This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.
Business (noun), busi·ness, \ˈbiz-nəs, -nəz
- the activity of making, buying, or selling goods or providing services in exchange for money
Typically, IT has been offering services in exchange for money to the business. However, maturing IT organisations are assisting the business to turn this internal service into a product with a monetary value that can be offered to external customers and partners.
What is the P of the P&L?
In short, running IT like a business comes down to the P&L of IT. The 'L' is a simple derivation, it is the IT budget. But the tricky question is what is the 'P'? The short answer - it's a moving target. Before we fully answer the question, let's explore today's business environment. Like never before, technology is constantly leading disruption and innovation in the organisation, giving birth to new business models. No industry is an exception to it.
Mature industries like hotel and taxi companies are being redefined by new incumbents such as Airbnb and Uber. Barriers to entry on capital investment for the tech industry has been greatly reduced by vendors like Microsoft Azure, Amazon Web Services, etc. Startups can gain the scale and efficiency of enterprises by leveraging vendors like Salesforce, Workday, etc., as opposed to lengthy and costly traditional ERP and CRM implementations.
Industry and business model shifts, accompanied by low barriers to entry and ease of achieving efficiency, marks 'Stability' and 'Efficiency' as a must have for IT, but not a differentitator to the business. That leads us to the conclusion, that the real 'P' in the P&L is 'Speed and Agility'. It is more relevant today than ever for CIOs to focus on establishing a business and technology architecture that can offer speed and agility to the business. I use the term 'architecture' deliberately because achieving speed and agility is not just about cool technology and tools. It is the ability to have a culture of continuous learning and change management to accompany that technology, that really makes the difference.
Achieving Speed & Agility with Data-driven Possibilities
The days of being safe are over for CIOs. CIOs need to think like CEOs and BU leaders, balancing risk and agility, which can often feel like managing polar opposites. This forces CIOs to embrace a more calculated risk approach. I recommend a three step process to embracing and balancing risks with speed and agility:
- Define your Risk Profile: Know your business and understand the risk profile of your company and industry. Define the risk profile that is specific to IT in alignment with the overall business. The risk profile is not one size fits all, and a CIO needs to get more specific about the various segments of their business. It could be functional, geographical, or business unit centric, etc. Review the IT risk definition with the C-Level and BU leaders, and secure their support. This is crucial for confirming alignment and motivating the broader enterprise culture.
- Adopt a Data-driven Approach: Implementing a calculated risk model is an art and a science. Data becomes the currency for the science. This forces CIOs to take a data-driven approach to managing their organisation. CIOs should be able to picture their data in an efficient manner and action at speed. I strongly recommend CIOs investing in a cockpit view which allows them to visualize their world in four major areas: Financial effectiveness; Delivery Efficiency and Speed; Security & Governance; and Talent. IT facilitates many parts of the business, so it is crucial for CIOs to clearly understand the right KPIs on these four vectors that are relevant to their business. This should be a living, breathing view, and the KPIs on the dashboard should be adaptable to the business climate. To be effective, establish a disciplined process where these IT metrics are reviewed from a strategic perspective on a periodic basis, and integrated into the operational workflow from the tactical perspective. Also leverage the KPI as a communications tool and report to the business leaders on a regular cadence. This transparency benefits the CIOs when they are called upon to explain the spending and the value that IT provides to the business. On the contrary when things go wrong, as is bound to happen occasionally, the CIO should step up and take accountability. Use data as a way to understand the root of the issue and act swiftly on corrective measures. Using KPIs that are leading indicators can rally the organisation to be more proactive and predictive. This feeds directly to the culture of continuous learning and improvement, and enabling IT as the facilitator of speed and agility for business.
- Focus on Culture: Change in how IT operates could affect the nature of people's daily work across every area of a company. Technology is not just the responsibility of IT. With digital influence in the enterprise, IT is everyone's business. Build a culture where everyone can be open and straight forward, and challenge the status quo. Embrace shadow IT. Most innovation happens close to where the pain is. Create a framework to make it easy to bring ideas to IT and vet it through a logical process in an efficient and effective manner. Teach safety to the enterprise. IT has to change the role of being the pilot to enabling people who want to fly in a safe and secure fashion.
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