Thursday, July 21, 2016

How to Run Differentiated IT to Reach the Zenith of Digital Maturity

IT has to continue to evolve the digital dynamic and reinvent itself as a strategic business partner and the innovative game changer.

The majority of IT organizations today still limit their role as a support center to keep the lights on. Bottom line thinking is one of the great limitations of the modern IT organization. The true IT value is hard to derive from support services since measuring productivity can be elusive and difficult to quantify. Also, with explosive information flow and disruptive digital technologies, all forward-thinking organizations claim they are in the information management businesses. Hence, IT as an information steward of the business has to be run as a strategic partner and a key differentiator of the company, in order to improve business competency and reach the zenith of digital maturity.

Competitive differentiation of IT: Organizations rely more and more on technology; the IT department has more and more to offer, also has more obstacles to overcome. A clear understanding of what services or solutions are supporting your competitive advantage is needed. IT is increasingly supportive of the competitive position and the business. In general, careful considerations must be made about which knowledge or skills have to be secured; what are commoditized services, and what are competitive differentiators; which service to buy from outside, and which capability needs to build in-house. Because even your suppliers will help you out, but often they will offer the same solutions to competitions as well. In order to run a differentiated IT, CIOs should understand the business first, otherwise, it is challenging to link the dot between business and IT. Once you show and demonstrate to the other CxOs that you understand the business, they will respect you and give you authority, power, and influence in executive decision-making. Only under the strategic leadership, IT can unleash its full potential and reach the next level of maturity.

IT system as a core of business advantage: IT is the business. The issue is the business context definition. Can your company rely on an IT system that is a commodity (standardized usage of technologies or services), or is IT system at the core of your business? The value proposition of IT and IT management approach often depend on the nature of the business and the role that IT plays in defining its positioning in the market. With fierce competitions in many industries, the opportunities for cost-leadership as a strategy are now much harder as everything moves so much more quickly. On the other hand, the differentiation provided by innovative technologies allows companies to reach the "long-tail" customer that previously was impossible or uneconomic. Hence, the differentiation provided by innovative technologies usually is more long-lived than differentiation provided by marketing actions that can be copied easier. At the same time, digital also brings unprecedented risks as every opportunity has risks in it, the emergent technologies can push you out of business if you are not agile enough to change your business model. Many leading organizations also take a hybrid approach -leveraging IT system as a core of business advantage and improving business efficiency at the same time: Keep costs down from operational perspective, and aim for being a differentiator from customers’ lenses as well.

Digital technologies are creative disruptors, and information provides the very clue for the growth opportunity: Broadly speaking, at the lower maturity level, IT is aligned with businesses to provide necessary support in a reactive way. However, when moving up the maturity, IT needs to be more strategic, creative and proactive. IT should become the “digital brain” of business because the information is the “gold mine,” and technology is a creative disruptor, IT can become an innovation engine to bring the new opportunity for business growth. IT maturity also depends on how it manages the changes with the right attitude (reactive vs. proactive), and the level of aptitude (only taking the one-time initiative to run an IT project vs. building an ongoing change capability as cohesive strategy management effort. In traditional IT organizations, what usually happens is that IT couldn't get the business engaged and then ran out of the way. IT staff are trained early on to focus on change control as a sort of promotion to the production process and they aren't usually skilled in how it happens. The tendency is to think of the application change as the end when really, it's about the middle. The digital potential of IT cannot be unleashed until the structure is put in place to know what is being delivered and the weakest link - talent gets strengthened by putting people to the right position with the right capability to do the right things. And IT can contribute significantly and directly to the business model and strategic direction.

Embracing digital is inevitable as that is now part of reality. In order to lead change and drive digital transformation, IT should ride above the change curve ahead of the other parts of the company. IT leaders need to wear multiple hats with different personas to practice situational leadership, innovative leadership, and transformative leadership, to lead IT as a competitive differentiator of the business. IT has to continue to evolve the digital dynamic and reinvent itself as a strategic business partner and an innovative game changer, with ultimate goals to reach the zenith of digital maturity, and bring high-performance business results.


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