In the spring of 2007, I took a fantastic class at MIT Sloan with Professor Peter Weill entitled "Generating Business Value from IT". Weill primarily focuses his class on Fortune 1000 companies, but I believe there are important lessons for the nonprofit sector. I attempted to tease out these nuggets of wisdom from his lectures and class discussions through a series of blogs this Spring.
The first lesson is that getting value out of IT, whether to reduce costs or to further mission, is the responsibility of all managers in an organization. Too often Executive Directors leave IT decisions to their IT staff or their consultants. Whether out of fear, lack of understanding, or a dearth of vision for technology's capabilities, nonprofit leaders frequently offload technology decisions.
As an example, I heard a story from a colleague yesterday in which the Executive Director met with her, as the consultant, to tell her that they needed a new database. It was clear to the consultant that the ED didn't know exactly what she needed or how an investment in a database would further the organization's strategic goals. The ED became frustrated when challenged to connect strategy to IT because she just wanted to offload the IT decision-making. In the end, I think the organization will appreciate the consultant's candor(she could have taken the money and ran with it), as it will result in significant savings over building a database that will go under-utilized if used at all.
Weill expounds on what decisions should be made by management offering 6 IT Decisions Your IT People Shouldn't Make...Alone:
- How much should we spend on IT?
- Which business processes should receive our IT dollars?
- Which IT capabilities should be organization-wide?
- How good do our IT services need to be?
- What security and privacy risks will we accept?
- Whom do we blame if an IT initiative fails?
On that last point, the private sector has a lot more leeway for failure given their resource base. Big business simply has more capital available for IT investment than the nonprofit sector. Big businesses (and many smaller businesses) spend 50% of their total capital spending on IT. Even larger nonprofits are lucky to have a capital budget at all.
Even with such limited resources, the nonprofit sector, both organization leadership and funders, should look to IT not as solely a cost center, but also for its value creation potential. If IT is creating value, its meeting the mission and the strategic goals of the organization. Such value creation requires sophisticated management with investments tightly aligned with either measurable cost savings or progress towards strategic goals.