CEOs need and expect more value from their IT functions given the central role of information technology in how a company plays and wins in its respective marketplace. Delivering on this expectation requires IT leaders to fundamentally transform the function to:
The first two articles in this series provided perspectives on what CEOs should expect of IT in terms of re-establishing the function’s relevance and value and re-equipping the function with the capabilities required to deliver on this value. In this article, we share our perspectives on what IT must do to re-position the function from an order-taker to a highly valued business partner that enables its partners to effectively and efficiently use IT to drive growth, profitability and innovation.
IT, like many staff functions, has successfully made the transition from being functionally focused to providing responsive customer service. Many IT functions have embraced this effort by establishing roles in their organization that focus on building and maintaining strong customer relationships. In their zeal to be responsive and customer-centered, Business Relationship Managers in IT, many of whom rose through the technology ranks within the function with little to no experience working within the core functions of the business, are quick to take the order for IT tools and technologies suggested by a customer—“If that’s what you want and you can pay for it, we can build/deploy it.” This is especially true in organizations where IT investments are wholly funded by business units or functions and not centrally governed by IT or at the most senior levels of the organization.
While noble in its intent, this has resulted in creating complex and expensive technical environments that require significant investment to run and maintain over their lifecycle and often provide marginal value to grow and transform the business. In CIO circles, this is known as “technical debt.”
Recent studies by Deloitte indicate that IT budgets are dominated by investments focused on running and maintaining existing IT infrastructure and applications to run business operations, while spending little on helping the business grow and transform – the true value of IT. Business Relationship Managers, and frankly all IT employees, should be focused on working with their customers to shift investments from the operations bucket into the business change and innovation buckets.
How can this be, given IT’s unwavering focus on serving the customer? Simple—when it comes to IT (and any business solutions for that matter), what the customer wants may not always be what they need, even if they have the money to pay for it!
Our experience shows that what business leaders need from IT is a highly collaborative partnership in which IT:
For career IT professionals, this can prove to be a real challenge. It requires a strong understanding of the underlying business and its strategy—operational, financial, and people. It also requires the ability to help the business customer set aside pre-conceived notions about what technology solution they need (“We need salesforce.com!”) and explore in detail the business problems or opportunities they wish to address, and how (or if) IT can be used to solve or capitalize on these problems and opportunities. For example, “We need to improve our salesforce productivity and customer experience to ensure we are targeting the right markets and people with our products and providing them a useful and user-friendly digital experience.”
Once these needs are defined, IT must help its customers articulate and, whenever possible, quantify the business impact (in financial, operational, and customer terms—not technology-related terms such as solution features) of meeting and failing to meet these needs. This is absolutely essential in order for IT and its business partners to make informed choices about potential IT investment and, importantly, to set parameters for choosing solutions that are best fit and provide a tangible return on investment. Refer back to the first article in this series to see our proposed IT Value Framework, which assists in quantifying business impact.
It wasn’t too long ago that the nature of IT was so complex that most business people would not even attempt to identify which solutions where most appropriate. This has drastically changed as the result of technology advancements (e.g., Cloud, Mobility, etc.) and the wholesale shift from installed solutions to SaaS solutions. Personal experiences with technology have also drastically shaped our understanding of IT (e.g., Apps, Smartphones, one-click shopping on Amazon). These shifts have, for good or bad, created a whole new generation of IT-savvy (and not so savvy) business people who know (or think they know) what solutions are “best.” Further exacerbating this are SaaS providers who go directly to the business person to sell their solutions, sidestepping IT in the process.
Needless to say, this has made the job of IT harder as it now requires the function to understand the myriad of solutions available and, very importantly, educate their business partners – in layperson terms – on the myths and facts of each option. At times, IT may need to move its partners away from pre-determined solutions that are not fit for purpose, which requires the ability to influence their business partners’ thinking regarding functionality and features (this is particularly true when discussing the level of customization required to meet defined business needs). Three things are true in life: death, taxes, and the fact that the more you customize IT, the more expensive it is to run and maintain over its projected lifecycle. IT must have the business and financial acumen to understand the financial implications of solutions, not just the technical capabilities they provide or the costs associated with development.
The reputation of IT has historically been built on its ability to execute IT projects on time, on schedule, and within budget. Significant investments have been made by the function to build and maintain its project management capabilities to deliver on its promise. Unfortunately, IT often thinks its job is complete once the project is delivered when in fact nothing could be further from the truth. Completing the project is only the beginning. IT must demonstrate shared ownership and work closely with its business partners to fully realize the expected value across the entire lifecycle of the investment. This includes ensuring the partner fully understands how to get the most benefit from the solution and plays an active role in the choices on future capability and investment required to realize this throughout the solution’s life. It also requires IT to influence and, where necessary, push back on the business partner’s desire to expand or build upon the solution in ways that increase the total cost of ownership and the complexity of the business’ overall technical environment.
We frequently come across organizations that have pushed the limits of their solutions in ways that make it extremely costly to maintain, decrease overall performance, and reduce the likelihood of realizing the fully operational and economic value from their investments. IT functions that desire to “please” their customer or do not fully understand the economics of total cost of ownership frequently shy away from pushing back and ultimately disappoint their business partner as a result of this well-intended, but misguided behavior.
Becoming a highly valued business partner requires IT to develop a new and expanded set of knowledge and skills, anchored firmly on a strong and current base of technical knowledge, and encompassing a complete understanding of the business—its strategy, customers’ operations, and workforce—to help the organization make fully informed choices on when and where to invest in IT. And importantly, it requires the IT function to fundamentally shift its orientation from pleasing the customer to collaborating with them to make and execute sound investment decisions that produce tangible improvements in business performance across the spectrum of growth, profitability and productivity, innovation, and effective management of business risk.
Our next article focuses on the imperative for IT to transform its operating model to improve its ability to deliver on its value promise. In the meantime, we invite our readers to share their thoughts and perspectives on our points of view regarding what CEOs should expect from their IT functions.