The Evolution of Enterprise IT
Why it’s Critical for Companies to Achieve “Technology Leadership Competency”
A Wide Gap between Expectation and Performance: Over the past two years, The Harvard Business Review and The Economist have been conducting primary research to better understand the changing role of the CIO and IT Department. Some of the key findings from their research suggest that there is a wide gap between the role IT currently plays today versus what it should play going forward.
- Nearly half of CEOs feel IT should be a commodity service purchased as needed
- Almost half of CEOs rate their CIOs negatively in terms of understanding the business and understanding how to apply IT in new ways to help the business grow
- 57% of the executives expect their IT function to change significantly over the next 3 years, and 12% predict a “complete overhaul” of IT in their company
- Only 25% of CEOs thought their CIO was performing above his or her peers
Unfortunately for many companies, the overhang of legacy thinking about IT has permeated the ranks of the C-Suite to a point where they have lost the ability to recognize the value of technology as a source of innovation and transformation that can deliver new revenue and profits for the business. Part of the responsibility for this current state of affairs rests with the CIO and IT Group who have willingly or unwillingly allowed themselves to be put into the cost center/support function pigeon hole. In these cases, the CIO does not report directly to the CEO but rather to the CFO or Head of Operations. As such, the primary focus is on how cost efficiently they can operate and maintain the company’s enterprise IT architecture and systems.
While optimizing the “run the business” IT expenses for a company is not a bad thing, taken to an extreme it can completely neutralize the ability of technology to “change the business” by directly contributing to creating new and compelling ways to engage with employees, customers, supply chain partners and other key stakeholders. These new terms of engagement are redefining the competitive boundaries of most industries and failing to stay abreast of them will result in a significant loss of market share and market influence.
Some Early Examples of Success: The good news is that there are some early examples of how forward thinking CEOs and CIOs are working together to build a “technology leadership competency” throughout their organizations. Here are some of the actions these early adopters are taking:
- First and foremost the CIO must report directly to the CEO and be a full participating member of the company’s senior leadership team
- In some cases, companies have gone so far as to create a separate board level technology committee, just like an audit committee, whose sole focus is to monitor and help ensure the company is getting the highest return and value from its IT investments
- CIOs are realizing that they must evolve IT from a “developer of services” to a “sourcer of services” and focus on the cost benefit tradeoffs between in house services versus outsourced services
- CIOs with help from CHROs are reassessing their IT group’s organizational design; the core roles their IT leaders must play to drive major transformative initiatives and the new skills and capabilities they must possess to play those roles
- At a high level, business oriented IT skills and service based roles are gaining increased importance over the build/deploy/support roles of the past
- CIOs, CMOs and Business Unit Leaders are embracing a new model of “collaborative IT” where all the key stakeholders work together to align technology investment priorities with critical business goals and outcomes
Some Challenges to Overcome: While these early actions can be very helpful in defining a roadmap and go forward game plan, the HBR research shows the harsh reality that a good percentage of CIOs and their IT Departments are facing.
Based on some of my recent work, I have seen first-hand that the vast majority of current IT job descriptions are well past their sell by date. Traditionally IT professionals have been recruited for their technical skills not their leadership/relationship skills. As such, when they get into discussions about new business IT requirements, they don’t have the requisite sales skills to persuade the business partner that their recommendation is the best solution.
In other cases, IT professionals spend a disproportionate amount of their time and resources “putting out fires” and doing “work arounds” for individual businesses so they never get the chance to truly get out in front of a major change and develop an enterprise wide solution that creates sustainable value.
Some Actions to Consider:
- To create true “technology leadership competency” a company must be prepared to make an all-out commitment from top to bottom to move the IT function out of the engine room and up to the bridge where it can help chart the future direction of the enterprise. This means that the CEO and other members of the C-Suite must see the CIO as a full card carrying member of the senior leadership team.
- They need to recognize and leverage technology as an essential component to successfully engaging their employees, customers and other key stakeholders in this new digitally empowered environment.
- They must also realize that they need to do an overall assessment of the new skills and capabilities that senior IT professionals must have in order to be on an equal footing with their business partners and users.
- The CIO and the IT Group should develop a new cohesive strategy that allows them to identify behaviors and actions they will stop doing e.g.: just being order takers along with new behaviors they will adopt e.g.: being catalysts that drive technology enabled innovation throughout the company.
- The CIO should create a series of thought leadership forums e.g.: Webinars, Town Halls, Brown Bag Lunch Sessions where they can interact with key internal stakeholders and talk about the major transformative shifts going on in enterprise IT and where they will have the most impact on the performance of the different business units and key support functions.
- The IT group should create and utilize a series of performance measurement tools including an internal IT Net Promoter Score metric to measure the group’s ability to meet or exceed its internal business user’s needs and expectations.
While this will be a challenging journey for many companies and their senior leadership teams, it will be a journey that defines the legacy of successful leaders versus leaders who fall short of meeting this challenge.
As always, I welcome your comments and feedback along with any suggested actions you think companies should take to achieve technology leadership competency.