The article has many great examples of effective CIOs, including Jeff Hutchinson, who sits on the executive committee at Maple Foods and participates in planning, and Randy Witt of Restaurant Technologies, where IT is branching into revenue generation. The article also provides statistics showing that 57 percent of IT leaders say they are perceived as a “service provider or technology-only collaborator”, and 21 percent say that IT is “unappreciated and misunderstood as a cost center”. CIO also says “…fewer CIOs now report to the CEO, a metric typically used to estimate CIO influence”.
What CIO doesn’t do in this article is to provide guidance on what senior IT managers should do if they want to move from being an unappreciated and misunderstood provider of technology to being a true partner with the business. It’s easy to identify the problem, but it’s very hard to make the changes needed to improve the situation.
I have worked with many IT managers over the years, helping them to start making strategic improvements, and on two occasions this has resulted in the senior IT manager I have been working with being offered a seat on the board, reporting to the CEO. This didn’t happen because they were popular, or because someone liked them. It was because they had transformed IT from a cost center to a strategic business partner that helped create value for the business. It is not easy to do this, but the rewards are high and the initial steps are not too difficult, so don’t wait for next year’s CIO survey before you get started.
At HP, we use a very simple model to help our customers understand what is needed to create their own successful strategy.
- Agree on Outcomes. – At this first level you agree and document your vision and mission, what markets and customers you want to serve, and your overall objectives and critical success factors. The outcomes you define will probably be very high level, and they are not easy to turn into actions. But, if you miss this step, you will find that people are constantly disagreeing about what they are trying to achieve; you will have poor alignment between IT and the business.
Some internal service providers think that they don’t need to analyze their markets and customers. I have heard statements like “we only have one customer, so we don’t need to do this”. This is very short sighted. It is during this analysis that you start to understand what is distinctive and special about you, and what that means to your customer(s). If you don’t know why a customer should continue to buy services from you -- rather than from an alternative service provider -- then your customer certainly doesn’t either.
- Define Services– This second step involves deciding what services you should be offering. To do this well, you must:
- Ensure that you really understand what business outcomes are important to your customer(s), not in IT terms, but in terms of their business and their customers
- Analyze your current service portfolio to understand how well it supports those outcomes
- Understand how to make the best use of your existing assets
- Decide what to do yourself and what to source from other service providers, and
- Prioritize future investments in new or changed services.
- Develop or Source Capabilities – This third step includes understanding all the capabilities required to design, build and run the services in your portfolio, and then comparing this with your current capabilities, and deciding how to develop or source the capabilities you will need.
Your overall strategy must be linked to, and consistent with, your customer’s strategies. To achieve this, it is very important to start at the top of this hierarchy. There is no point in analyzing the capabilities needed to deliver the service portfolio if the portfolio itself does not effectively support customers. The service portfolio can’t be analyzed if the stakeholders haven’t agreed on the vision and mission or haven’t identified the customers and markets to be served. Failure to perform sufficient “top-down” planning will result in optimization of the wrong services, failure to align what you do with what your customers need, and wasted investment.
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