Monday, July 8, 2013

CIO as "Chief Investment Officer": How to Present IT Value to the Business

IT is the input of corporate strategy and IT strategy is an integral element of business strategy.

Successful CIOs know not only know the IT side but also understand the business, as the CIO is not just the guy/gal running the PC help desk anymore. There are far larger, business-oriented responsibilities on the horizon, the skill set of the CIO is going to transition from running IT infrastructure to best applying IT to business problems. Thus, on one side, the CIO is a Chief "Intrapreneur" Officer to run IT as a startup, on the other hand, the CIO acts as a “Chief Investment Officer” to scrutinize business case, master business language, and well prepare what if you have a seat at big table, how do you present effectively.

1.    Link IT Projects to Business Strategy

IT is the input of corporate strategy and IT strategy is an integral element of business strategy. Spell the business strategies and against each defines how dependent that strategy is on IT in terms of numbers (could be approximated or attached value based on criticality). 
  • It should be preceded by lots of work that shows IT project (and the IT Strategic Plan) links to the business plan. This requires a good planning process and governance where the business derives IT priorities and co-owns benefits. In the future, it's clear that the expectations of IT will require that technical skills be complemented by strong business management capabilities. No longer is it enough to just provide the technical strategy on how to respond to business needs. The studies emerging now are clearly stating that the CIO and IT function must be contributing to the future business strategy by leveraging technology as a means to an end, not the end itself. Only the CIO puts "Chief Investment Officer" hat on, he/she can scrutinize IT effort via the business lens. 
  • The CIO needs to provide unique business insight as they usually oversee key business processes: The CIO is a trusted advisor to the Board, and increasingly, the CIO can be part of the Board. As such, the CIO has to be a productive member and provide some actionable insight and options. There’s no difference between the CIO’s role to ‘deliver capability’ to the business and other members of the Board to be productive in the leading organization outside of the meeting. More to the point, without the analysis, insight, and understanding of the CIO, how does any executive direct the creation of a business strategy that is increasingly dependent on technology and more often, competitive advantages that derive from the technology. 

2.    The Three Keys to Present IT Value 

 The value can be in the form of money saved, revenue from a new unexplored business idea, etc. Even though exact metrics varies for each company and business model, the board will like the IT strategy which helps the company’s bottom line and top line growth. CIOs may need to be paradoxical again at the big table, be 'Chief Intrapreneur Officer' and 'Chief Investment Officer' at the same time:

  • The three keys to presenting IT value are financial returns, return timeline, and risk: Just like any other investment. If you can present IT's project portfolio in a manner similar to an investment portfolio, it makes instant conceptual sense to board and C-level folks. Once you start prattling on about TCO and IT-centric metrics you've lost your audience. If you can show the objective of the investment and the three elements above, you can present IT as a value generator rather than a cost center. One of the tactics in catching the attention and drawing the interest of the board in looking & appreciating the IT strategic benefits to business is to estimate what would cost the business if IT was not used to achieve the strategy. 
  • The CIO needs to be well grounded in first and foremost corporate governance principles and frameworks: Principles of Corporate Governance, The Transparency Principles, Corporate Governance Code, etc so that they can speak the language of Corporate Boards. IT Governance is a subset and special case of Corporate Governance. Secondly, it is prudent that in order for CIO's to break the Board Room barrier, that they formalize the IT Governance Profession and be in possession and be members of established IT Governance.

3.    Present IT Project Benefits to Meet Strategy

Making a connection with other people around the management/board table is all about talking their language. Identify the key performance indicators of the company and detail how your initiatives will drive improvements in the current state. Focus on the vision set out by the Board - draw a picture of how and what the CIO’s doing will help achieve the vision. 

  • Convincing shareholders about IT value: This is also the right time, to convince the shareholders on new projects by showing them projected benefits to meet the strategy. Try and show how close IT has come to the perceived value that the business has about IT. Often times the business crowd wrongly equate IT solutions with concerns of expensive technical difficulties and the IT crowd builds more out of its own know-how than the need of the business client - thereby not serving its wish to earn that seat at the table. Until each and both parties transcend to a genuine hope and belief in one another, ‘he said, she said,” argument is still on. 
  • IT-Business cooperation: The next logical step for a CIO should be to evolve the IT department into a co-operation-wide recognized body that provides solutions for a variety of business opportunities. The CIO may act as Chief Investment Officer, to justify business case via fiancĂ© term: (1) doing ROI on IT Investment pre-project initiation (2) ROI is driving the go or no go decision on IT Projects and (3) When the project is completed, look at the actual expenditures and benefits to see if the ROI was actually met. To be a partner, you have to share the goals and aspirations of your colleagues. 
The CIO as ‘Chief Investment Officer”, he/she needs to have a technological vision, business insight, and finance discipline, speak business language, present/share with entrepreneur’s passion, have capabilities to ask good questions and present IT value in an understandable way. 


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