Going up?

To claim a spot at the top, IT must elevate the value it brings to the executive suite

Dries van Nieuwenhuyse is General Manager of Business Intelligence at USG People and a lecturer at EHSAL Management School in Brussels, Belgium. His mission is to create an effective CIO office that can enable USG People, a leading European provider of employment services, to realize its international multi-brand strategy.

"I've been in IT long enough to know that if you wait for things to happen, life can get a little dull," van Nieuwenhuyse says. "Somebody has to be the leader of the pack and, if we have the right analytics and the right frame of mind, that leader can be IT."

In the Q&A that follows, van Nieuwenhuyse shares his thoughts about what makes IT managers and organizations relevant in any business setting.

Why do so many IT organizations find it a struggle to prove their relevance?
IT managers are very good at providing answers to direct questions. But if they want a seat at the top table, they must get better at telling people which questions they should be asking in the first place.  As much as IT becomes commoditized, we must demonstrate our value by thinking more freely, as pure scientists, with a more analytical frame of mind.

Sometimes, though, you also need to think like a novelist or a screenwriter, imagining what is on the mind of an organization's central characters: the senior decision makers.
Yes. You have to ask yourself, "If I was CEO, what questions would I want answered? What would keep me awake at night?" Of course, CEOs are fully capable of asking these questions, but there is a fundamental disconnect between what they know they ought to do and what they are used to doing.

As people move up an organizational hierarchy, they take their reports with them. They might increase the scope of the reports, but the quality does not change. In other words, the reports remain stuck at the operational or tactical level, rather than moving to the strategic and visionary level.

The mistake information technologists have made in the past is looking at the world from their own perspective, asking, “What sort of data can we put in the data warehouse?” The decision makers don’t know the answer to that question.  So the IT people play safe and store everything. And the net effect is to diminish the perceived value of IT.

What does an IT manager notice when he immerses himself in the world of the senior decision maker?
Well, the first thing he sees is that C-level executives lead a strange kind of Dr. Jekyll and Mr. Hyde existence, where financial accounting is the respectable face of the enterprise and management accounting is the brutal alter ego lurking below the surface.

Executives convince themselves that financial data is the truth, whereas in fact it is a lagging indicator – useless for managing a company. If you want to find out what's really going on, you have to dig around and find the leading indicators.

You can see the difference when you examine the granularity of data. To take a simple example, financial data suggests that a company's best sales week is always the fourth in any month. The reality is that the accounts department piles up all the invoices from the previous three weeks and processes them in a single batch. So if you want to get a true picture of peaks and troughs in sales performance, you need the operational "to be invoiced" data.

But who wants to tell a C-suite executive he's wrong?
In the past, IT has served the business like a trained animal. When an executive gives the command, “Make this report,” we perform the trick. And we get rewarded for it, which reinforces our behavior. Instead, we should ask ourselves, “What is the next question that he should have asked?"

One of the questions that we felt USG People should be asking is, "What actions could we take now to improve our performance in the future?" The difficulty here is that, in our business, actions we take today such as more telephone calls to customers only have an impact on key metrics -- such as customer acquisition, revenue and so on -- at some point in the future.

So first you need to be able to visualize the correlations between past actions and results. And to do that, you've got to determine the time lag. Plus you need to bring in external data in order to compensate for macroeconomic influence, such as a crisis in business confidence. You have to make a lot more calls to have the same impact when the economic climate has turned sour.

With this information, you can better understand the kind of corrective actions you should have taken in the past, and from this you can predict – with a reasonable level of confidence – the effect of current actions on the future.

IT does itself few favors when it delivers tools rather than analysis, do you agree?
Business executives are rarely pure scientists. Therefore, they often make assumptions that correlation equals causality.

A classic example: Many will look at their balance scorecard and see that when spending on staff training goes up, so too does revenue. Obvious conclusion: increase spending.

In reality the relationship works the other way around: When revenues are falling, departmental training budgets are among the first to get cut, and then they follow revenue back up again.

If we want to demonstrate value, IT must deliver fewer tools and reports and focus instead on increasing the quality of our analysis.

What sort of business benefits can result in such a shift in IT focus?
At USG People, we got proactive and rationalized. We made a simple cluster analysis of all the different report dimensions and variables and soon found that we could reduce the total from 125 to 40 reports.

The time savings are actually amazing, for example, because we no longer have to develop drill-down capabilities on superfluous reports. In any case, I've never seen a senior manager drilling down on data.

We used the freed-up time to identify genuine cause and effect. Instead of drilling down, we can then bring the really interesting data up to the surface. And it's much better to be riding the "up" elevator.

The results illustrated in this article are specific to the particular situations, business models, data input, and computing environments described herein. Each SAS customer’s experience is unique based on business and technical variables and all statements must be considered non-typical. Actual savings, results, and performance characteristics will vary depending on individual customer configurations and conditions. SAS does not guarantee or represent that every customer will achieve similar results. The only warranties for SAS products and services are those that are set forth in the express warranty statements in the written agreement for such products and services. Nothing herein should be construed as constituting an additional warranty. Customers have shared their successes with SAS as part of an agreed-upon contractual exchange or project success summarization following a successful implementation of SAS software. Brand and product names are trademarks of their respective companies.

Copyright © SAS Institute Inc. All Rights Reserved.