The role of the CIO is becoming ever more challenging. They are expected to deliver higher quality services while navigating between the demands for cost reductions and the behaviours of suppliers who want to protect their profit margins.
Despite the importance of IT to business success, most CIOs only have a limited role in influencing the Board agenda. To secure true influence and control CIOs must embrace a more businesslike approach, with a greater focus on managing both IT demand and a network of external suppliers to contribute to business performance success. We call this Commercialising IT.
Although IT departments have transformed themselves through external sourcing and better service and project management, they are still not seen as contributing to the business agenda. Indeed, the power dynamic is moving further away, as it becomes increasingly easy for individual business units to bypass the IT function and procure the services they need direct.
Managing IT demand to contribute to business success
A vital way for IT to create value is to understand the business it serves so it can anticipate customer needs better and then design services around them. This leads to more cost efficient services and allows innovative IT solutions to be introduced. This means moving away from managing IT departments as cost centres, where the priorities and budgets are set by others, to seeing them as value centres. In this model, they have greater freedom to look across the business as a whole and combine their understanding of the technology with their knowledge of the business to contribute for example through the adoption of cloud based services for office based applications.
Orchestrating a network of external partners to supply IT services
The next area to focus on is securing the supply to meet these demands effectively. Sourcing IT services externally is now commonplace but still challenging. Integrating a network of partners to develop and deliver IT services requires CIOs to ensure that the IT function has the critical commercial mindset and skills to manage an integrated network of external partners.
Commercially leading the function
To manage supply and demand successfully IT leaders need a single minded focus on contributing tangible business benefits. This includes ensuring effective management information is available, not the standard data overload found in many IT organisations. This should also encompass strong financial and business management systems that can model IT costs for each part of the business to provide transparency.
They then need to structure the organisation around the drivers of value and empower those dealing with customers and suppliers to influence decisions within IT. Part of this is about employing the right people with the right skills, including recruiting from IT vendors or other outside organisations to inject commercial experience. It is also about shadowing, mentoring and secondments to and from the business.
The CIOs that can embed this more commercialised approach to leading IT will ensure that their function becomes a true contributor to both bottom and top line growth for their business.
To find out more about how PA can help your IT function become more businesslike and more influential, contact us now.