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Boots, House of Fraser not renewing IT director posts

Short-sighted or smart move?

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Comment Initial reaction to the fact that two sizable retailers are not renewing their outgoing IT director posts could easily be "short sighted mistake".

It's easy to see why they might be doing this though. The retail refresh cycle has seen many retailers catching up on 15 years of under investment. Many may have little appetite for much more, and so a sense of "thanks we'll take it from here/use what we have/try to keep a lid on costs by giving overall responsibility to the CFO", is not surprising.

But, given the fact that most businesses' fortunes are now inextricably linked to their IT capabilities, this could point to an assumption of a lack of dynamasism in the retail sector going forwards (wrong), or a more fundamental misunderstanding of the fact that IT needs to be seen as part of the family in terms of having board level representation and the ability to liaise properly between what the business needs and enabling that through effective IT investment and resource management.

Many of the problems associated with IT stem from the fact that it is managed as something discrete from the business, so having its overall management subsumed by the business (e.g. managed as an integral part of the business) is a possible sign of very mature thinking. That is not necessarily the case, however, depending on how IT is viewed. It could be that it is a backward step.

The obvious starting point is to ask what an IT director of a large organisation does, which includes:

There are three levels of maturity in our view:

A) IT as a slave or cost centre - often reports into the business directly (e.g. part of the FD's responsibility) and/or has a relatively weak IT director in place. IT is told to jump when things need doing rather than being involved in business level discussions and proactively adding value. IT directors in this kind of role are typically stressed and frustrated and die young of heart attacks. Often, they are techies that have been promoted beyond their means.

B) IT as an internal service provider This ischaracterised by a strong IT director who almost runs IT as a business within a business. Heavy emphasis on contract/commitment mentality and a "negotiation" mindset. People seem to aspire to this, and lots of IT departments are run this way (in spirit at least), but it is not the optimum model as IT is still regarded as something separate, albeit better tuned in than a) via the negotiation process.

C) IT as an integral function of the business This is characterised by an "us" or "we" mentality which has the business and IT objectives integral to each other indistinguishable. There may or may not be an IT director in place, but if there is, they are more of a business person than a technical one. In mechanical terms, the key attribute with this kind of approach is a good business driven IT governance model. With that in place, and things like an Enterprise Architecture group feeding into it, the traditional IT director "champion" or "chief" role is less relevant and can be picked up by another exec or as a main board responsibility. This on the surface seems similar to a), but the mindset is totally different.

To put is more simply, IT is a slave in the first model, a supplier in the second, and a part of the family in the third.

So, are these retailers moving from B to A or B to C? If the first then that's bad, if the second, then it's good.

Furthermore, these relatively bold/enlightened/foolhardy moves are being made by retailers which, in all fairness, are not acknowledged as being at the cutting edge of "harnessing technology" (although Boots has certainly stepped up the pace in recent years) in their respective markets.

This takes us back to my initial points:

  1. Have Boots and House of Fraser out-thought their peers and are establishing a next generation "IT governance" model (think brand new kit, plus lots of outsourcing being managed by a "skeleton crew")?
  2. Are they very naive and think the work is done and that they can sit back for another 15 years?
  3. Is this simply a cost control exercise and we are reading far too much into names, titles, and roles?

Time will tell if their model is right, or if we shall see them desperately playing catch up again within the next five years.

Copyright © 2007, IT-Analysis.com

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