Transforming IT from a cost centre to a Value Driver

According to a recent Gartner survey, only 7% of CIOs said their information technology department demonstrated value to the business. The remaining 93% of CIOs felt their IT department was perceived as a cost centre.

The common question many CIOs ask is how can I articulate the value of my information technology organisation to the wider business?

The answer to the above question will be the focus of today’s post.

The Challenge

IT organisations have traditionally played a tactical role, by reactively supporting whatever the business demanded.  But, with the digital transformation revolution, technology has become a cornerstone in business models and those who adopted technology in their business strategy thrived and those who did not, perished.

Yet, many IT organisations find it difficult to engage with the business. The reason is, we, as technologists, are comfortable talking about .. technology! But as soon as we discuss with CEOs their challenges, such as about cash flow, emerging markets, share value, we feel like fish out of water.

How do we successfully engage with the business?

The How

Every organisation has a corporate strategy that either the CEO or board of directors sets. Examples of business strategy might be to have the highest customer satisfaction in the industry, to increase market share, reduce operational cost, etc. The business strategy is intentionally high level and fairly generic, for a reason. The details are reserved for the next layer down, the divisional strategy. Each division will set its own strategy that is in line with the corporate strategy. Information technology can show value by enabling different business units to achieve their objectives through technology.

“It is strictly business.”

Let me illustrate with an example from a past engagement. I was brought into a midsize organization struggling with new agile competitors and shrinking margins. The CIO asked me to help identify business objectives and challenges within the business. I had a meeting with the head of each division. My first port of call was with the head of sales. The meeting focused on business. I asked, what sales targets have you committed to the CEO this year? What challenges do you foresee that might prevent you from hitting the target? Which competitors worry you the most? What advantages do they enjoy? There was no mention of cloud, DevOps, machine learning, or any other technology. It was strictly business. I used the same approach in my other meetings with divisional heads.

Once I had a good insight into the different business units’ needs, I reported back to the CIO with my findings and initial recommendations. Once validated internally, with a list of priorities and an estimate of costs, time and effort, the CIO formulated a strategy that demonstrated HOW her technology team can address WHAT the business needs.

The Results

The organization is in a much better position. Sales are more agile, armed with a new mobile app to provide price quotes to customers within 20 minutes instead of waiting 24 to 28 hours on a central team to respond with a quote.

Finance is enjoying the benefits of automation. Low value-add administrative tasks such bank reconciliations, cost allocations, etc., have been automated, thus freeing staff to focus on strategic priorities.

Human Resources implemented AI recruiters that automated many of the administrative tasks, such as short-listing most suitable candidates, scheduling interviews, providing feedback, etc.

By focusing on the business first, technology had a powerful impact.

I realise I am oversimplifying the process. I had to use SWOT analysis, OGSM strategy framework amongst other tools to get the business insight I needed. But it all started with a simple business conversation.

Fast forward to today, COVID-19 is the news with the serious challenges it poses to businesses. Many organisations find their current business model has been disrupted by COID-19. For example, field sales can no longer go to offices and outlets, and product/service distribution will take much longer to deliver. A large majority of customers are abandoning retail stores for digital retailers. There has never been a more pressing time for CIOs to articulate the value of IT, than today, by understanding the business challenges and opportunities and helping business facilitate the necessary changes.

“The Chinese use two brush strokes to write the word ‘crisis. ‘ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger but recognize the opportunity.”

John F. Kennedy

Shifting from a technology-focused mindset to a problem-solving mindset is the differentiator between 7% and 93%.

I hope you have found the post informative and thank you for reading and sharing.

 

Regards,

Nick