Monday, April 14, 2014

Running IT as a Business

IT is part of the business to contribute top-line growth, moving beyond as a service provider. 

Technologies play a pivotal role in driving business innovation, optimizing business process and improving both customers and employees' satisfaction, how about internal IT, how do you view the role of the IT department today? Is it a solution provider, support provider, service provider, all three? What percentage of the day is spent with each of the roles your IT department is handling?

IT is part of the business: IT may provide a service, but that does not mean it should be labeled as a service provider. The language holds key connotations and implies a relationship that does not benefit the business as much as it should. If you think of IT Departments as "providers" of any sort, you are placing them outside of the business. What does IT do new/different to be seen as an investment vs a cost? A service provider is usually not invited to impact the top-line growth and moreover, they are evaluated based on strict numerical ROI. Why would a CIO sit on the board of business if they are a "provider"? Today, businesses are more and more reliant on technology and digital solutions to compete - if they don't see IT as a fundamental part of their business, as fundamental as finance, operations, or HR, then they will be doomed to fail.

IT as a business partner: What C-level execs really want is a partner, someone who knows what they want before they know themselves, who innovates by understanding the business, as well as what they do; the partner that works both "on the business" and "in the business," not just "for the Business." "Providers" are measured on metrics such as "Cost per Transaction," "Uptime," "Project success rates." All these are important, but for real partners in the business, these are just input measures to "Margin Contribution," "Sales win percentage," "Yield on investment." IT executives and departments need to work out how they affect these business output measures, and what they can do to improve them using the means at their disposal. Once they do that and make a unique, valuable, independent contribution to the business outcomes that they can demonstrate in these terms, they will gain credibility and value beyond what any "provider" can deliver. 

Fundamentally redesign IT role and culture as a co-creator of top-line value, growth, and profitability: Let the revenue generation/increase become the focus vs. cost savings/ optimization. That's not to ignore the cost completely. Basically, start showing small wins in helping revenue increase and IT will get opportunities to transform from mere enabler to accelerator of the business. From a cultural perspective, IT needs to break out of the service provider mindset and see itself as a center of value creation, not just service providers. If you don't have that mindset, how can you expect the rest of the business to think differently? if you want to add value, you must be part of the business, understand it, help set its strategy, and innovate its products and processes, not just be an order-taker.

The role of IT today for many organizations is Solutionary for Information, Automation, and Orchestration - although the real goal is, as is the case with every part of the organization, helping the business become, stay, and increase profitability! The role of IT in the current business environment should be able to enable business outcomes. Business is no more interested in IT if it continually delivers projects without delivering value. 

-Information for analysis and decision support: While a lot of information may be kept, IT does not add value by simply storing, maintaining, and securing information. That is necessary and a given. But the true magic is when IT helps harness and understand that information. Providing ways to better recognize and act on that information for competitive advantage. 
-Automation - for the automation and delivery of product and service: Developing and delivering tools down to departments and users help those better do their job - the job of more streamlined and profitable operations - is one of the most critical roles for IT.
- Orchestration -Business relies on I.T. as a force multiplier and cloud orchestrator: It is important to make correlate large-scale data for helping with business concerns, the relationship is just not as "tight" as it needs to be. Look at Cloud- the newest estimates are 90% of Enterprises will have some form of a cloud play in the next two years- that is a lot of out-tasking. At the same time, Cloud is seen as "business-driven" not I.T. driven- business likes the idea of fast provision with the cost they can understand, or think at least they do. thus, IT needs to become a cloud orchestrator to improve business effectiveness and efficiency.

IT needs to be proactive, not reactive: In most of organizations, IT is setting back and waiting for the request. IT has to be configured in a way to understand the business and set the architecture to deliver the business and market need. IT has to be a consultant and advisor to the business to maximize revenue. I.T. is being not only neatly analytically measured by the business, but it is also being measured by every customer experience the leadership of the business has with every I.T. delivery they experience in their own lives. That sets a very high standard that internal I.T. will get held to in some ways, visible and measurable or not. 

From IT leadership perspective, the CIO is expected to be the internal consultant and Chief Innovation Officer: CIOs are trusted experts who understand a lot about the performance dynamics of the tech sector to be seen as value-added participants in conversations regarding the need to increase profit, market penetration, reduce risk, and to increase the velocity/effectiveness of every dollar spent. What's missing in many organizations is the CIO's ability to question the business' requirements and justifications used for IT-based projects. They also have to advocate for "departmental immersion" and other strategies to help IT become more integrated and aware of the organization as a whole. The CIO must be concerned as to whether the operational ecosystem will function as expected. CIOs also need to become Chief Innovation Officers to run IT as an innovation engine; otherwise, you will become Chiefly Irrelevant Officers.

From IT leadership to IT talent, from mindset to priority-setting, IT needs to go beyond as a service provider, and act as a true business partner, and make a contribution to the business’s top-line growth. IT is the business.


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