THE 4 ZONES MODEL: A Playbook to Maximize the Business Value of IT
Defining the Company’s Future Enterprise IT Agenda
The disruptive impact of social, mobile, analytics and the cloud is fundamentally changing the ways companies engage with their employees, customers, supply chain partners and other key stakeholders. In order for companies to remain competitively viable in the new world of digitally mediated interactions, they will need to overcome their legacy mindset about IT as primarily a cost center support function. CIOs must facilitate IT’s evolution to a full strategic partner role that directly contributes to delivering new revenues and profits. Simply put, a company will have to use technology as a source of competitive advantage in order to transform itself into a digital enterprise.
What’s ultimately at stake for CIOs is who will take the lead in defining and implementing the future enterprise IT agenda for their company. To regain their rightful leadership position requires both a new organizational and operating playbook for IT. We call this the Four Zones Playbook and it is designed to ensure that the organizational structure, operating cadence, resource allocation process and success metrics including ROI are properly adjusted to and aligned with the priorities and deliverables for each zone. In doing so, it will maximize the business value of IT across the enterprise.
The 4 Zones
The Productivity Zone: Here the focus is to optimize the costs of maintaining the company’s legacy systems of record while making sure that all systems and platforms are stable, secure and in compliance with industry standards and regulations. There will be an ongoing effort to identify and unlock trapped value in maintaining legacy systems of record to be invested in new systems of engagement. There will be a goal of “no technical debt.”
The Performance Zone: Here the focus is to demonstrate the business value of IT as a source of competitive differentiation for all of the enterprise’s established lines of business. IT’s charter for this zone is to provide new user-centric tools, services and solutions eg: social, mobile, cloud and data analytics that improve the competitive performance of each of the company’s lines of business. The implementation of a Collaborative IT Governance Model will align future IT investment priorities with critical business outcomes.
The Incubation Zone: Here the focus is to help the company identify, test and validate next generation product, service and business ideas and leverage technology enabled innovation to develop them. An Agile development model will replace the traditional waterfall development model.
The Transformation Zone: Here the focus is to help the company scale net new lines of business that produce material (10% or more of current revenues) new revenues and profits. There can only be one transformational new business initiative in play at any one time.
The Key Principle for Success
Overall, the key principle behind the Four Zones model is that, because the goals and objectives of these quadrants are so diverse, any set of management methods that creates success in one zone is likely to cause failure in each of the other three. Therefore, it is critical to:
- Install a governance model that separates these four zones from one another
- Establish IT business value deliverables for each zone
- Overlay a light-weight corporate system to oversee all four zones in parallel
In upcoming blogs, I will take a deeper dive into each zone and further examine the specific functions and deliverables from each one. I will also highlight specific implementation tools for each zone such as the Trapped Value Audit and the Collaborative IT Governance Model.
Based on some early engagements with CIOs and their senior leadership teams, I have seen first-hand the value and benefit this 4 Zone Model brings to maximizing the business value of IT within an organization and with its key external partners and stakeholders.
As always, I am interested in your comments, feedback and perspective on the ideas put forth in this blog. Please e-mail them to me at email@example.com.