CEOs rely on their Chief Information Officer (CIO) to develop IT strategies that help their organizations achieve business objectives. The operating model that IT executives choose can have a dramatic impact on an organization’s ability to meet those objectives. However, what’s most important is that CEOs and technology leaders work in tandem to run the IT department like a business that is focused on delivering successful outcomes.
Let’s first consider normal business operations.
There are multiple teams and processes that support each function. In the case of a product company, there is direct and indirect sales, customer service, product management, supply chain management, HR, IT, accounting, safety, quality, R&D, manufacturing operations, engineering, and facility management. Each department has varying levels of management and leadership, and let’s not forget about investors and owners. Each area has its own set of inputs, interconnected processes, and outputs, and the managers of each section are monitoring specific KPIs and the effectiveness of their processes to meet their goals. This oversimplified view of a company is consistent across most organizations.
With that in mind, let’s examine what it means to run IT as a business.
Capital flows through the IT business, and leaders of all departments are accountable for how they spend it and realize ROI. CIOs need to master the language and processes behind accounting. You might consider it table stakes for the CIO to know where cash is going, how it is spent, and the value derived from it. Equally important is for the CIO to understand the levers that move customers’ business. For example, when the question comes up in a sales production meeting of why inventory turns are too low, leaders need to understand the impact that has on the P&L and cash flow statements. That in turn leads to deeper conversations about why they are low and how IT can help improve the situation.
Every CIO knows well the challenges of staffing, including staff burnout. Capacity management is one of the key responsibilities of any manager, and the IT leader is no exception. Hiring the right people, training, and retaining them is vital to the success of the organization. Like a manufacturing production manager, who knows how many widgets per hour a person can process, IT leaders must understand their own metrics and factor those into their capacity plans. The capacity plan is foundational to the other major processes like demand, project and operations management. Unmanaged capacity creates unmet expectations and staff burnout, leading people to seek better options elsewhere.
IT has a direct sales team; they are the business analysts embedded with and working alongside the business stakeholders across the company. They are identifying business needs and communicating this information to the IT team. Each of those requirements is a new opportunity to deliver value to IT’s customers, the internal stakeholders.
IT also has an indirect sales team. This is the service desk team, who receive written and phoned-in requests for products and services. The IT department is “selling” devices, software, and services to the stakeholders throughout the company. It is the job of the service desk team to clarify what the customer is seeking and match the correct product or service to meet their needs. It also typically has a website where customers can shop for products and services and initiate request for service. Both forms are instrumental in supporting customers.
IT has a customer support team; it is the service desk, and they handle incident requests. Once IT has delivered those products and services, like any company, they are charged with supporting their customers as they use and consume them. Like traditional call centers, production is monitored and managed to achieve the optimal rate of support. The overarching objective of any customer service team is to retain their customers, making them lifelong customers. That should be the objective of every IT customer service team.
A company’s product management team is charged with surveying market trends, consumer demand and needs, production capabilities within the company, and then meeting those demands with product to sell. They are responsible for the product’s lifecycle, from cradle to grave. Like the business, IT also has an important product management responsibility. There are several dimensions to this, but let’s start with enterprise and solution architecture. Those teams are responsible for understanding market trends, available technologies, the company’s strategy and objectives, and gaps between what the customers want, the company needs, and what IT is currently delivering, as well as its capacity and capability to deliver those products. They then create the roadmap for how the company will adapt the technology architecture to fill those gaps. In addition, agile development has ushered in a role call product manager, who is responsible for doing the same on a smaller scale. These important roles are vital for staying connected with the customers and ahead of their demands.
Supply chain management
Product companies have a team of people who analyze their available inventories, expected demand, supplier performance and lead times, and then place orders for the products and services required to deliver on the promised service levels. Without their efforts, the company has nothing to sell. Likewise, the IT department also has internal supply chain specialists, who track the number of available products on hand, purchasing new products and services, which are either warehoused in the facility, held in 3PL logistics centers (manufacturers or MSPs) for rapid deployment, or queued up for the IT operations and engineering teams to assume and deploy. This includes managing spares and ancillary device inventory levels as well as licenses and virtual device consumption and spend.
Manufacturing, R&D, Engineering, Quality, and Facility Management
There are numerous parallels from general business here. Software development is a form of manufacturing, R&D, and quality. If done well, those processes are smooth and deliver high quality product that the customers find valuable. Engineering, in this case, network and systems engineering, is also responsible for assembling and delivering new technologies that customers leverage. These activities are measurable both in terms of their throughput and their value to the organization. Accordingly, they have a price that the customers should pay.
Leadership and Management
All business requires leaders and managers to stay above the details with their eyes on the prize. The IT leader is no different. The axiom of that which gets measured gets done, is as true for IT as it is in any other business. The role of leadership is to set and articulate the vision, mission, strategic objectives, and the strategy to reach them. The IT leader must do the same for that business within a business. Once set, it is imperative that the leader measure the levers that move the IT business forward so that we can make adjustments that aid production and unleash creativity.
Running IT as a business sounds good on paper but has challenges in practice
Overcoming the us (IT) vs. them (the business) culture is a challenge. It takes strong and committed leadership to change the culture, to establish good processes and procedures, and organize in a way that produces the products and services that IT’s customers need to be successful.
Running IT as a business is achievable for large companies that can absorb the overhead to manage the details and generate the data necessary to run an IT organization. This can seem daunting for small and medium-sized business.
How can mid-market companies realize this level of efficiency without hiring an enormous staff?
With an unlimited budget, an organization would hire a CIO, CTO and CISO to establish best practice processes and oversee people and technologies that operate an IT business within a business. Many businesses cannot afford all those resources as direct hires, but by leveraging a broad range of fractional IT leadership, can achieve better service, transparency and accountability. If you want the benefits of running IT as a business, contact Hartman Executive Advisors for a professional consultation with people who care about your success.