Thursday, March 10, 2016

How to Leverage IT in Building Business Competency

IT need to deliver value to the organization in order to help the business build competency and implement business strategy.

The goal of all businesses is to generate revenue, increase net-new business, enlarge their footprint, and monetize their core competencies. In order to achieve business goals, organizations need to build a set of business capabilities such as innovation, agility or intelligence, and complementary core competencies such as customer satisfaction which consist of multiple capabilities and are infused into the being of the firm, IT is an important business enabler which can weave all necessary elements of the business into strategic capabilities and unique competency of the organization.

Highly effective IT organizations continue to cultivate its differentiated capabilities and business competencies: IT is uniquely positioned to observe business processes across the enterprise. Sometimes when one business area has a new product that can be used by another, IT leaders can connect the dots to come up with new innovative solutions. IT is not just the sum of services or processes, or monolithic hardware only, IT needs to build capability based unique competency via weaving all necessary hard and soft elements, in reaching high-level maturity. Unique competency is a combination of capabilities with a focus. A core competency is a harmonization of multiple capabilities such that it permeates the entire organization with a focus, and in alignment with the resource-based view, it is at the same time valuable, rare, and difficult to imitate. Each of these same capabilities may be combined in different fashions to yield multiple competencies. If capabilities define how you do something (marketing, logistics, production, etc.) and competencies describe just the result of those capability combinations in terms of what you deliver to the market and customers, then the firm can exist, thrive, and generate a suitable return as an outcome of being competitively advantageous. Leverage unique IT knowledge and capability to build business competency is crucial for the business's long-term growth and maturity. There are few business units that are as deeply embedded into each corporate function as IT. Use this knowledge to uncover hidden value, not only within IT but benefit the entire organization.   

Business case justification is important in IT portfolio management: The CIO must be concerned as to whether the operational ecosystem will function as expected. What's missing in many organizations is the CIO's ability to question the business's 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. If you have a project or program without a sponsor, you need to take a fast, hard look at the business case that justifies the program you are engaged in, spending assets on. A business case provides the description and reason for starting an initiative. 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. 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. 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, prioritize the portfolio, and manage full application life cycle. Every IT project is the initiative to help build business capability and competency.

Multi-layer ROIs: IT is an enabler of current and future capabilities of both the organization and its ecosystem. Thus, CIOs need to maximize IT value via pursuing tactical, strategic and innovative alignment with the business. Building business competency really means a lot: from “doing more with less” (efficiency) to “doing more with innovation”; from enabling business strategy (execution capability) to adapting to the changes (agility); from revenue growth to business resilience. Hence, in order to become a better business partner, IT value-based management needs to be driven by concepts like collaborative value or collective advantage. IT and the business have to speak the same language and communicate more creatively, IT leaders must be both business strategist and technology visionary, always think in terms of the value-adding to the business. From IT performance management perspectives,  if, as a CIO, your key metrics focus only on cost, then don't be surprised if you are managed on cost. If your metrics is all pointed backward at the technology, then don't be surprised that the business can't really understand the value of IT. Only through the well-defined set of KPIs which focuses on measuring business result, IT can both qualitatively and quantitatively measure value delivery to business and improve business competency.

In short, IT needs to deliver value to the organization in order to help the business build competency and implement business strategy. It means to have a respected intra-organizational agreement of priorities and resources, to have the teams and employees focusing on the most important things, develop the energy and excitement to achieve business results, not only for quick wins but for long term prosperity.


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