Wednesday, January 22, 2020

From “Cost Center” IT to “Value-Added” IT Transformation

Forward-looking organizations see what IT is driving the business transformation regardless of the industry segment they play in.

With the increasing pace of changes and overloading information, many companies are reaching the inflection point of digital transformation. IT plays a critical role in such a digital paradigm shift. Forward-looking IT organizations are practicing entrepreneurship and running IT as a purposeful software startup to make continuous deliveries.

Visionary IT leaders need to learn how to advocate for "departmental immersion" and other strategies to help IT become more integrated and aware of the organization as a whole for improving the overall organizational maturity.

Develop IT as the “brain” of the digital organization: IT is business, nowadays, the forward-looking organizations across the vertical sectors claim they are in the information business. Different functions of the company leverage the data to solve their problems in different ways. IT stands out as a value-added function by managing information effectively and efficiently. IT is responsible for the information agenda and provides accurate information and applications to store and allow the modeling of information to solve business problems. Digital IT organizations with highly cognitive connectivity play a crucial role in building a high-responsive, high intelligent, and high-mature digital business.

IT is the information provider of the entire company;, departments such as marketing, finance, HR, and business are responsible for applying the information to their businesses with the aim of generating revenue growth, motivating employees, and improving customer experience and engagement. Running IT as a business means IT understands what’s the customers’ true needs, helps to solve their problems, but also transforms itself from a cost center into a value center.

IT needs to know how to promote its products and services besides building good products and solutions: IT cannot be seen as a value creator unless IT management clearly understands what their organization does for a living. Every new technology adopted must facilitate the business but also bring down the incremental cost of growth and the time to market. To reinvent IT from a cost center to value-added, IT management needs to know how to promote IT as a trustful business partner with tangible performance data, work out how they affect the business growth and improve organizational maturity via some business output measures, such as “Sales win percentage,” “Margin Contribution,” or “Yield on investment,” and build a solid brand.

  IT can digitize the touchpoints of the customer experience and transform from an inside-out support function to an outside-in customer-centric IT. What is required is having an IT-enabled capability strategy that integrates technologies across the entire enterprise, including how best to source them. Also, make sure that the external customers who purchase products or services have a great experience relating to any IT systems that impact them.

Provisioning future business capabilities: In a traditional setting, IT’s main focus is to develop and maintain internal systems. From a strategic perspective, IT is the value-added delivery that makes the organization different and competitive. IT is, in fact, the strategic competency of the business. Every competitive business has a unique set of key capabilities to achieve its business goals and reach a high level of performance. IT plays a threshold competency role in building core business competency. IT competencies directly impact how it helps the business gain competitive advantages and capture upcoming trends to compete for the future.

The narratives within strategic business cases reflect multifaceted business value pathways, respond to mandates by external parties; upgrade existing technologies; make business process improvements; tune organizational structures, sharpen business capabilities while reducing the cost to market without the sacrifice of strategic goals,  gain a competitive advantage; and, generating options for provisioning future business capabilities. Leveraging unique IT knowledge and capability to build business competency is crucial for the business's long-term growth and maturity.

Forward-looking organizations see what IT is driving the business transformation regardless of the industry segment they play in. IT has to move from providing largely back-office support to become the prime facilitator, differentiator, and value creator of the high mature digital business. IT has to step into businesses with knowledge and confidence as a strategic business partner.


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