A Pivotal Role
- 07 August, 2003 10:25
To effectively deliver on the CIO's six imperatives - lead, anticipate, strategise, organise, deliver, measure - CIOs need to really know their enterprise and their business environment.
The leadership role of the CIO is being forced up a level by the increasing fusion of business and IT. CIOs increasingly take a top-level view of the enterprise and act as the pivot point between the business and IT.
Today's stakeholders include executive colleagues, board members, business units, business partners, IS staff, customers, external service providers and external agencies, such as regulators - and more. Their interests range from long-term priorities to day-to-day operations and they hold divergent views about what IS should do in most areas. A key part of the CIO's role is to educate and inform these stakeholders so that their expectations are reasonable and mutually agreed. This leadership and coaching role is now top of CIO agendas. The evidence from 620 CIO participants in Gartner's 1800 member Executive Programs 2003 CIO Agenda Survey is that in order to achieve this role, CIOs need to deliver on three demand side imperatives (lead, anticipate and strategise) and three supply side imperatives (organise, deliver and measure).
These imperatives enable CIOs to both deliver critical services today while positioning for future growth.
Imperative 1: Lead - Bridge business and technology. CIOs now have to behave more like CEOs. The "lead" imperative releases the real power of IT-enabled business initiatives, by bridging business and technology communities. CIOs can do this by knowing and engaging key decision-makers. Look for opportunities to support your peers and to exercise your business judgement. Volunteer for assignments that will demonstrate your deep business perspective. Have a clear understanding of the key people you need to influence and find ways to support them. Finally, conduct frequent peer reviews and set up formal and informal channels to get feedback and business intelligence.
Guide the board and top executives about how IT can enable the business. At an international automotive parts company, the corporate CIO was promoted to report directly to the CEO and be part of the Executive Council. The Executive Council now better understands how IT enables business strategies, rather than viewing IT as a cost centre.
Implement effective IT governance. For example, IT at Old Mutual South Africa (OMSA), has gone through three major phases - high business-unit independence, to high dependence on central IT in the mid-1990s, and most recently, to IT and business interdependence. OMSA's management team now better understands where IT governance cooperation makes sense and where business units should be free to act independently.
Communicate business imperatives to the IS organisation. IS must be able to link its performance metrics and appraisals to the enterprise's strategic direction.
Imperative 2: Anticipate - it's up to you to sense key trends. Volatile times increase the importance of anticipation and the need to better synchronise supply and demand. "Anticipate" involves sensing key trends by tracking business cycles and investment trends along side technology and competitor trends. At the enterprise level, CIOs need to really understand and anticipate critical business drivers. They need to use their "political sense" to know who sets agendas and why, and their "cultural sense" to understand their people, their values and belief systems.
Agility requires a "sense-and-respond" strategy based on a set of articulated and agreed assumptions. CIOs play a key role in tracking, checking and rechecking these assumptions. Knowing when these assumptions are tracking as you expect - or are wavering - is a key part of being able to respond quickly. It enables the business to work faster and smarter as more of a real-time enterprise that does not get blind-sided
Imperative 3: Strategise - Shape informed demand to better synchronise business and IT. You can do this by envisaging ways IT can enable the business to achieve growth and profitability. See your role as shaping informed expectations of both business peers and the IS organisation. This is all part of the "coaching" CIOs need to do today. If this is done well, there is more likely to be a real partnership approach between business and technology executives and managers. Investment approaches will be well synchronised. There will be enterprise-wide funding and charging strategies that support desirable behaviours.
Part of the CIO's role is to consider enterprise-wide risk exposures and establish a risk management program - to minimise vulnerabilities and to protect the enterprise, its customers and its shareholders. Longer term, a sound business-driven IT architecture will ensure the enterprise has the right technical base to scale up critical business initiatives, especially those that cross business unit boundaries.
Imperative 4: Organise - Orchestrate for a high performing 'IS Lite' organisation. Relentless IT budgetary pressures make CIO survival dependent on effective supply-side management. Supply-side management includes managing multiple sources of supply to get value for money, while managing IS's capability to meet business needs. The role requires organising, delivering and measuring.
CIOs need to organise to truly become a high performing IS organisation. The term IS Lite is used to describe a focused and high-value-adding IS organisation. It is likely to be "lighter" than its predecessors, with many infrastructure services provided by external service providers, on the one hand, but business-facing processes and applications managed by business units, on the other hand.
No matter how "lite" the IS organisation, though, six key roles remain critical. The first is to be a professional services organisation. Configure the IS organisation to deliver cost-effective services. Attract, nurture and sustain people and resources. Manage resources prudently, balancing cost/growth initiatives and ensure succession planning is in place.
Imperative 5: Deliver - Provide cost-effective, timely and risk-managed services. While CIOs are often hired for their business acumen these days, they are usually fired because of a failure - or perceived failure - to deliver on a set of expectations. The message here is deliver, deliver, deliver and ensure you are perceived as delivering against expectations.
Build (or provide access to) well-targeted capabilities for agility and low cost - the third key role. Set demanding timetables to deliver value. Ensure business continuity and security arrangements are in place. Implement disciplined and quality-based program and project management. Source IT services strategically and manage partnerships and alliances effectively.
Imperative 6: Measure - Know where you stand and why. CIOs need to link IT metrics to business goals and performance. For example, the "IT dashboard" at the global financial institution ING helps focus management attention on the comparative performance of IT. The objective is to periodically assess IT's contribution to ING's process of value creation, provide early warnings on technology-related operational risk and identify areas for IT-enabled operational and financial improvement. The IT dashboard provides ING with more transparency on IT's contribution to the value creation process and is embedded in ING's overall-reporting infrastructure. By being coupled with ING's medium-term planning process, it provides clear links to financial and management accounting reports.
Tracking and communicating the business value of the IS organisation and its IT-enabled investments is part of what CIOs need to do - and reinforce - every day. At one level this means ensuring a benefits-realisation process is in place and that most of the ownership of benefits delivery is with the business. At the other end, assessing and communicating the total cost of ownership is today taken as a given.
Increased levels of sophistication also mean that IS organisations need to implement and continually assess service-level agreements. And business managers increasingly require - and expect - some form of real-time executive dashboard.
These six imperatives have real implications for CIO agendas, particularly as they relate to different types of enterprise environments.
Emphasise different imperatives in three different business environments. In my column in the June issue of CIO, I introduced three different business environments identified in Gartner's major study of business and CIO trends. The three environments are fighting for survival, maintaining competitiveness, and breaking away. For the CIO, these three environments each have a different set of priorities and focus areas. It would probably be disastrous for a CIO to follow a breaking away strategy in an enterprise that's fighting for survival.
For example, the lead imperative in an enterprise that's fighting for survival needs a CIO to build credibility. The breaking away strategy, though, is to focus on guiding the executive to new business models. Similarly, the strategise imperative in an enterprise that's fighting for survival is about reducing business costs, whereas for breaking away enterprises it is more about investing for innovation and growth.
The key is to know your enterprise environment, know your enterprise and know your business. Know the business cycles and be able to anticipate them. And take the time to really get to know your executive colleagues as individuals.
Dr Marianne Broadbent is group vice president and Gartner Fellow, and global head of research for Gartner's CIO Executive Programs.