PTS Consulting®

9252173916_Visioning.jpg

why and how the cio must influence the business strategy

Kuldip Sandhu outlines 4 technology trends that are challenging the status quo in strategic decision-making, and 6 ways in which CIOs can leverage these trends to influence business strategy.

1988007325_Kuldip Sandhu copy.png
Optional caption

In May 2013, a new McKinsey article highlights the ten IT enabled trends that will disrupt our current ways of
working like never before, altering how people live and work, changing perceptions of where we derive value
and leading to the injection of entirely new products and services into the market place. Such trends mean
that an organisation’s business strategy can no longer afford to dictate its technology strategy. In other
words, today’s CIO must learn how to exploit these disruptive trends so that IT can influence the business
strategy. It is time for a serious rethink in terms of the role of the CIO and technology in a business context.


A detailed discussion


In the past, IT strategy tended to formulate a back office-centric 3-5 year plan that provided directions for
Information Technology investments. The IT department was defined by what it owned, and other
technology investments beyond its remit were often omitted from the strategy. It was not uncommon
therefore for an IT strategy to be missing strong ties to the enterprise’s business strategy; its raison d'être
was to align as a supporting element, not to fundamentally influence, the business strategy. IT generally
made safe and conservative decisions that were risk-averse and mainstream. Innovation was a substance of
rarity. Strategic and risk taking decisions were solely in the domain of a business strategy in which IT had
little voice.

The mandates that IT leaders assume nowadays would not be well served by this type of IT strategy. Use of
technology is now pervasive throughout the organisation, from the front to back office, and a great deal of
challenges and complexities arise from inter-dependencies among different technology solutions in an
enterprise. It is out-dated to think of technology merely as the background enablers of common functions
such as telephones and email.

Below, we home in on 4 trends in technology that are challenging prevailing wisdom around business
strategy. We then highlight 6 ways in which CIOs must approach a new Business Technology Strategy in a
way that leverages these trends, disrupts the status quo and delivers real value to the business proactively.

Trend one – The Scope of IT

B2B and B2C interactions now depend heavily upon technology capabilities, from ecommerce to social
networking, exposing IT to a much broader set of mandates far from its traditional focus on the back
office. With technology convergence, IT also finds itself becoming increasingly responsible for a portfolio

of technologies that used to be considered non-IT. Two examples are Cloud hosting and Bring Your Own
Device.

The rigidly controlled boundaries of enterprise IT are being unpicked and blurred to the point of being
borderless. These developments have thrust IT into the limelight, meaning that it can no longer merely be
a supporting element. What it does well and does not do well will have a fundamental effect on an
enterprise, its strategy and business.

Trend two - Consumerisation

Powerful consumerisation trends are forcing IT to deal with the introduction of consumer technologies
into an enterprise environment with or without its control, demanding much nimbler responses.
Today’s consumerisation IT trend is the culmination of a fundamental shift in the relationship between
employers and employees that began in the 1980s. This shift has only now worked its way into the world
of enterprise technology. It is apparent that employees’ demands to use their personally preferred mobile
devices, personal computers, applications, social media, and cloud services represent a transformation in
the relationship between the typical IT organisation and the business as a whole. IT must now present to
the business ways of dealing with rapid model changes, security and vulnerability and data management,
not to mention proposing an entirely revamped support structure for these devices.

Trend three – Technology Innovation: From cutting cost to adding value

In today’s environment, being efficient with IT no longer means purely cost-cutting and reducing risk. A
traditional IT strategy’s response to a major cost pressure was to cut the IT department’s spending.
Constant innovation within technology means that in order to be efficient, organisations may in fact need
to spend more up front and deal with greater risk. Part of a strategy may consider increasing technology
investments – for example, in automation – to reduce the overall enterprise spending, or it may
contemplate implementing advanced analytics to improve the bottom line, thereby relieving the cost
pressure. In short, IT can be proactive in contributing value to the business, rather than simply reactive.
Trend four – Big Data: Putting the “Information” into “Information Technology”

In the past two decades IT has tended to be focused on building robust infrastructure and business
systems. Now that these are built, the focus is on how to extract critical business insights captured in
the content of these systems to make innovative and competitive business decisions.

By finally putting the “Information” into “Information Technology”, an enterprise’s technology strategy
considerations have been fundamentally changed. Aided by such techniques as agile analytics and
machine learning, the types of business insights an enterprise can now mine from its information assets
are far more sophisticated than the outputs of traditional business intelligence.

These trends disrupt IT’s relationship with the business to the extent of rendering the current modus
operandi unfit for purpose. That IT’s scope has never been broader, its influence on employee satisfaction
never stronger, and its ability to innovate and inform the business never higher, demonstrates its potential to
deliver real value in the strategic decision making process. Too often, however, it plays a reactive role.

Technology leaders are forced to play catch-up and this hampers the types of technology-based
advancements that could have benefited the business and its strategy.

The CIO therefore must use these disruptive trends to challenge the status quo for the benefit of the
business as a whole. At PTS, we believe that organisations must therefore adopt a holistic ‘Business
Technology Strategy’ that considers a broader spectrum of the enterprise’s technology use and investments
as well as information tracking and analytics the technology portfolio enables. It replaces the old form of IT
strategy and integrates much more tightly with a business strategy, even to the point of driving that strategy.
6 tips to formulating and executing a business strategy

Having worked with CIOs that are grappling with this task in all manner of organisations, we understand the
difficulty in challenging the status quo, putting the case forward, and delivering measurable benefits to the
business off the back of a Business Technology Strategy. When we work with these organisations, we put
forward a 6 point approach to formulating and executing a Business Technology Strategy to help ensure that
strategic decisions are informed and that technology transformations are executed seamlessly to deliver real
business value.

1. Engage business leadership early: make it very clear that the Business Technology Strategy being
formulated will inform to a large extent the business strategy, and not simply the other way round. The
CIO not only needs to fully understand the problems that the business is trying to solve but also to
identify possibilities that were simply unattainable before technology considerations. A team of business
and technology strategists will have to collaborate and iterate intensively to identify such possibilities and
build an actionable strategy around them.

2. Envision the enterprise’s strategic target state from the beginning: do not dwell on the current state
issues and limitations. Naturally, the CIO must understand the relationship between the strategy and the
current state operations (i.e. the value chain and business capabilities) and how one impacts the other,
then determine if the target state contains appropriate operational responses to the impacts. What they
cannot do, however, is overanalyse obstacles to the point where paralysis prevents the business from
achieving the strategic target state.

Strategic decisions in the new approach do ultimately come down to deciding which gaps between the
target state and the current baseline an enterprise chooses to close. Few enterprises can afford to close
all gaps between the idealised target state and the current baseline. Thus, the decisions have to be made
with the most care to determine what combination of decisions and implementation prioritisation will
maximise its strategic benefits.

3. Understand the value in taking calculated risks: IT should now be expected to challenge the business to
consider innovative ways to implement strategic measures through technology enablement that are no
longer just risk averse and main stream. A technology strategist must construct a balanced portfolio of
technology decisions and related investments which carefully considers innovative and measured risk
taking for a greater return on investments. A heightened sense of result and benefits-driven
accountability is a natural consequence.

4. Consider a broader spectrum of technologies beyond the traditional domains of back-office IT: pay
special attention to how technology will enable strategic use of enterprise information assets.

5. Regularly review the strategic target state: considerations will need to be made continually for its
impact on the current state until all of the future state hypotheses have been proven or disproven

6. Develop an actionable roadmap for implementing the business/technology strategy: even with a
strong linkage between strategy and outcomes, we find that many technology/business strategies contain
insufficient detail to be actionable or too much detail around functionalities with no overarching objective.
Sometimes senior business leaders set high-level objectives and request that business unit leaders flesh
out the details. This delegation often translates into misdirected activity.

Structured workshops that cover necessary details in an accelerated and decision-oriented fashion
provide a great opportunity for the CIO to engage business peers in discussion about exactly what the
business needs to accomplish and what technology brings to the table. The CIO can educate the business
about disruptive technologies and engage the business in discussions about the "art of the possible" –
how such technologies may impact the business. This is also a great opportunity for the CIO to showcase
any activities of the technology innovation group, if there is one.

Once an actionable business technology strategy is available, the strategic planning activities begin in earnest.
The correct approach defines the strategic target state across multiple aspects of the organisation to
describe, in high level terms, a three year vision of the enabling business model, business operations,
organisation and technology architecture that achieves the objectives defined in the business strategy. By
starting with the end in mind, we avoid undue influence from the current operations and technology. We use
modern management science techniques, such as issue-based problem solving and a hypothesis-driven
approach, to avoid "boiling the ocean" for possible solutions. The actionable strategy provides a clear
definition of the problem being solved, concept solutions (offerings, operations, organisation and
technology) to be put forward, tested and, if proven, added to the envisioned target state.

By starting with an actionable strategy, our approach ensures that the target state is developed within the
framework of the organisation's goals and objectives. The target state is iterated to ensure that the
transformation from current to target is fully translated, prioritised, and sequenced into programs that
create an actionable roadmap.

Conclusions

In taking on these new challenges, many CIOs realise the dual nature of their mandate. On one hand, they
are tasked with keeping technology solutions running reliably and scalably without disruption. On the other
hand, a CIO has to think of the bigger picture, help the business innovate through strategic deployments of
technology solutions, and enable a greater degree of agility, efficiency and productivity in the process. A
balancing act of stability versus agility and risk aversion versus innovation is the name of the game for the
new generation of technology leaders.

The bottom line is that almost all business processes are either enabled by some form of technology or could
benefit from some form of digitisation. A fit for purpose Business Technology Strategy development process
provides a platform where technology plays a critical role as a business enabler.

No single IT Strategy is appropriate for every IT group. To choose and implement the most effective strategy,
IT must clearly identify the goals its business partners hope to achieve. In our view, no Business Technology
Strategy can be effective without including the goals and strategies of its business partners.

Organisations need to begin formulating strategies that solve the business problem and enable the business
strategies of their business partners. By implementing a Business Technology Strategy that recognises the
trends disrupting the relationship between IT and the business, and that is formulated and executed
according to the 6 steps above, organisations will really start to see the value that IT and the CIO can bring to
the business beyond current expectations.

< OPENTRACKER HTML START >