks about a need to “automate or die” and to make smarter business decisions. Decision Management, with its focus on automating decisions to improve straight through processing and to eliminate manual review steps is ideal for this. He posits a future with a “death of staff” where people are only involved in creative tasks and in exception handling. This will not happen without the effective automation of operational decisions, without (in other words), adopting Decision Management.
  • Trust between the departments and the need for a common language comes up again and again – he had a lovely analogy of an ethnic restaurant where one language is used in the kitchen and a different one in the restaurant itself. In one section he talks about turning a law into code. Even if a programmer can learn the law well enough to do this, how can the business and legal folks review the result? You need, as Ade says often, direct engagement between technical and non-technical folks not just business analysts acting as some sort of DMZ. Business rules, by enabling shared/collaborative development can make this work. In particular I think the power of a small rules project to entwine should not be underestimated. Both by making IT people give up some control and by making the business people discover the value of QA, testing etc once they take control of their own rules.
  • One challenge he sees is that many business people only interact with non-differentiating tech like email and Excel. What if you used Decision Management and the business executives and managers changed the rules in their own systems, saw the results on their dashboards and interacted with critical run the business systems? Then perhaps they would have a different perspective on IT.

Quick quotes I liked:

  • You need IT value amplifiers not value dampeners.
  • People are expensive and so need to be “sweated” like any asset.
  • IT leadership is “the process of leading others to achieve results through the use of new technologies.”
  • Different cycle times for IT and the business can be addressed by rules.
  • He talks about learning from the leisure industry and I liked Chocolates on the Pillow for this
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