61 llanagement lnformation Systems

How fo Win Friends qnd lnfluence
Business People: Quqntif)r lT Risks
qnd Vqlue
/--\IO Tim Schaefer thinks words do matter.
\- When he looked at the words IT used inside Northwestem Murual Life,
he t-elt that they sent exacdv the \rong message about IT's role in rneeonq'llusiness goals. So. over *te iast 18 months,
*rese .,vords are out: IT costs, intemal customers, 1T' leaders. aligmnent, and IT srstems. "fhese rl'r-,rds are in: I'l
irr.,-est-
nlents, ertemal ftistomers. business leaders, inteqrarion, senice ler.els, and I1'assets. ln adtlition, "IT and dre business
'

is nor.v refered to as "our business."
"\/e catle to realize u.e ourselves ri.ere buiiciing tl're r',',rli. \t'ri'ere distinqrrishing r;'.rrselvcs from the rest r-,1
tire companl,," savs Schaefer. "\re r.rere sr,rnehou dittlrent, \e had eli this special knr-,u-1edge. So this nr'hul.
l
concept of black box, lnd the gap in the lelati<xrship., u c (renle to realize as of our ou'n doing." As p,rrt oi.,
broader change of I'l strategv lncl cultrire^ Schaeier has,rsked the top 150 leaders in I'l to comrnit to beins
business Ie,rdert. not I f lcader..
u. hole lot of fussi -Sure-if If' continued ro behar.e exactiv the srme .,r.ay it a hvar .
S1,rnbo1ic, semantics, ancl a
has. At Northwestern I'iunral, a lif-e insurance and investnrent companv rvith morc than S155 hillion rn assets.
IT'has not. IT started by rr.'orking -..er1'hard tLr put e real r'rlue on IT assets. Although the process is ,rngoing,
Schaet'er sa)'s the company norli knorvs it has IT assets lr.orrh "somex.here north of $3 bil1i,rn." I'l can t:ik abou:
sen'ice levels in terns that business uniis care about: Car.lsing problen-rs in the undenvriting process costs
S11,000 an irour in Iost procluctir.itv, and proirlerns that keep the field fbrce frorn using tl'reir client manasel:en:
to()1s costs $25.000 an hour.
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Schaefert goal is to get IT systeras to be r.iericd r-. business asset, \,ith a r.alue ei,en'bit as real as the
rruildine's and lancl tlie company owns. Cletting there requires a portfirlio approach to tlll of its T'I assets.'lhat s
not a project portfblio approach that ruanv TT teams have, but an investment portfoiio rritli the same n'pe o-
'.rrocesses the companv uses to urarll1ge holdings in stocks, bonds, rerri es'"'.1te, or pri\.ate equirn-. Instead of cor-l-
.ri.rrns u'hether to buy,, hold, or sell assets. tl.rough, the If'asset portfolio assesses I'li s1,5ssmr and applications
:r:c,ugh a fran:ervork called -i-L\tE: tolerate,
.:r-,::i. rniqrete, or elirninate. FIGURE 2.1
P,riring a value on an IT asset isn't easl,-.
\:,::h-r. esrern \Iutualt IT team does so b1,
'.,. -,:--::: lancl-in-hanri rvith the busines-s units

-i,, :. . , n them. I{,:q,rnanv more emplovees
- -.; :- ::k. to process claims if the sofnr,'are
-.r

!'. >i:r- ->:i i,r that dicln't exist? \hatt
the re-
p1:c.::r.:--: - ,:: \-l-rat's the
per horrr fo the
r:o-qt
lrus:n... -: -: . .. Cou-n? Getting an asset vslur:
is on.i :ir: ,:.: ,:.:. though. -1 r:fthese fnctcrs
gu tn: ...-.:...-: ... : f ,,i,. to inrest m6re inf,,
that asser. -t:',: .-,,r'r ilo the rieht things rvith
these Sl b:iir,,, ,'.
::r oi rssets, 1ve're not going
to opnmize n.,,":--r.. Silaelei: savs.
This asset-ar j - ;', : : r:r int pl-iilosophl, drives
u.hich IT protecs -!l:. .1,r:'-i:r--\-invests ir. Lots of Being able to quanti{y the value of lT initiatives
. t t. -::. . --. .l reg\ contn:iftct:
Ct-rtttpanieS ha. allows ClOs to show their impact on the bottom line.
to help guide I f spenons. .:s Jr,e' \orthu'estern Source: @ Getty Images.
"Nlutual Life. ''\e're r;lnsrdoirrns ',Ienr into an