Specific Problems with Organization and Management Methods

The CIO Problem from poor Capital Organization and Management

Conventional administration mixes diverse capital within a function. Organize capital to be professionally- managed.

By: Harry Greene

Our Chief Information Officers (CIO) have a problem. First, our systems are overly complex, because we do not use one simple system to directly manage the business for 21st Century Management. But, that is the subject of other articles. Considering 20th century IT, one person has to have many capabilities to manage diverse kinds of capital. The CIO has to have professional capabilities with management strategy, technology, equipment and network operations, information system logic, business operations, and system application. The CIO also needs to have capabilities with all types of enterprise information capital: data, knowledge, records, and intelligence.

The problem is fundamental to the way we organize and administer capital. We have never tried to understand the specific human capital capabilities needed to develop, support, and manage the variety of tangible and intangible capital we need to utilize as a successful enterprise. Review the R-pM community downloads "Organize and Manage Your Business with R-pM" to see how to organize and manage capital to produce value in results.

Many enterprises have a problem where one manager, such as the CIO, needs the capability to manage diverse capital

The same problem extends down from the CIO into the Information Technology (IT) function. IT has to have capabilities in all these areas as well. All the enterprises that I have evaluated have problems somewhere or another, because IT does not have the capability to handle all of its responsibilities.

We have such examples as:

  • Business change is stuck in the technical IT backlog
  • Application systems are managed as information technology and interfaced with the business rather than being integrated with the business process as business capital
  • The analysis of business improvement needs is separated from the business, and needs are satisfied by technology rather than precisely-defined business improvements
  • Users assistance is restricted to how to use technology per se and is no help in using technology to solve business problems
  • Stress on data and records with little support capability for knowledge or intelligence
  • System utilization is managed as system availability or a service level, rather than managing the utilization of the system to create value for the enterprise

So, how do we solve the CIO problem and the problems faced by information technology management?

We now propose a Chief Technology Officer (CTO) to handle technology needs. The idea of splitting out management of our capital based on professional capabilities required is valid, but we must do it right.

We need to align the management of capital with the professional capabilities needed

The root of the CIO problem goes back to the beginning of IT. Our business processing used to be managed by each business unit with support from an enterprise organization and methods kind of unit. Then we started employing technology in our business processing that required special professional capabilities, so we set up data processing to develop the programs and to operate the expensive centralized technology. So then, we processed data separate from the business. Then data processing expanded into the Information Technology units of today. As IT expanded, it became more difficult to manage, so we appointed a czar in the CIO.

But, what happened to the rationale that set up data processing? We no longer need much programming capabilities, since we are using application package systems. The systems are much more pervasive and familiar, so everyone in the enterprise has basic capabilities. More and more of our computer power is operated by the users, with IT handling the connecting enterprise application architecture and network.

We need to rethink our definition of capital management and utilization

It is time that we rethink IT and all of our capital using the basic premise. “What professional capabilities are required to manage and support our capital”? We also need to rethink the meaning of capital utilization. We think of utilization as being used. We need to think of utilization as being employed for measured benefit that provides the return on the investment in capital. For years, IT has been providing equipment or a service, but nobody has ever managed how information systems and technology are utilized to benefit the business and to gain the return on IT investments.

Identified tangible capital is administered, rather than managed for utilization. The enterprise has much high-worth capital that is not specifically identified and managed as capital. Much resides in responsibility centers with no enterprise management or is placed under the heading "intangible assets" so that it simply can be ignored. The enterprise must know all capital to know all costs and ensure that capital is utilized to create value in results.

R-pM organizes capital for proper capital and performance management

The answer is provided by Result-performance Management (R-pM), which organizes and manages the enterprise through two entities: 1) results produced as outputs from the business, and 2) performance solutions that provide the capital utilized by the business.

R-pM solves the CIO and IT problem as a by-product of proper capital management. R-pM structures all of our capital to satisfy important needs:

  • Identify all capital, including intangible assets, as performance solutions to be managed
  • Categorize capital to apply the proper professional capabilities to produce capital management results
  • Classify capital as performance solutions so that it can be integrated and utilized by the business to produce results
  • Produce capital management results to operate, support, and develop the capital
  • Manage the performance of capital so that it is utilized properly to provide the return on investment

R-pM manages capital by producing specific capital management results. The performance solution that has the most impact on whether we produce a good or defective result is human capability. A basic principle of R-pM is to match the human capabilities required in the business process solution to the capability solutions deployed to produce the result.

Capital is categorized by the operation support and development capabilities needed

Four separate human capabilities are required to produce capital management results.

  • Business knowledge and analytical aptitude capabilities
  • Human handling, development, and coaching
  • Expertise in the operation, maintenance, and administration of assets
  • Management judgment and research capabilities

R-pM structures capital in four categories that require the same capabilities to be professionally managed:

  • Business: Capital directly utilized to produce a specific result, which requires business knowledge and analytical capability
  • Human: Human personnel and capabilities to produce a result, which requires human handling and development capabilities
  • Facility: Tangible capital that supports results, which requires expertise to maintain and administer
  • Management: Capital that plans and directs results, which requires research and management judgment

R-pM solves the problem of corporation chiefs by requiring chiefs with specific capabilities rather than appointing an executive to assume a title.

R-pM solves the CIO problem by focusing chiefs where their human capabilities are required

When we examine our capital to define it, structure it, and manage it properly, we will automatically solve the problems of mismanaged capital and the organization of IT. Then the CIO will no longer be one individual expected to do everything. There will be separate professionals with capabilities to manage each category of capital (business analyst, human handler, facility expert, and management researcher). Then the chief and those who support the capital need but one essential human capability.

With R-pM, capital is managed and supported by professionals, who have the result-oriented capabilities required to manage, support, and utilize the capital. The R-pM Toolkit provides the guidance to organize and manage capital properly.