Although most UK companies now see themselves as part of the information economy, it seems that few recognise that their information technology must be given a strategic role if they are to maintain competitive advantage. “I wish I had a pound for every time I’ve heard a chief information officer complain his IT department has no business strategy,” says Paul Sparkes of CapGemini, the management and technology consultancy, “or a chief executive officer complain that his business has no IT strategy.”

As head of CapGemini’s technology consulting practice, Mr Sparkes says he continually sees organisations in which the IT department, and the governance necessary to make it run optimally, is treated as a cost rather than an investment. In such organisations, compliance with IT governance standards such as Cobit is viewed as a standalone headache akin to the Y2K problem.

However, there is a growing consensus that good IT governance can benefit the bottom line in a variety of ways. New archive systems, for example, could have a direct impact by reducing the need for expensive off-site storage. Indirectly, they could improve internal efficiency by reducing the time needed to retrieve files. And, of course, they could improve the security and accessibility of your information, reducing your exposure to legal action under laws such as the Freedom of Information Act, the Data Protection Act and the Computer Misuse Act.

Anecdotal evidence suggests that directors of larger UK companies are coming under increasing pressure to give IT a more strategic role. At the Institute of Directors, for example, senior policy adviser Professor Jim Norton says he is “definitely hearing of more pressure being applied to members by their major stakeholders… Manufacturers, for example, now tend to rely on global supply chains and trade. The only way to handle that properly is through proper use of IT. It’s not negotiable: you must have good IT governance.”

Yet surprisingly, he adds, “directors are still reluctant to have to understand IT – they want it to be someone else’s problem.” He explains that the IoD recently introduced a course for non-IT directors on “Managing the use of IT”, then discontinued it after a lack of interest (it has now broken down the guidance and distributed it among mandatory areas of its chartered director training). “I’m actually suspicious of putting an IT director on the board,” he says. “That may seem countercultural, but if an IT director is on the board, then it can encourage the other directors to shun responsibility for IT issues and effectively ghettoise the department.”

Clearly, empowerment is necessary to align IT with other departments in support of the organisation’s overall objectives, but this is not simply a matter of a seat on the board. “CIOs don’t have the longevity you might expect,” points out Mr Sparkes. “It’s a challenging and frequently impossible job. Many inherit an IT function that has evolved on an ad hoc basis over many years and needs to be fundamentally re-engineered – a bit like turning an oil tanker, especially in functions with over 100 staff – yet they don’t have a position on the board, or they lack sufficient influence there.

Many report to the financial director or chief operating officer. What tends to happen is that each CIO embarks on a short-term drive for better financial management or the improvement of a particular competency. Then they move on. The turnaround is never completed. Some do take a holistic strategy on the road, but the time required to make it work far exceeds the number of hours they have in the day.”

Mr Sparkes says he often tries to persuade organisations that they must set up an “office of the CIO”, a subset of the board in which “the change warrior role is broken down into its constituent parts, so that contributions to IT strategy [and its implementation] are made by stakeholders from, say, the offices of the financial director or chief operating officer”.

“I am continually amazed at how disconnected IT functions are from their peers, such as human resources, sales and marketing,” he says. “One of the problems is that the output of an IT function is largely binary: it either delivers systems that work or it doesn’t.” This is why he believes a sub-board meeting of stakeholders can help put IT into a strategic context, and help the CIO to pursue a holistic, long-term agenda.

The advice has proved particularly helpful at Clifford Chance, the UK-based global law firm. “I inherited an IT function that had grown up without the business noticing,” says Paul Greenwood, who joined in 2000 as its chief knowledge officer and quickly became its CIO. “Staff from outside the department thought it did little more than change toner cartridges.”

Mr Greenwood explains there was little global co-ordination of IT; rather, power was devolved to local functions in each of the 19 countries in which Clifford Chance operates. “At first, I had a complete lack of ability to influence what was happening. Even though the regional heads of IT would come together periodically, expenditure was largely uncoordinated. The biggest struggle I had was to change the reporting lines. I couldn’t do that until we got the corporate governance right.”

Acting as consultants to the firm, CapGemini recommended that IT strategy should be driven by the person with overall responsibility for the dissemination of knowledge through the organisation, hence the amalgamation of the CKO and CIO roles. Mr Greenwood says the external perspective was helpful because “the business recognised it had a problem with IT but wasn’t sure of the questions it had to ask.” He suggests he is the right person to speak for IT on the board because, with a background in knowledge management, he is “someone who understands enough about IT not to be hoodwinked, but who can communicate it to the directors and partners in such a way that it isn’t steeped in jargon. Essentially, I’m the translator in the middle.”

Under Mr Greenwood, and with CapGemini’s help, Clifford Chance has established a “business systems group”, which formulates global strategies. This includes the finance director, the chief operating officer and partners who represent the firm’s various locations and practices. “Under that, we have steering groups, some organised by region and some by global practice area,” Mr Greenwood says. “These focus on local operational performance and applications.”

This structure is adaptable enough to cope with regional variation. For example, the document management system in Germany had to meet different security requirements to those in the rest of the world. “In London,” explains Mr Greenwood, “documents are judged to be ‘strictly confidential’ (that is, for certain eyes only within the company) or simply ‘confidential’ (that is, accessible to most people within the company but to no one outside). In Germany they are pretty much all in the higher category.”

Nevertheless, he adds, the global shift has yielded “amazing cost efficiencies”, reducing IT headcount (both internal and external) by about 8 per cent. Equally significant, he says, is the fact that “after two and a half years of transformation, I now (for the first time) have a global budget for IT and the flexibility to make long-term investments.”