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Does IT deserve a seat at the table?

Larry Scinto and Chris Gallacher

CIO Update

27 June 2011

 

Given the current global environment and the competitive advantages technology can provide, it is interesting to see that the role of CIO is typically not present in the boardroom of most medium to large organisations. Other corporate functions are usually present such as HR, legal and finance, with IT typically reporting into the COO or CFO rather than the CEO.

Why is IT left outside? Does this mean these organisations don’t have a vested interest in IT or simply view IT as overhead rather than a strategic enabler of business change? How does the IT organisation make itself more relevant to boardroom discussions?

In order to earn a place at the table, IT needs to demonstrate the ability to drive competitive advantage by demonstrating cost competitiveness and high ROI on technology investments; and understanding and working closely with the business to create and deliver innovative services and products for external customers.

So how to change this? How does IT become more related to the business?

Critical Enabler No. 1:
IT must be seen as a value-add provider - IT needs to move away from being seen as an uncontrollable expense and demonstrate cost competitiveness and high ROI. Frequently IT conversations with the business focus on reactively answering the question on "Why does IT cost so much?"

To address this concern, IT needs to take time to breakdown associated costs and clearly demonstrate the added value it brings in a proactive manner to eliminate any view that the costs are unjustified. This is an opportunity for IT to educate the business in explaining the additional value provided when compared to alternatives.

Mature mechanisms exist for managing the cost of IT, one of which is to develop and implement a business-facing service catalogue as described by ITIL (IT Infrastructure Library). ITIL is strongly focused on delivering value to the business through its main principle of running IT as a service without the business worrying about specific costs and risks.

The service catalogue is a great way to lay out exactly what IT offers -- in business terms, mapped to business processes. This not only helps the business understand what IT provides but also helps to educate the business on what costs make up IT and how the business’s own behaviour can help control costs through consumption.

Developing service catalogues involves direct interaction with the business and can help develop relationships at a senior level as well as support competitive advantage by providing differentiated "fit for purpose" technology services to the business.

As technology has advanced so has the language and hence the need for IT to refocus its raison d’etre and learn to adapt its message to their audience. IT should steer away from purely focusing on technology towers and talking in IT jargon but develop skills in describing IT services in terms of the business processes that it supports (e.g., number of transactions, invoices printed, etc). It is key for IT to operate in terms of business outcomes, not technology outcomes (e.g. new direct-to-consumer lending model implemented vs. just providing Web services and hosting).

This is the opportunity for IT to prove the added value it brings by demonstrating competence and expertise in how to leverage technology for greater business benefit. The need to stay abreast of technological improvements is still critical but any adoption of a technology must show clear business benefit and not just be linked to a "Wow!" factor. Developing clear technology roadmaps is a catalyst to building the business case for adoption and maintaining alignment with the wider business strategy.

Critical Enabler No. 2:
Communicate and organise around the business - Developing and maintaining relationships across the business is key to ensuring that IT understands the business and how it operates. The conversation with the business must mature beyond simply keeping the lights on.

While it is paramount to provide stable and resilient operations, IT needs to ensure adequate focus is made on strategic and technological advancements. IT must keep its ear to the ground to determine the people, process and technology enhancements necessary to provide the business greater efficiency and competitiveness while also striving to innovate to reduce complexity and costs.

Establishing formal dialogue with the business by implementing an organisational structure that shows clear mapping to business departments and segments will ensure the lines of communication remain open. Utilizing this approach to gather feedback and use this information to develop service improvement initiatives will ensure high customer satisfaction and provide IT with much needed information on the strategic objectives of the business.

Organisational structure is key and there are typically many to choose from but ultimately there are three dominant types:

Customer/Service – Ensuring alignment of business application functions to each customer organisation while managing infrastructure and support discretely across the whole service. This model is typically used when there are multiple business units within the organisation with differing requirements.

Lifecycle/Process - Providing plan, build, and run teams that are focused on high volume of changes. This supports organisations that are heavily change-focused and need to adapt quickly.

Capability/Technology – This type of organisation is centred around providing technology as a service typically split between infrastructure and software. Business management and support are managed as discrete functions. This typically supports smaller and more stable environments.

By focusing on the principles discussed, IT can strengthen its relationship with the business and senior management and build its case for a seat in the boardroom. As the IT understanding of the business matures, IT can then demonstrate to the business how technology led initiatives can be used to implement the overall business strategy and move from an internal service organisation focused on maintaining the IT infrastructure to an strategic business asset focusing on creating and delivering innovative services and products

This is not an easy journey and no silver bullet exists. However IT should organize itself to address both needs: to support business innovation and to provide a reliable and cost effective infrastructure. Any initiative to engage with the business at the more strategic level must start with IT -- proving that IT is already cost effective and that it can help with innovation. This will provide a strong foundation to gain business buy-in as the role of IT continue to be questioned and transformed.

Chris Gallacher and Larry Scinto are IT strategy experts with PA Consulting Group


For more information on PA’s expertise in IT consulting, please click here or contact us now.

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