A Common Set of Incentives Related to IT Performance

Organizations should be aware that in the digital arena, IT application and its dynamics have a significant difference compared to the previous age.

Today IT is permeating into every corner of the organization, and all forward-thinking organizations across industrial sectors declare they are in the information management business. However, some IT organizations get stuck at a low level of maturity, running as a silo function  - bottom-up, with the controller’s mindset.

To keep IT relevant and reinvent IT as a trustful business partner, it is critical to bridge gaps between IT and business, make a seamless alignment of IT and customers, and have a common set of incentives related to IT performance.

Ensure deliveries of agreed IT enablement to the business goals: Traditional IT has been perceived by the business as a commodity service provider or even a cost center. Top IT performers are those who can understand the business requirement, leverage the right technologies, capture real-time information, break out of the service provider mindset and perceive itself as a center of business value creation and customer champion.

IT management needs to engage with the business units to truly understand the organizational visions, figure out what's the best fit for the business’s strategic goals, and make continuous deliveries. IT professionals should understand that there are only business initiatives, it's important to "keep the end in mind" for spotting business pain points, fixing crucial business issues, capturing opportunities for developing new services/products or optimizing current ones, and achieving business value. They are astute at the tailored business solution with on-time delivery and measure the right things for making continuous improvement.

Always take the customer view as the basis of measurement of success: Running a customer-centric IT would follow the principle to gain customer empathy and optimize the customer experience. When IT and business are not one team, it is the customer that ultimately will feel the pain of less than stellar products or services and will take her or his custom somewhere else. Building customer-facing applications is both strategic to delight customers and tactical to improve project success rate via building the mature team and experiment with the best practices or the next practices.

Keep in mind, to improve customer satisfaction, it is important to capture customer insight, not just get information and understand it partially. Sometimes, what IT and users define "innovation" are two entirely different things. The inside-out perspective of IT management is operation driven and focusing on overcoming technology challenges; but the outside-in perspective of IT organization is customer-centric, making clients' jobs and lives simpler. Retention of customers/reduction in the churn with better IT-enabled products or services will be a great indicator of IT competency and an indirect way of increasing and maintaining business revenue.

Reduce the IT delivery cycle time: With rapid changes and fierce competition, IT needs to shorten its product/services delivery cycle for speeding up and improving business adaptability. Organizations should be aware that in the digital arena, IT application and its dynamics have a significant difference compared to the previous age. IT managers need to make an objective assessment - which apps should be built in house and which ones can be bought from vendors; the goal is to manage cost scientifically and shorten the IT development cycle significantly. Timing is critical, deliver what you promise, on time, on budget, and most importantly, on-value.

With the emerging “Software As A Service” on-demand model, the business can order commoditized IT services from third-party vendors easily. But it’s also important to develop IT core competency via in house deliveries on time. IT management needs to know how to "really do" risk management, quality assurance, vendor management, etc. Talent skill gaps or management ineffectiveness perhaps cause a time delay and decelerate business speed. The management should build consistent IT delivery ability as the soft asset and champion intuitive customer-tailored solutions to achieve specified goals and optimize the customer experience in a continuous delivery way.

Make a priority choice based on ROI and risks: IT has limited resources and budget, prioritization is critical because the alternative is a land grab for resources. Reduce the number of "prioritized business initiatives" and clearly delineate the really critical ones. It aids in removing silo thinking, calculating ROIs and risks, integrating and energizing the organization to get digital ready.

The IT prioritization objective shouldn't be to work on only those projects for which you have resources or staff, it should be to maximize what you can accomplish through creative leverage of your talent pool and build business competency. In fact, setting IT priority to leverage limited resources and talent to maximizing business value is an important step in climbing IT organizational maturity.

Have executives’ oversight: IT oversees underlying business functions and structures, and enables all critical business processes, which underpin business capabilities in enabling digital transformation. IT leaders must not fall into the role of facilitating flawed or incomplete business initiatives. They should always stay focused on the big picture of the organization, establish his/her department as part of the business, rather than just a service organization, to ensure that IT is part of the business and it's on the right track to achieve well-defined business goals without getting lost and burning out.

IT has the necessary structure, methodology, and tool in shaping the new box of thinking and managing the emergent digital complexity. By leveraging systems thinking to understand the interconnectivity of contemporary organization, high-competent IT can become a business simplifier that also helps to keep optimizing business processes, tuning organizational structures, sharpening business capabilities while reducing the cost to market without the sacrifice of strategic goals.

In the digital era, information technology potential directly impacts the potential of the company. To make continuous improvement, develop a common set of incentives, ensure that IT measures are quantitative, and implement whatever mechanisms you need to be able to gather the data, for catalyzing IT-enabled innovation, improving revenue, catalyzing business growth, and ultimately improving organizational maturity.

Posted in: IT Performance Management,IT Transformation