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Another Alignment Trap?
Back in 2007, MIT’s Sloan School decided to ask what seems like a basic and reasonable question about IT: Do those organizations that spend more on IT have better business results to show for it?
Of course, the devil is entirely in the details, but they decided to make it simple. To make “spend more on IT” objective and measurable, they used IT budget as a percentage of annual sales. To make “better business results” objective and measurable, they used compound annual growth rate of sales over three years. Then, for the 500-odd companies they surveyed, they plotted the results on a chart.
What they expected to see (and what you would expect to see) was a high degree of correlation: the companies that spend more on IT (compared to the average) had better business results (compared to THAT average), and those that spent less had worse business results. But no. Instead, the results were all over the map. They then wondered if there were other factors that were missing that needed to be considered.
After much additional head-scratching, they concluded that the two other factors were: how well IT was aligned with the business (or not), and how efficacious (how efficient) IT was. It was only then that the pattern (shown below) emerged.
The Sloan Study concluded that companies that had efficient and aligned IT organizations did in fact outperform their peers, both in spectacular revenue growth while underspending on IT. This quadrant they called “IT-Enabled Growth.” They also found that ¾ of those surveyed had inefficient and unaligned IT organizations, and had the mediocre business results to show for it – “Maintenance Zone.” These are the companies Nicholas Carr was referring to when he wrote “IT Doesn’t Matter,” because to these organizations, it doesn’t.
Above and below this correlation, they found two more results that tell an even more interesting story. The “Well-oiled IT” organizations, by being less aligned with the business, didn’t have the business results the “Growth” companies did, but spent 15% less on IT than the average because their IT organization was effective at what it did.
The most interesting quadrant is the “Alignment Trap,” that spent the most on IT relative to the average, but had the worst business results to show for it.
They concluded that the problem was attempting to align IT to the business before the IT organization had its own house in order, thus the businesses failed precisely because they tied the business to an ineffective IT organization. They felt this result was so important that they titled their report “How to Avoid the Alignment Trap.”
Enter Big Data
So, what does Big Data have to do with all this? Turns out, exactly the same thing.
Top 10 Reasons to be Thankful for Big Data
Sometimes, you just have to stare a big problem in the eye and be thankful for it. Like how in the world am I ever going to eat all of this dinner? But, we do.
So it is with Big Data. As we enter the Thanksgiving holiday, we thought it might be useful to consider the top 10 reasons why we ought to be thankful for Big Data.
1. It doesn’t byte. It’s just data you know.
2. Most people don’t know it exists or what it is. It’s easy to become an expert fast in ths space as there are no reference models or standards anywhere in sight.
3. Lots of cool new storage devices to play with. Love all the announcements from Dell, Oracle, IBM and others about how to house all of this stuff … feels like the DataCenter days all over again!
4. Hadoop, where would we be without a new technology to play with? Every paradigm shift deserves a new open source tool to fuel it.
5. Lawyers settle before I have to go find it. It would be a real problem if we had to actually be defensible in our data collections.
6. It’s a full employment act for IT! There is no way anyone can come in here from India, China or anywhere else and make sense out of this mess.
7. Buried treasure hunts. Who doesn’t love a challenge? Finding the data someone is looking for reminds me of Willy Wonka and the Golden ticket.
8. Visions of Jack Bauer dancing in our heads. Wouldn’t it be cool if we could have all of our field folks armed like Jack was on 24? Data on demand!
9. It’s justification for our budgets for the next five years. It’s really not that hard to do the math. If you want to avoid fines or even jail, pony up.
10. It will be 2x the size of IT by 2020 … and it’s all ours! We’re going to have a digital universe of 35 zetabytes by then. That’s right zetabytes. If ever there was a trend to sink our teeth in to, it’s Big Data.
Can’t wait to tell everyone over dinner Thursday about what I’m doing this year. Sometimes bigger really is better.
Happy Thanksgiving everyone!
Put Big Data on your Balance Sheet
How do you value Big Data in your organization? Recently, we’ve talked with a growing number of senior executives who have started to ask a very provocative question.
If you put Big Data on your balance sheet would it be an asset or a liability? Or maybe even more to the point, do we have any way of quantifying the value of Big Data?
At our Customer Advisory Board meeting last month one of the big topics of conversation was how to sell the value of managing Big Data to executives of the business. We talked about a whole range of justifications for action that related to cost, risk and just the growing reality that there is not enough storage or people to keep track of it all. Then we dug in to the real issue that was compelling … value.
How do you value Big Data? This week, we read a very similar summary from a group of C-level executives in a computing roundtable on Big Data. They asked the critical question of how to get this on the CEO’s radar and came to the same conclusions we had.
Quantify data as best you can and put it on the balance sheet!