Wednesday, May 18, 2016

"CIO Master" Book Tuning XXXIV: Running IT as DIgital Capability Builder of the Organization

Defining your enterprise business capability is part art and part science.

Forward-looking organizations are making a continuous journey shifting from an inside-out operation driven organization to an outside-in customer-centric business; to improve competency, they also shift from process-oriented practices to capability-based strategy management. IT plays a more important role in such a digital paradigm shift. The capability is the ability to achieve the desired effect under specified performance, standards and conditions through combinations of ways and means (activities and resources) to perform a set of activities. What are differentiated business capabilities can IT help to build for business to gain long term advantage?

Decision-making capability: IT is the steward of the business information. Information and decision-making are intimately connected and interdependent. The fundamental responsibility of IT is to ensure the right people getting the right information to make right decisions at the right time. Decisions are based on information and generate information. The amount of data required for a decision, and the amount of information generated by a decision, can both be measured in bits or bytes. Or to put it another way, for decision-making to be effective, the decision-maker must have enough knowledge to make their decisions rich in information,  "information" as input to the decision-making does not absolutely determine the decision but allows the decision-maker to exercise their judgment. Information as the output of decision-making can also be managed as business knowledge to benefit for future decision-making.

Change capability: For forward-looking and highly mature organizations, the IT department has become synonymous with the change department to improve business agility -The ability for business to create necessary change and adapt to changes.  A mature organization is one that can quickly and safely assess all of the consequences of a possible change and devise effective plans to achieve and sustain those changes - and to do this continuously. How do you make changes to anything without knowing all the parts and how they are related? In order to make effective changes, you have to know the underneath structure and processes of your business, because they underpin digital capabilities of the organization. Fundamentally, change consists of one or more of the following: people change, process change, and technology change,  and IT is not only the superglue but also the integrator to weave all important change elements effortlessly and make change sustainable. The IT department has been left to run change project, to have a good understanding from a strategic perspective of the organization (structure, processes, locations, drivers, objectives, goals, applications, data, technologies.). Thus, IT is a crucial element for improving business agility.

Innovation capability: Innovation is the change, but change does not always mean innovation. At the higher level of maturity, IT needs to run as a business' innovation engine. Innovation management is about transforming new ideas to achieve its business value. Innovation follows basic rules which are adapted depending the one company’s situation and ambition. The digital mantra for forward-looking IT organization is to do more with innovation. It doesn’t just about innovation within IT, IT has always been very innovative regarding technology, but for many lower mature IT, The missing part is business innovations. The innovative nature of IT can be used to the benefit of business only when IT participates in defining strategy and business goals and make IT as a business driver and strategic asset. An effective IT can drive all sorts of innovation, proactively pushing ideas on how to leverage technologies to drive business growth, increasing business productivity, digitizing talent management, building business competency and improving customer satisfaction.

Defining your enterprise business capability is part art and part science. IT needs to become the digital capability builder of the organization. Because Business capabilities are fundamental pillars to achieve the corporate strategy, and business information is the very clue to understanding every step of customer purchasing, and technology is digitizing every touch point of customer experience. Digital IT is the integrator and superglue to recombinant dynamic business capabilities, without them, strategy execution can not be sustained.  


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