Friday, December 8, 2017

Running IT as the Golden Thread of Digital Transformation

IT transformation is an integral part of the business changes, the linchpin of strategy management, and the golden thread of digital transformation.

Embracing digital is inevitable as that is now part of reality. In order to lead change and expedite digital transformation, IT continues to grow in importance to organizations, both operationally and as a competitive advantage. “Keeping the lights on” is just for openers, an evolving digital IT organization rides above the learning curve to become the business value creator and the golden thread of digital transformation.

IT management must directly link to the strategic direction of the top line business goals: The IT organization should provide guidance, direction, assistance, and support in the application and adoption of information technology solutions enabling business objectives! However, in many companies, there is a disconnect between the business’s strategic goals and IT management focus. Business partners perceive IT as a cost center, or support desk only, because they don’t have a clear picture with quantitative information about contemporary IT value proposition, and thus, lack of knowledge on how critical IT can contribute to the business’s top-line growth and customer satisfaction, and even become the golden thread of digital transformation. CIOs need to make an objective evaluation of how IT can directly contribute to the organization's strategic direction and the top line growth. IT needs to be considered a line of business. IT can become known as a revenue rainmaker by associating its efforts directly with sources of income. Both HW and SW IT assets, either externally acquired or internally developed, must be linked to business services that support the business goals and measure IT contribution to revenue generation.

Identify and trace through the matter by which IT impacts both the business bottom line and top-line business growth: CIOs must lead IT in reaching high-level performance. IT management needs to keep doing routine checks such as: How do we get revenues? How will we do in the future? How should IT help the company win businesses? How can IT contribute to customer acquisition and retention? The first thing is to stop calling IT initiative, clarify the business purpose first, profits and ROIs should be the driving force behind any IT effort. Trace through how IT impacts both the business bottom line efficiency and top-line business growth. There are tangible (cost savings, efficiency, etc.) and intangible (brand equity, sales enablement, etc.) components of business value. For CIOs to help the organization generate revenue, they need to get in front of the customers. Looking for solutions which will directly benefit the external end customer will improve the competitive advantage and in-turn bring in increased revenue. Retention of customers/reduction in the churn with better services and experiences provided to the customers will be an indirect way of increasing and maintaining the revenue. Like any other business initiative from another part of the company, developing a compelling strategic business case is especially critical when an initiative is difficult to monetize. IT has to switch its perspective from inside-out operation driven to outside-in business focus and customer-centric. It means to leverage more resources and talent to increase revenue and improve customer satisfaction. Making the IT department a profit center is one of the biggest challenges in most organizations. It is important to measure and validate ROIs, to be as comprehensive as possible in monetizing costs flows.

Information and knowledge can be tapped in monetizing an IT-driven business initiative’s benefits flow: CIOs will contribute to revenue generation when they are part of the senior executives' team responsible for the strategy making and revenue targets. IT understands deeply the value chain of business, the value chain of the industry segment and value chain of the business ecosystem where it competes. Generally speaking, IT value is demonstrated through the rate of employee productivity increases, the rate of new product development increase, the rate of market share gains, the rate of customer satisfaction and retention improvement, and the rate of sales gains, etc. Information Management today can capture the real-time business insight and customer foresight for discovering the new areas which contribute to the business growth, or spot the opportunities to increase revenues, and to innovate in the way certain tasks are automated with the help of technologies that allow the business to put a significant portion of resources and talent in innovation management. IT is no longer just that isolated function, IT management has to work both in IT and on IT, the true value is created at the intersection of many disciplines. There should also be a strong interaction of different functional management and their teams with feedback mechanisms and willingness to work on IT-enabled revenue-enhancement initiatives and find solutions that can support both the business need and build any ROI required to justify the business case and enable IT-driven innovation benefit flow.

IT-driven digital exploration is all about planning, investing, designing, developing, operating, consolidating, integrating, securing, modernizing, optimizing, balancing, and orchestrating. IT organization has to lift its maturity from a cost center to a strategic business partner and a profit maker. IT transformation is an integral part of the business changes, the linchpin of strategy management, and the golden thread of digital transformation.


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