Monday, October 10, 2016

Avoiding Three Traps in Calibrating IT Growth

These are undoubtedly dynamic times, with the increasing speed of changes and high expectation of customers.
IT organizations are at the crossroad, either continue to be a commodity IT service provider or reinvent itself to become a business growth engine. Because the majority of IT organizations still get stuck in the lower-level of maturity and struggle to prove their unique value for helping the business gain competitive advantage. In order for the CIO to practice transformational leadership and for the IT department to reposition itself as the premium provider of competitive business solutions, IT needs to avoid these three traps in calibrating the growth and improve its efficiency, effectiveness, and agility.

The traps of IT strategy disconnected from the business strategy: IT strategy is an integrated component of the business strategy, so it needs to closely link to the business strategy, take care to not distance yourself from directly linked business value. However, in many organizations, the leading executive has chosen a goal and called it a strategy. Most of the times the so-called "strategy" document only gives the goals or objectives but does not state the roadmap or path to achieve the goal. Or the planning is becoming so formal that the process lacks the flexibility and creativity needed to address the uniqueness of each company. To avoid the trap of disconnected strategy, first, set the business strategy as the basis, and then carry out an As-is assessment of the IT environment and create IT strategy accordingly. Though these are not always linear steps, because often IT strategy is an invaluable input to the business strategy, and because information and technology are often the disruptive power behind the business innovation. The fine-tuned capability based business strategy execution is an interactive continuum. The other cause of disconnected strategy is that the top management fails to communicate the plan to the other employees, who continue working in the dark. Fail to involve key employees in all phases of the planning process (preparation, strategy development, evaluation, and implementation). To put simply, fail to create a climate which is collaborative and not resistant to change. To avoid such a trap, the executive team needs to provide the vision to the staff and then share the differentiating recipe for how their strategic approach will accomplish "goals" that exceed those of their competitors.

The traps of solely focus on quantifiable benefits or short-term result: Digital transformation is a long-term journey. Old IT thinking cannot move fast enough in the age of the digitalization. IT leaders shouldn’t just spend all resources on gaining some short-term result. Managing a healthy “run, grow, and transform”  IT portfolio is crucial in calibrating IT growth with the steadfast pace. Thus, CIOs need to keep collecting feedbacks from the business upon how to improve IT services and satisfy customers, and how they can deliver ‘competitive capabilities” to the business as many businesses will plateau without IT. To avoid the trap of short-sightedness, the long-term plan needs to be a cross-functional collaborative effort, not something the IT team does alone in a corner. You need to talk to the business people, find out what their key initiatives are, and discuss how IT can facilitate, enable or support their initiatives. Talk about shared goals, and shared risks. Discuss timelines and set goals, identify metrics and KPIs that will be shared across teams, and talk about funding and resource commitments.

The traps of measuring IT performance only through IT operational lenses: IT value is multidimensional, IT metrics need to evolve to something that matters to the business audience, at the same time that "business sentiment" needs to get put into something more tangible, such as optimizing processes, or improving productivity. Measure IT performance through the benchmark which can reflect the multidimensional value of IT to the business, not only for the bottom line but also for the top line growth. Measure what it matters, to reflect the business value, also make sure IT and business are always on the same page. Every new technology adopted must facilitate business but also bring down the incremental cost of growth and the time to market. That should be the true metric for a CIO’s success – how has he/she been able to impact the top and bottom-line and facilitate growth and competitiveness. The traps of measuring IT performance only through IT operational lenses might further cause the “business dialect translation” issues because two different languages (IT and business) need to find common ground and pursue the cohesive common business goals. In the end, the business expects ROI. The answer upon how to measure properly is somewhere in the middle. The various activities are needed to manage performance, both STRATEGIC and OPERATIONAL plans, innovation METRICS, day-to-day decisions, agility, and overall organizational maturity.

These are undoubtedly dynamic times, with the increasing speed of changes and high expectation of customers due to IT consumerization trends and continuous digital disruptions, lightweight digital technologies, and abundant information and knowledge. To avoid these traps in calibrating IT growth, forward-looking organizations need to invite their IT leaders to co-create business strategy, empower IT to become a changing organization for leading digital transformation, to strike the right balance between the quick win and long-term perspective, and to harness cross-functional communication and collaboration.


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