In previous decades, the role of many IT departments was understandably network-centric. IT departments were the keepers of information and systems, and they possessed IT knowledge that made them indispensable cogs in the corporate infrastructure.
Today, however, cloud-based systems, plug and play technology, software (and almost everything else) as a service, and concepts such as ‘bring your own device’ have rapidly decentralized the IT department. Whereas businesses that were frustrated in years past had little choice but to deal with it, today, they have choices, and many of them are choosing outsourced support, systems and even entire outsourced IT departments.
Who is responsible for leading this evolution? While IT leaders certainly bear a big part of the burden for adapting their own thinking and approach to keep up with changing demands, it’s the CEO or CFO who needs to get out in front of this issue by asking questions like:
- When you think about IT, are you still blinded by outdated systems or philosophies?
- Has your thinking about IT evolved with the changing business environment?
- Does your IT leadership recognize the business impact these changes have on your company?
- Given the pace at which your business evolves and changes, has your approach to IT lagged behind, maintained pace or perhaps even led the evolution?
Savvy IT leaders have evolved their departments to a more business-centric approach in which information and business value, not infrastructure, are king.
Business leaders, who have largely chosen to distance themselves from IT decision making, now realize that they play a critical role in ensuring that their IT spend returns business value. CEOs and CFOs need to consider what role IT should play to deliver the most business value for their organization today.
One of the keys to creating a business-centric IT organization is having an IT leader who understands the difference between commodity and business value. IT networks and the core systems, such as email, data storage and phone systems, have largely become commoditized today. That’s not to say they aren’t critical, but they are more of a commodity now than in the past. In other words, they don’t bring strategic value to most businesses.
How do you manage a commodity? You spend as little as possible to ensure that it works reliably and consistently, as advertised, and no more. Electricity is the example most often cited as a business resource that once was a strategic differentiator a century ago, but is now a commodity. You flip a switch, you expect a light to go on, and you want to pay as little as possible for that to happen.
Similarly with email, you click the send button and you want your message to reach its destination quickly and reliably, at as low a price point as possible. For many firms, that means outsourcing at least the management of email, if not outsourcing the email system itself. Most companies no longer wish to employ expensive full-time administrators simply to manage their email accounts.
More and more, the most valuable roles within IT today are shifting from network administration toward information and process management. The stronger business contributions of today are coming from business process analysts and information specialists who understand business requirements and can effectively act as a liaison between business users/management and the IT community. IT leaders who want to succeed in the new economy need to understand this dynamic.
Of course, the focus must be on business strategy first.
This is where the role of Chief Information Officer (or CIO Advisor) is critical. Technology certainly has the capacity to stimulate and accelerate growth, efficiency and innovation, but only if the focus shifts from ‘tool-centric’ (networks, systems, servers, etc.) to ‘business-centric.’ What impact can technology have on profitability, efficiency, risk and customer service? The CEO plays a key role in leading and modeling this paradigm shift in thinking about IT.
CEOs with a vision for how automation, innovation and information intelligence can propel their businesses, and are able to communicate that vision to a business-centric IT organization that can align IT strategy with business strategy, will be the ones whose organizations will win in the end.