Thursday, October 26, 2017

Three CIO Debates to Assess IT Digital Maturity

When IT executives move beyond commodity management and begin to show a higher level of strategic value and dedicate more resources to innovation.

IT has become strategically important, it is imperative for IT and business leaders to work effectively and efficiently together to ensure that they are leveraging IT across their companies to attain enterprise-wide digital transformation; not just using IT as a digital extension, but running IT as a digital engine. Here are three CIO Debates to assess IT digital maturity.  

What is the IT role in the company? Is IT there to just keep the light on, or is IT expected to actively take part in strategic and tactical decisions? When board directors or executives ask the IT leader about these questions, rather than answer those questions mechanically, CIOs should take it as an invitation to a dialogue with other C-suite members to envision the business via a technological lens and convey a clear message of IT as a differentiated business advantage. Also, collect the business feedback regarding their expectation of IT. IT has to continue working together with businesses to find out what they need and develop tailored business solutions side by side to advance the company. Through cross-functional communication and collaboration, the business will come to have a better understanding of the contribution that IT function makes and empowers IT to take initiatives for leading changes and digital transformation. The gap between IT and business will enlarge when the business keeps changing its mind and is not happy with what they ordered and IT is overloaded, feel the business has not communicated effectively or lacked an in-depth understanding of IT complexity. The mistrust between business & IT is deepened while business thinks IT is too slow to adapt to the ever-changing business environment, and IT leaders thought that they don't get sufficient support from the business. The “lost in translation” syndromes will further cause silo thinking and decelerate business performance. To make IT as a trustful business partner, CIOs should be an insightful business leader and empathic communicator, they need to understand stakeholders' expectations and propose a service/solution portfolio that focuses on business priority and build unique business competency. CIOs won't set priorities in vacuums, rather, they'll use the enterprise's strategy and business objectives to determine which business capabilities are needed to enable it to achieve those objectives and then, execute to build or solidify business competency.

Is IT a low-cost internal service provider, or should you be looking for ways to spend a dollar to make three? IT leaders should make an objective assessment of IT performance and maturity, not just through the financial lens, but also bring a broader perspective on how IT creates the competitive advantage of the business. From an IT investment perspective, it’s about spending the money right and getting the right results for both short-term quick win and the long-term perspective. Depending on the industry, IT spending usually runs 3% to 5% of revenue. However, these numbers typically include all IT spending, not just what the IT department may spend. You should not spend to meet a quota, nor should you avoid spending to stay within a quota. IT leaders need to do a further quick check: What proportion of IT spending is used to run, grow or transform your business? It helps you prioritize with better resource and talent alignment, also cut out waste and shrink the gap between IT and business. Making IT a profit center is what the real challenge in most of the organizations because it requires some kind of rethinking and reinventing the corporate processes and creating that changed sense of maintenance and support to services provisionings, such as consolidation and optimization, putting on wheels a new profit center. IT can help the business grasp growth opportunities via information-based business insight, IT can also help business improve net by reducing the cost of doing business via various means such as right sourcing and sizing, keeping IT costs flat while at the same time maximizing its output.

How is IT performance as an organization evaluated by the rest of the company? How will you measure success? IT leaders should both manage IT and measure IT performance effectively. Continually accelerating changes in IT consumption and production require faster responses and better performance metrics. IT leaders must keep in mind which KPIs best measure IT ability to deliver business value.  IT performance metrics need to evolve to something that matters to the varying business audience, at the same time that "business sentiment" needs to get put into something more tangible, such as optimize processes, or improve productivity or products/services innovation. In reality, it is true that the majority of IT organizations still cannot articulate their economic value to the board or shareholders in a language they understand and performance metrics alone will not solve the problem. Even if you choose the right KPIs, you must change them from time to time accordingly. Otherwise, your business is going to be driven by that specific set of KPIs: you are going to focus on them only. The business goal behind the IT measurement has to be about focusing on benefits generation, return on investment and contribution to innovation.

When IT executives move beyond commodity management and begin to show higher level strategic value and dedicate more resources to innovation, IT is on the right track to improve its performance and maturity. IT leaders need to brainstorm a lot, debate a lot, and make a comprehensive assessment of its manageability and strength, its differentiated competency including innovation ability, as well as its overall organizational maturity.


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