Selling a New Way to Manage IT

The IT organization of the future will look drastically different than it does today.

Embodying that model of the future is the IT organization at big-box retailer Best Buy, the $12.9 billion big-box and online consumer electronics retailer. Led by CIO Bob Willett, Best Buy’s IT team consists of a collection of business-minded strategists and managers, with specialized work sourced out to dedicated experts.

Willett oversees hundreds of staffers responsible for supply chain and demand planning and corporate development, but he has only 35 internal IT workers. Their task: Dive into the business (he calls his staffers "business information officers") and identify ways meet their needs.

When it comes to executing–building applications or planning systems, for instance–Willett turns to his 1,300 or so consultants at Accenture in the U.S. and India. (Before joining Best Buy, Willett headed Accenture’s global retail consulting practice.) "We concentrate on steering the strategy," he says. "They row the boat."

So far, he says, it’s paid off–Best Buy’s IT spending has declined in the past three years as a percentage of sales. "You’re becoming more efficient and more effective," says Willett, who declines to share specifics. "You’re making sure your every penny counts."

Making the transition to this model is difficult for any IT executive. Willett offers these tips for CIOs aiming to streamline their organizations:

• Understand Business Priorities. Aligning IT strategies with business needs is something most CIOs understand, but it becomes more pressing when considering outsourcing vs. assigning projects internally. "The CIOs of the future must be much more strategic, and probably the main change agents of the organization," Willett says. A closer relationship with business executives, and a deeper understanding of their priorities, can help a CIO determine what tasks would be most efficiently addressed in house or out.
• Build Trust, Not Competition. Many companies struggle to develop a competency for working with third parties. "There’s always a tendency to mistrust third parties," he says. "You can always think you do everything right and blame mistakes on third parties." Instead, take baby steps. CIOs need to clearly communicate their expectations and work with the provider to identify potential problems or shortfalls. Once everyone’s on the same page, he says, obstacles are easier to overcome–without playing the blame game.
• Use a Wide-Angle Lens. IT executives must take a holistic view of end-to-end processes to understand outsourcing’s potential benefits. By knowing the way different products are developed and implemented and how that impacts the company’s business processes–or in Best Buy’s case, how it might impact the customer experience–they’ll get a better idea of what works. "I’m not sure that enough folks think that way, because it’s usually countercultural," says Willett. "But it forces you to have a good understanding of what your internal customers face."