Becoming the CIO – The Convergence of I.T. Strategy and Business Value Propositions

Show me the money value.

A fundamental business enabler for any business is their I.T. department. A business sponsor/stakeholder frequently approaches the I.T. decision makers and asks what value their I.T. team is providing to them. They have the obligation to do this because they need to maximize the return of the firm and make sure the services that are being provided to them are competitive and offer value to the business. In addition, they control the money and have the authority to spend it as they choose. If businesses are in business to create value and wealth for their customers, it’s only fair that we treat internal business units the same. You need to show them the value that your team provides, and they will pay the price that is required to capture that value.

Some questions business leaders ask are:

1. Why does everything take so long and cost so much?
2. Why are there so many changes to the environment?
3. Am I getting enough value for the services you provide to the business?
4. Are your services competitive enough or am I better served by consulting/out-sourced firms?
5. How are you measuring the value that your team creates?

These are valid questions that all I.T. executives better have the answers to. However, I want you to focus on the last question above as that is what things boil down to : demonstrating the value that your services provide to the business by measuring them quantitatively and then educating the business sponsors for their complete understanding. It will then be a business decision to determine if real value is being created based on their subjective theory of value derived by the numbers provided to them.

Strategic business people will want detailed metrics of how the I.T. team offers value to their business operations. Sometimes explicitly publishing a document in your organization to display your value can bode well for I.T. measurement. This removes the negative connotation that I.T. is about spending money and reducing costs. If people realize the value that I.T. creates, they will most likely look to involve I.T. earlier in initiatives for their expertise.

In this article, I outline the metrics that an I.T. shop should show to the business groups to demonstrate the value they bring to the organization:

Top 5 Measurements of I.T. value

1. Delivery. Are your projects delivered on time? How long does an average project span? In a time line driven world where pressure is very high to push quality products out the door, your team must be able to meet the delivery dates that you commit to.  Business cases can be invalidated if projects take too long to bring to market. Not delivering a project on time allows your counterparts to lose faith in your ability to execute.  In addition, projects that span larger than a year have a higher probability of being over budget. Try scoping out projects that are smaller in size with multiple releases. The benefits to this is accurately projecting costs, reducing risk of failure, and decreasing time to market(You don’t need all the bells and whistles on the first release).

• Value Indicator #1: Demonstrate that you can deliver on-time, within budget and establish a track record.

2. Competing I.T. Service Firms – Value is in the eye of the beholder. The value that the I.T. shop claims to be adding to the organization must be captured by the price that is being paid for the labour.  Can you prove that the work, experience  and deliverables that the in-house group provides adds better value in comparison to a competing  outsource group?

• Value Indicator #2: Demonstrate that your shop is the best damn shop in relation to the market and that the business can maximize their value by partnering with the internal I.T. team.

3. Strategy and Roadmap. There are two ways to look at roadmaps: one from a business perspective and the other from an I.T. perspective. The ideal situation is to have these two strategies aligned. Easy? Not in your wildest dreams. In I.T., you have to build systems to be extensible, manageable, and general enough to apply to multiple customer segments etc. Business leaders care about their own business not anyone elses. This is because they are measured on the performance of their business outcomes. However, the I.T. group has to partner with multiple business units to develop solutions that meet their needs. So imagine the I.T. group trying to attempt to please all these business units and not making one a priority over the other. It is definitely something that requires a lot of planning and understanding of each business to plan a long-term roadmap.

• Value Indicator #3: Demonstrate that your I.T. roadmap aligns with business objectives for the long run.

4.Disruption of Service & Business Continuity – If the business doesn’t have to worry about I.T. downtime,  service availability and degradation, it will allow them to focus on what they do best:  running their business. Business continuity is an important concept to the overall health of the company and success.  It has  direct impacts to client experience.

• Value Indicator #4: Demonstrate the system up-time, service availability and degradation and  how it impacts their business clients.

5. Innovation, Collaboration and Creative Thinking – How many new ideas/ concepts does the I.T. group bring forward? Your organization shouldn’t be a taker of projects and demands rather you should view yourself as a partner. You should never think that you are a silo of different groups, rather team members with certain expertise. Leveraging peoples expertise in specific domains and applying them to solve multiple business problems is more productive than having each group solve their own problems. It is the collaboration between I.T., Finance, and Business Units that make technology companies successful.

• Value Indicator #5: Use collaboration to drive innovation

Conclusion

In many companies, I.T. shops are viewed as cost units with the goal of maximizing operational efficiencies and driving costs down. However, there is a limit to which costs can be minimized. The business opportunity for businesses to leverage their I.T. groups is the areas where I.T. can create value for their counterparts. Creating value has infinite opportunity.

However, demonstrating value to business sponsors is no easy task. Even within the company, it is hard to  measure value as different business units measure success differently. However, the five measurements outlined above will give you a good starting point to demonstrate to your business partners that you are providing a valuable service. As a corollary, it also gives you a good measurement if you are not providing enough value so you can look for ways for your firm to correct the problem areas.

The successful Chief Information Officer(CIO) fulfills multiple hats and provides an array of value to business stakeholders that rely on him/her to align with the business strategy.

Top key things to be proficient in to become a successful CIO:

1. Technical knowledge. Understanding the tools, processes, applications, technologies that the enterprise requires to operationally obtain its goals is critical. To make technical decisions and also lead technical people in their decision making you need to have a clear view of the technology landscape that lies ahead.

2. Business acumen. One of the CIOs core focus’ is to align the long term I.T. strategy with business strategy and growth. That means you need to understand key business drivers, value propositions and core competencies of the business. You need to understand how you can use I.T. solutions to develop a competitive advantage for your company to execute on their strategy. You need to talk, walk and breathe at the same time. Communicating I.T. strategies and its benefits to business stakeholders is imperative to establish trust, buy-in  and likeability in your profession.

3. People leadership. Having technical skills and understanding the business will only get you so far. You need people to carry out the vision and strategy. Leading people is a soft  skill that few people can execute perfectly. It’s an ongoing mandate to develop relationships with people and have them want to follow you in realizing a vision.

4. Professional Network. Although not necessary, a good CIO as with any senior executive should have a professional network of CIOs/ senior I.T. executives that he/she can leverage. Things that can be learned from each other are best practices, challenges and pitfalls, and  a common strategy to succeed for your organization. It’s also noteworthy to add that as much information, thought leadership, guidance you receive, you should give back.

5. Passion for learning - In the ever evolving world of technology, things change at a rapid pace. As an executive you need to keep to update with current trends (not only in technology). You will notice that new ideas and concepts usually come from other disciplines and can also be applied to your organization.

6. Focus – There are many strategies/implementations/vendors that can be chosen to implement a certain architecture, strategy or system change. Maintaining a core focus of the long-term architecture roadmap is critical to reducing cost and successfully communicating technology benefits to key stakeholders. Standardization of technologies is one example of aligning  the company and obtaining focus.

7. Delivery – The last thing and one of the most important things is that you have to deliver. You have to deliver on scope, timelines, budgets, quality and business benefits. A constant track record of delivery will enable you to get business stakeholders be confident that the I.T. shop is providing a tangible benefit to their business.

Conclusion

In an age where I.T. departments are asked to deliver more with less, the top skills outlined above are necessary for senior I.T. executives and CIOs to possess to successfully lead their I.T. strategies to align with business objectives.

The aim of this blog is to chronicle my learnings and analysis of the Chief Information Officer(CIO) profession in my quest to become a CIO in the future. I am severely interested in this profession as it touches upon the challenges and opportunities that technology companies face in this ever changing and competitive environment. Information Technology and the tools that an I.T. organization uses to create business value play a vital role to the success of an organization and its objective to create shareholder value. I hope you, as a reader, will accompany me as I evolve into a better I.T. professional and inevitably become a CIO.