Is your firm IT Savvy? I hope so because according to MIT CISR http://cisr.mit.edu/ research, "IT Savvy firms have net margins 20% above their industry median." They also have a higher return on assets from technology sharing (ROAs 30% above industry median) and higher revenue growth (three percentage points higher than their industry median).

For those unfamiliar, the term was coined a few years ago by Peter Weill, Chairman of MIT CISR and Sinan Aral, now an Assistant Professor at NYU. I read their first white paper on the topic and they initially identified the five following characteristics as being representative but not exhaustive of firms with stronger overall IT Savvy:

• IT for Communication - high use of electronic channels such as email, intranets, and wireless devices for internal and external communications and work practices.
• Digital Transactions - a high degree of digitization of the firm's repetitive transactions, particularly sales, customer interaction and purchasing.
• Internet Use - more use of Internet architectures for key processes such as sales force management, employee performance measurement, training and post-sales customer support.
• Firm-wide IT Skills - high capability of all employees to use IT effectively. There are strong technical and business skills among IT staff, strong IT skills among business staff and an adequate market supply of highly skilled IT staff.
• Business Management Involvement - strong senior management commitment and championing of IT initiatives. There is also strong business unit involvement in IT decisions resulting in partnership between IT staff and business units to help generate value from IT investments.

Peter and his colleagues at MIT CISR continued to refine and advance the idea of IT Savvy, culminating in a book he finished writing last year with Jeanne Ross, Director of MIT CISR http://bit.ly/dt9q0q. The book included an updated definition of IT Savvy as "the ability to use IT to consistently elevate firm performance." The publication is actually a culmination of over 20 years of their research and the idea of IT Savvy continues to dominate their thinking.

I'm writing this post after attending Day 1 of MIT's annual CISR Summer Session (which I highly recommend). The theme for the day was "Maximizing Business Value in IT Savvy Firms." The first topic on the agenda was delivered by Peter, "Becoming More IT Savvy and Increasing Firm Performance." The entire presentation was great, but here are my two favorite sections:

IT Savvy Firms Achieve Superior Results by Three Obsessions:

• Fixing What's Broken
• Actively manage the enterprise IT Portfolio - prioritize and balance the risk and return of the IT portfolio with rapid feedback loop
• Establish clear decision rights and accountability - light-weight governance connecting IT and other key assets of the firm
• Creating a Platform
• Create a digitized platform for business execution and innovation - start with what's not changing, i.e., core business processes, data, technology, shared services
• Exploiting the Platform for Profitable Growth
• Reuse the platform for business agility and innovation
• Empower employees with world-class information and systems

The 10 Digital Disciplines of IT Savvy Firms:

• Govern, budget, and prioritize to build a digitized platform on project at a time - and then exploit it
• Enable employees and managers to work together to manage risk
• Design and manage enterprise architecture, standards, and exceptions for both business processes and technology
• Define, price, deliver, and assess shared services explicitly
• Recruit, develop and empower people to deliver in a digitized environment
• Transparently manage IT unit costs and project performance
• Match metrics and incentive programs to strategic goals
• Run internal and vendor partnerships with shared risks based on business performance metrics
• Use fast feedback to learn and adjust goals, business processes and projects
• Design ownership and accountability for data process optimization

During the Q&A, I noted to Peter how his presentation listed characteristics and results of an IT Savvy firm, but it did not include a singular definition. I raised this point because I recognized that the definition had evolved between his first white paper on the subject and the book he wrote with Jeanne. I have known these two brilliant people for years so I am aware their ideas are in a constant state of evolution. Given this, I wanted them each to share their one-sentence "definition du jour" of IT Savvy.

After a little chuckle and an admission that the definition would continue to change in the future, Peter offered the following, "Thinking digitally." Jeanne agreed and added another definition she likes, "The ability to use IT as a strategic asset."

I loved both answers and I'm looking forward to following the inevitable evolution of what I consider to be a great concept. I urge you to read their book and to understand and determine your firm's level of IT Savvy. You can then strive to drive your firm to higher levels of IT Savvy to achieve superior results and the realization of more business value from your technology investments.

I hope to see you at next year's MIT CISR Summer Session. I'm sure the subject of IT Savvy will continue to dominate the proceedings.

Steve Romero, IT Governance Evangelist