1 5. A. H. Maslow, Motivation and Personality (Harper & Brothers publisher, 1954), 411 pages, ISBN 978-0-06-041987-5. 6 Keep the Lights On (KTLO) At Pier 1 Imports, we got so good at the foundation level of the Laudato Hierarchy of IT Needs, KTLO, as shown in Figure 6.1, that I had to fight with my HR business partner to keep it as a metric. Because we consistently maintained 99.9% uptime, he argued that KTLO was solved, and we shouldn't be rewarded for it. I've had a CFO tell me that KTLO is table stakes, and it really “doesn't count” toward CIO effectiveness. CIOs have told me they leave this to their VP of Infrastructure so they can go off and be strategic. Figure 6.1 Laudato Hierarchy of IT Needs © 2017 Andrew Laudato All Rights Reserved Hierarchy of IT Needs Wrong, wrong, wrong! The moment you get good at KTLO is when you need to double down on it. Complacency is the number-one enemy of reliability. You can only go without air for five minutes, water for three days, and food for maybe a month. If you run out of water, your needs become more desperate, and falling in love goes out the window. If your customer relationship management (CRM) system gets hacked, I promise it's going to occupy your life around the clock until it's resolved. When your engineers are up all night fighting bugs, they're not much use during working hours. In my blog post “Why CIOs Need to Pour Concrete,”6 I wrote, “CIOs who understand the need to build upon a concrete foundation will eschew the ‘sexy' until their platform is robust, and only then will they create a beautiful and glamorous digital experience built to stand the test of time.” KTLO is the key to innovation. It's the foundation upon which it rests. Once the systems are robust, it's time to move up the Laudato Hierarchy of IT Needs pyramid and create a lean and efficient organization. Note 1 6. A. Laudato, “Why CIOs Need to Pour Concrete,” (Heller Search Associates, May 27, 2020), https://www.hellersearch.com/blog/why-cios-need-to-pour-concrete. 7 Lean and Efficient IT A lean and efficient IT Department is a low-cost provider of software and services. Imagine teaching your kids about money if you have no savings and your credit card debt is mounting. While your advice may be good, your credibility is crap. Do what I say, not what I do is a failed strategy for parenting and leadership. Now imagine talking to a senior executive about using technology to drive improvements while your IT budget is out of control. It's the same credibility problem. As shown in Figure 7.1, we are moving up the Laudato Hierarchy of IT Needs. After getting the foundation solid, the next step is to make IT cost-effective. Get it right, and then get it cheap. Sometimes you have to spend a lot of money to get things stable. Imagine that your website is down because an engineer misconfigured it and then walked out. If the only person who can fix it bills at $500/hour, you grit your teeth and pay the bill. If you need to hire an offshore team to watch your batch systems at night, you grit your teeth and pay the bill. Unreliable systems are expensive. Figure 7.1 Laudato Hierarchy of IT Needs © 2017 Andrew Laudato All Rights Reserved Hierarchy of IT Needs Place your IT Department on the chart shown in Figure 7.2. If you're in the bottom left, with systems that are both unreliable and expensive, it's time to update your LinkedIn profile. The bottom right—low cost, low reliability—is typical for companies that don't see value in IT. Keeping costs low is the only priority. The CIO probably reports to the CFO in this scenario. Sometimes these companies decide they don't need a CIO, and they turn the function directly over to the CFO. Figure 7.2 CIO Performance Matrix In the top left, we see the case where things are running smoothly with reliable systems, but costs are above industry averages. This is where outsourcing talk happens. Be wary; the CFO is definitely having a fancy dinner with a global outsourcing company. In other words, if the systems are stable while your costs are above industry averages, you become fodder for outsourcing talk. The CFO and CEO are being approached on a regular basis with the promise of lower IT costs. Once you're externally benchmarked, things get dicey. Benchmarks compare you to everyone, including companies with low IT costs and low IT capabilities. Whether or not it's a well-run IT department becomes irrelevant. The holy grail is lean and efficient IT. In the top-right box, your team has the time and funding to work on strategic projects. As a superstar leader, you remember that keeping the lights on remains the most important priority, so you never lose focus on the foundation as you take the next step up the Laudato Hierarchy of IT Needs pyramid and begin to create value. 8 Create Value
“Technology is all I have left.”
—Greg Rake, global supply chain expert Sharing what’s going well in his industry, 2020
We are now at create value, the penultimate step of the Laudato Hierarchy of IT Needs, as seen in Figure 8.1. When you look at the list of strategic initiatives for your company, how many involve technology? 70 percent, 80 percent, 90 percent or more? Regardless of the industry, technology is at the center of almost all growth plans. Digital acceleration is driving these percentages even higher, spurred by the onset of the Covid-19 pandemic in 2020. Digital is transforming all sectors of the economy: manufacturing, media, entertainment, services, education, technology, healthcare, and retail. More and more, your efforts to create value will use and depend on technology in a variety of ways. Figure 8.1 Laudato Hierarchy of IT Needs © 2017 Andrew Laudato All Rights Reserved Hierarchy of IT Needs That's good to know, but what does it mean to “create value?” In simple terms, creating business value means putting money in the bank. The more successful a company is, the more opportunities exist for its employees. Successful companies invest. Successful companies hire. Successful companies celebrate, and successful companies pay bonuses. Business value comes from reducing costs, increasing revenue, enabling opportunities, and reducing risk. Cost
