CEOs should take the cure

Commonwealth Bank of Australia chief David Murray assured himself of even bigger headlines than Bill Clinton when he said some tough things about the technology industry at an event they were both attending in Adelaide in February.

Commonwealth Bank of Australia chief David Murray assured himself of even bigger headlines than Bill Clinton when he said some tough things about the technology industry at an event they were both attending in Adelaide in February.

It was the World Congress on IT, at which Clinton, not famous as a computing commentator, was to be the headline act. (One can only presume that his post-presidential career has taken a further nosedive given that his next appearance in this part of the world will be to launch a car.)

Murray hogged the headlines by blaming the technology industry for encouraging people like him to have inflated expectations of what IT could deliver. The US IT industry had “single-handedly wrecked the world economy” over the past couple of years, he went on. Clinton’s upbeat message, that IT is central to world economic growth and if used effectively can bridge the digital divide between rich and poor nations, was hardly going to cause a ripple, in comparison.

Ripples are still spreading from the bank boss’s outburst. While the initial furore has died away, research firm Forrester has used it as a trigger for suggesting ways chief executives can avoid the kind of disappointment Murray was expressing. Forrester’s research director, John McCarthy, delved behind the headlines and noted that Murray’s harsh words had to be weighed against the benefits the bank has enjoyed from IT. (That Murray did have some good to say of IT will come as a relief to CBA-owned ASB Bank which, under former IT-boss-turned-chief executive Ralph Norris, made maximum use of information systems for competitive advantage.)

According to Forrester’s McCarthy, what Murray had to say typifies the “love-hate relationship” senior management often has with IT. On the one hand CBA has successfully used the internet to introduce new services; on the other, it has been the victim of vendor hype in regard to blending old and new technologies -- with subsequent loss of productivity, and it has suffered numerous large-scale project failures. (If the CBA experience has been mirrored by the ASB, we’ve never heard of it.)

McCarthy’s prescription for what he diagnoses as Murray’s case of IT schizophrenia (if it’s a misuse of the term, blame him) has four parts. First, he advises bosses to “instil a culture of discipline and measurement around IT”. It sounds obvious – and as though it should be easy. But McCarthy says to be really effective it needs to go beyond measuring return on investment to include indicators like customer/supplier satisfaction and supply chain efficiency.

The second part of his cure is to organise IT spending around process teams made up of IT and business managers. As an example of this, he points to what Lou Gerstner did at IBM: the former CEO identified Big Blue’s top dozen processes and assigned a senior manager to each.

McCarthy’s third treatment is to get CEOs to relax a little and not expect to see an immediate return on IT spending; they need to realise that some of the benefits will only be visible with hindsight.

Lastly, as they try to get to grips with how internet-based technologies are changing the everything, they should look for ways of applying it that tie together the world they know with the virtual world. He offers the example here of a distribution company using GPS technology to track its vehicle fleet with the aim of improving customer service.

Taken together, it would appear to be a sound course of treatment and bosses should be grateful to Murray for drawing attention to the condition. If they’re not already depending on IT management to help overcome the symptoms, they should follow McCarthy’s advice and involve it in the cure process.

Another attentive ear they could bend might be that of just-appointed Hewlett-Packard New Zealand boss Russell Hewitt. Hewitt has been elevated to lead what, on paper at least, will be the country’s biggest IT vendor company, with total sales in the region of $0.5 billion. I’m not meaning to suggest that Hewitt is an expert in schizophrenia; just that he’s proved an adaptable and capable chief executive.

He assumes the top job after less than two-and-a-half years in charge at Compaq, which he joined from systems integrator Computerland. He took control as Compaq was suffering indigestion from its acquisition of Digital, and while the IT distribution channel was nervously contemplating having to compete with a Compaq intent on experimenting with direct selling. Hewitt successfully overcame both challenges, through a blend of pragmatism and affability.

Many would have expected HP New Zealand head Barry Hastings, another likeable and capable manager, to be the natural leader of the merged company. Hewitt’s merger experience, and success running a bigger company (Compaq New Zealand’s revenue and headcount are significantly larger than HP’s), undoubtedly helped him out.

Hewitt and Hastings, who are friends, will work together at the new HP; while Hewitt is in overall charge, Hastings will manage the PC and printing sides of the business.

To change the subject yet again, you’ll notice a new column in this week’s paper. Mac Manager will appear monthly and is not me showing where my true loyalties lie – when it comes to computers, loyalty is a wasted emotion – but is acknowledgement that Macs are a small but significant part of the IT landscape.

Doesburg is Computerworld’s editor.

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