Sunday, May 29, 2016

“CIO Master” Book Tuning XXXXI: Five Questions to Improve IT Maturity

To improve IT maturity, IT needs to change the emphasis to an “outside-in” approach with that vital focus on users.

Although IT has touched almost every corner of the business right now, the majority of IT organizations still get stuck at the lower level of maturity, struggle at the stage of the business and IT alignment. IT is business, with the increasing speed of change, many think that the gap between business and IT has actually widened. The reason is that business and IT have evolved at a different pace over the past few decades. While IT has evolved significantly in all aspects such as people, process, technology - business has, and continues to evolve faster due to the “VUCA” business new normal. Moving from IT-business alignment to IT-business integration and optimization is strategic important for IT leaders to run a digital IT and improve overall IT and organizational maturity. It is increasingly more challenging for IT to deliver to business WHAT it wants and WHEN it wants. Here are five questions to assess your IT maturity.


Q1: How do you determine the strategic value proposition of IT to the business?
The main problem is that business executive still limits their vision of IT as “IT supports a strategy.” As a matter of fact, digital technology is often the disruptive force for business transformation. IT is not just to support strategy, IT strategy is an integral part of business strategy. The IT strategy is the responsibility of the CIO and works as a foundation for driving business success. Organizations need to empower their IT leaders to lead digital transformation as a forerunner. CIOs role as C-level is to contribute to the formulation of the business strategy where new trends of technology will provide strategic business capabilities to the business that will enhance the competitive advantages of the organization. The CIO is not simply the leader of the enterprise's IT departments, The CIO role is an enterprise leadership & executive role who is responsible for leadership of the information agenda, which includes driving customer engagement and experience as a cross-functional enterprise responsibility. The strategic value proposition of IT is how to leverage the resources and assets of the IT departments to create the optimal business value - which in the next step, will generate revenue growth, brand or increased market shares.


Q2: How do you evaluate the evolving IT capabilities of that could outperform competitors?
In today’s business dynamic, digital capabilities are a fundamental building block in digital transformations with which companies can transform customer experiences, operational processes, and business models, to reach high-level business agility and maturity. A business capability is the set of abilities needed by an organization in order to deliver value. It’s the ability of an organization to do things effectively to achieve desired outcomes and measurable benefits and fulfill business demand. IT is the key enabler for building business capabilities which can be categorized into: the necessary operational capabilities to keep the lights on, and the unique business capabilities (such as change, innovation) to make a difference. CIOs as IT leaders must be able to develop and optimize IT operational functions and harness value added IT capabilities within itself as well. It is also something to have IT resources (people and operational IT processes) refined to the point that they are nimble, can adapt to changing business demands in a timely fashion. It is critical as well to define performance indicators and evaluate & measure IT and business capabilities to achieve the expected result if you can only manage what you measure.


Q3 How do you allocate dollars across the portfolio of IT investments to ensure a healthy return?
The de facto best practices of managing IT project portfolio need to include such as, only manage a business project, not for technology's sake, IT should not just run the business today, but help to “grows the business” for tomorrow. The goals of portfolio management are not only the strategy alignment and value leverage; it's also a mix of short, mid and long-term projects that need to make up a project pipeline. IT leaders must also have a good understanding of the projects and programs they are facilitating, particularly the objectives and benefits to be delivered. Overall value, therefore, has to be judged at the enterprise level considering the overall satisfaction over each combination of cost, schedule, performance, and satisfaction of the customer, user, and each stakeholder, prioritize the portfolio, and manage full application life cycle. Here is a set of questions to evaluate the business value of every project: What are the key drivers behind this project? What problem or event is driving the need for the project? What immediacy does this problem or event have and why does it need to be addressed now? What is wrong with maintaining the status quo? What impact are these problems currently having (either to the organization or the community)? Can the impact of these problems be measured and quantified and if so what is the quantum of the problems., etc. A healthy IT program portfolio makes a good balance of “run, grow, and transform” projects.


Q4: What ideal IT spending ratio, what tradeoff are you making in managing IT performance and cost effectively?
All IT spending must be rationalized against the business benefits. This discussion and these arguments are not new. IT needs to stay in the mix; they need to find ways to move up the stack and provide business value, such as innovation and not spend their cycles "keeping the lights on" as just a cost center. For example, just keep the lights on to contribute 25 percent of the profit sounds better than just keep the lights on as an act of pure overhead cost. IT is always striving to improve its value to the business. Some of the "long poles in the tent" tend to be labor; depreciation and new capital spend. It isn't just the IT spending ratio as a percentage of budget numbers (70/30, 85/15), but the question of what is real: tangible or measurable business value? And who is measuring or driving the perceived value? When all departments truly collaborate with IT to improve the vision,  realized of using IT as a competitive leverage.


Q5 How do you measure that a breadth of best practice is in place to leap the business growth both now and in the future?
The success of IT is not for its own sake, but to ensure the entire business success. IT organizations should be able to define and align operational KPIs to strategic KPIs of business for successful tracking of the effectiveness of strategic KPIs. By the time IT is ready to deliver functionality to the business, the business needs not just "requirements" have already changed. Therefore, CIOs must become true business leaders by looking to get much closer to their company’s customers in understanding their needs, and use the big 'WHY' to help crystallize their own companies 'what.' The effective way to track the achievement of strategic goals is to cascade those down throughout the organization with the use of operational KPIs. It DOES mean that at the operation level, there should be some metrics that can be tied directly to achieving strategic goals. If one focuses on short-term value too much, this might not support long-term strategy and vision in the end. If one puts too much focus on long-term value, there may be a loss of momentum and engagement.

To improve IT maturity, IT needs to change the emphasis to an “outside-in” approach with that vital focus on users. IT has both internal customers and end customers as well. Cutting out waste such as shrinking the gap between business and IT could make a significant contribution and the sooner it starts the better it will be for all involved. At the higher level of maturity, IT is the business driver and innovation center.




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