CIO Evolution

To avoid extinction, CIOs must move from an orientation that revolves around technology to one centred on business processes

If Rip Van Winkle were a CIO, awoken today from a 20-year nap, he might not realize how long he'd been asleep by merely perusing IT management periodicals. The challenges that CIOs put on the top of their agendas in the 1980s - such as aligning IT with the business, partnering with operating managers and effective strategic planning - are the same ones they find most intractable today. It is enough to make one despair. Moreover, today's CIOs have to deal with outsourcing, an issue that was only beginning to surface two decades ago. Combine the challenge from outsourcers with the widespread availability of packaged software and the ever-increasing self-sufficiency of technologically savvy end users, and the classic CIO role (with the CIO being in charge of all IT) is under assault as never before.

The bad news is that this tendency will only accelerate. CIOs who persist with the classic model of the technology organization are doomed to extinction. At best, they will play a marginal role in their enterprises. The good news is that new opportunities exist for CIOs and their staffs to make even greater contributions to their organizations. However, taking advantage of these opportunities will require a rethinking of the very nature of the IT organization. In essence, IT must move from an orientation around technology to one centred on business processes.

While the term "process" is widely used and misunderstood, it is in fact a simple notion: It refers to the small number of cross-functional sequences of activities that create all customer value. Order fulfilment (which begins with receipt of an order and ends when payment has been received), procurement, product development, demand creation, order acquisition and post-sales support are typical processes. These processes do not show up anywhere on a conventional organization chart, which, at most, is a representation of the personnel in the enterprise, not its work. But processes are nonetheless very real and present in every enterprise.

Heretofore, processes have largely been ignored, as managers focused on narrow functional silos. But over the past 15 years, processes have begun to move front and centre in companies' programs to improve operating performance. Processes are the underpinning of Six Sigma and other quality programs, providing the context for identifying and resolving persistent execution problems. Processes underlie a new generation of measurement systems that offer a customer-centred perspective on organizational performance, emphasizing customer satisfaction rather than just financial results. End-to-end process redesign enables breakthrough performance improvement by eliminating unproductive, non-value-adding activities. All of these themes and more are brought together under the heading of process management, in which end-to-end processes are actively measured, improved and redesigned on an ongoing basis.

IT encountered processes when implementing integrated software such as ERP. The notorious difficulties that some organizations experienced with such software can be traced to the fact that ERP modules share a common database and interface with each other; in other words, ERP systems, at their heart, support cross-functional processes. Companies that attempted to install ERP encountered grave difficulties, for they were unprepared for the shifts in jobs and power that focusing on end-to-end processes entailed. Companies that managed their installation in terms of process change rather than software were far more successful.

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