e-Talk Radio: Rubin, Howard, 18 January 2001


a business, is saying, you know, "what am I being asked to do, what value am I delivering, what's the cost, what's the yield in managing toward that return..." So, in one sense historically the technology was used as a cost, in some companies it was used as a bottomless pit, and in some cases it was viewed as a pit that was not quite bottomless as capped, and we're talking about the changeover now as to IT investment management and using general strong business principles, and actually the principles I really espouse are the ones of portfolio management, where you understand your IT investments are splattered across investments of various levels of risk, some things are venture, some things are solid, the dimensions of those investments which have to again go for the application to the technologies infrastructure to the people or so on. When you're putting money into any of these things, you've got to do it with an expected yield and your business is managing to the yield but also understanding that, that money is not limitless, but what are the right investments to fund and what are the proper hurdle rates. So this is really, you said someone coming from the ranks who are worried about programming and product leaders...project leadership and maybe moved up to an IT director standpoint and their, their basic operating was managing to a budget, right now the change is running this thing like a business, figuring out really what that budget should be and seeing that the business is getting the true yield. So it's a big change but starting to see this everywhere.

Dekkers: And I think it's been a slow change in coming. Slowly the CIOs have been invited to the management table. It used to be that CIOs were under a vice-president or under a chief of finance or something like that, but it seems like they're now emerging to be almost a part of a big eight, sitting at a management table where they're expected to be running things like business and in some cases I think the rest of the business has to start looking at IT as being an integrated part rather then just that other department.

Rubin: Well, yeah, as I said there are a couple of reasons they're sitting at the table, if one out of four of your expense dollars is going through IT you want the guy who's managing that one of four expense dollars to be visible, so you can shoot at him whenever you want, so you want him at the table, not buried somewhere. I mean the money isn't in a lot of places, but number two, the important thing to understand is that running IT as a business just doesn't mean the CIO at the table, because what we know from our worldwide benchmark activities that for every dollar that companies are spending, that's under the central IT budget, whatever that really might be, there's probably one dollar in technology spending that's outside of it. So a company that might be saying they're spending, whether it's 50 million or 100 million or a billion dollars or two billion on technology, that they know about through the CIO's area, that's probably an equal amount outside of that, so running IT as a business has two levels of meaning. One level of meaning is that in fact the IT resources that are under IT control are managed as a business but I also want to make a point with number two, is that there is probably no part

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