The overarching goal for today’s IT leaders is to develop, align and embrace strategies that yield profit increases, cost reductions and new levels of agility. However, the reality is that various barriers, including day-to-day activities and external forces, continue to enter the picture—often overwhelming and ultimately disrupting their strategic planning. With this in mind, how have CIOs been able break this barrier?
As the 2008 CIO magazine “State of the CIO” report demonstrates, the role has seen a true transformation, with most CIOs now falling into one of three archetypes: the functional head, the transformational leader and the business strategist. Furthermore, it is becoming evident that CIOs are steadily working toward fully embodying the role of business strategist. As the report shows, the key drivers in this evolution include the increased ability to: create competitive advantage (59 percent), improve external customer satisfaction (41 percent) and grow existing revenue streams (27 percent).
This shift becomes more clear when looking at the CIO’s most prevalent goals and activities. According to a recent IDG Research Services survey, IT leaders today spend the majority of their time:
• strategically aligning IT with business goals (73 percent)
• creatively improving IT operations (63 percent)
• implementing new systems and architecture (59 percent)
• cultivating the IT/business partnership (57 percent)
• leading change efforts (50 percent).
All of these activities show great promise for the CIO role, especially when coupled with noticeably improved and blossoming relations with CEOs and other C-level counterparts. In fact, 72 percent of top IT executives rate communication between IT management and executive management as good or excellent. CIOs also overwhelmingly use words like “cooperative”, “collaborative”, “supportive” and “strategic” to describe the overall nature of the relationship.
Sean Scott, CIO of Womble Carlyle, a Winston-Salem, N.C.-based full service business law firm, says this transition to a strategic leader only makes sense. “By nature IT managers are meant to be strategic change leaders. We embrace change as a way of life, conditioned to do so by the line of work we have chosen. The trick is to develop a sense within other lines of business that change is not to be dreaded, but instead, seen as progress that can be achieved with very little inconvenience.”
The seemingly natural move toward the business strategist archetype presents an intriguing opportunity that enables CIOs to build momentum and increase their corporate presence. Yet regardless of intentions, IT leaders still have difficulty getting out from under the pressures of the daily grind. That said, the IDG survey results show that respondents possess a strong sense of organizational areas that need work in order to alleviate this pain. The areas that CIOs most often identify as weak include: consistent and streamlined business processes (40 percent); access to unified information and metrics (36 percent); and end-to-end process automation and integration (32 percent).
The desire to achieve a status-quo where IT leaders are able focus on strategy rather than putting out fires requires that they embrace a philosophic approach, says Tony Hashem, CTO End User Services, at Lynchburg, Va.-based global financial securities firm Genworth Financial. “We need to develop clear, business-based strategies; examine both external and internal factors including the economy, customers, trends, people, processes, technology, self-assessment, etc.; gain solid buy-in from our internal customers; and use this garnered knowledge to prioritize work and then execute,” he says. “By taking this approach, we can easily establish a system that we can duplicate as needed to seamlessly deliver predictability, repeatability and accountability.”
CIOs also need to focus more on measurement, explains Bill Bott, deputy for the Operations, Information Technology Services Division in the Office of Administration, State of Missouri. “When you can see how your systems perform and are routinely looking for patterns and trends, you get past the daily stuff pretty quick. After all, it’s hard to focus on a daily fire in your network when you see the trend chart that shows your bandwidth is at 99.9 percent capacity and has been steadily growing. The measures force you to look beyond the daily fires. Also the further development of our project management skills will play a significant role in helping reduce the risk and account for the fluctuations.”
To add to the stresses of dealing with daily duties, organizations are placing more stringent demands on their IT departments and the market conditions are far from ideal. In fact, the IDG survey reveals that 87 percent of respondents believe that the U.S. is already in or likely to be in a recession within the next six months. CIOs also say that factors such as rising energy costs (69 percent), an unstable economy (78 percent) and stock market performance (56 percent) will negatively impact their ability to achieve their top business goals over the next 18 months.
The most telling factor may ultimately rest with the specific impact that the economy has on IT budgeting, which survey respondents expect to increase by only 2 percent. The question is: Will anticipated funding mean stringent spending or will dynamic leaders take more strategic risks that result in dramatically reallocating funds? The answer likely depends on the progressive nature of individual IT organizations.
For Womble Carlyle’s Scott, the economic situation has primarily meant taking a new look at the project selection process. “Projects that we can classify as a ‘want’ instead of a ‘need’ are most definitely taking a back seat this year. We need to focus on projects that directly and immediately impact the line of business instead,” he says.
Genworth’s Hashem is focusing on prioritization efforts as well, but also sees the market shift as an opportunity to fine-tune relationships. “By limiting discretionary spend, we are freeing up time to place emphasis on supplier rationalization, as well as efforts to revisit contracts,” he says. “Given the current economy, our vendors are much more competitive, which translates to significant savings for us.”
The economic picture may not be pretty, but three-quarters of the respondents still remain extremely or very confident in their ability to manage through a recession. Such confidence may be a sign of seasoned leaders accepting that the challenges ahead are unavoidable and can be met with previous experience.
Bott, for example, places confidence in his IT organization’s ability to preserve, and believes the economic crisis has helped in some areas. “There are not many large-scale initiatives going on today that do not include an IT component. And, if it is important to the business, the money will come,” he says.
For IT leaders to take advantage of technology’s role, Bott stresses the need to remember that lean times should never translate to underselling projects. “We always need to be realistic with needs, and trust that if it is important then the funding to support it will be there,” he says.
In other instances, the positive outlook points to the willingness of progressive CIOs to hedge their futures on promising solutions capable of leading their organizations through the most difficult times. For example, survey respondents say that key areas of technology investment over the next year include:
• virtualization (55 percent)
• infrastructure management (40 percent)
• business continuity/availability (37 percent)
Falling into the progressive tech investment category is Scott, who plans to leverage virtual technologies almost exclusively after having tested the approach for the past 18 months. “This is helping us reduce our energy consumption, lower our support time and travel needs to other cities to support their server rooms,” he says. “We have designed several layers of redundancy and fault tolerance into our network and systems designed to ensure our lines of business experience the highest available up-time. This also helps to ensure we have more time for strategic IT as we spend less time on operational IT.”
However, he also points to having a capable team in place as a key component in avoiding the temptation to succumb to the daily grind. “Leaders in this field need to rely on their vision. The organization and the directors leading the firm must have vision to traverse the many changes that occur,” he says. “An organization without vision and proper leadership will more than stumble during any of the environmental uncertainties you have outlined above.”
[Sidebar] Sink or Swim
It’s true that during tight economic times, spending receives more scrutiny, and there is often a need to drive down operational costs. After all, when revenues are often down and the immediate prospects lack promise, businesses cannot afford exorbitant expenses. Yet at the same time, the most progressive organizations require IT to be in place and running smoothly for the business to continue, regardless of the economic environment.
CIOs and IT leaders should look at the economic environment as an opportunity to prioritize initiatives, embrace standardization and consolidation, while also exploring avenues of automation. By continuing to invest in systems, people, processes and technology, it is possible to spend your way to operational efficiency, which ultimately improves IT’s abilities to succeed, explains HP Software CMO David Gee. “IT is the heartbeat of any business competing in today’s marketplace,” he says. “Why would you disinvest when it is the best time to double down? A lack of investment will destroy an organization as skies clear because others will be so far ahead.”
The real focus should be on assuring the translation of IT spending into tangible business results. “We need to be able to deal with the competing requirements that come into the IT department by prioritizing based on business performance,” Gee says. “How do you allocate assets and think about the potential for returns? This is a new level of discussion and CIOs need the tools and capabilities to make these allocations properly. For example, if they want to be able to drive down the costs of delivering email to thousands of unique users or to facilitate efficiency within other key operational departments, success is a direct result of looking at where it is feasible to truly add value to the enterprise.”
With proven solutions that optimize the organization’s assets, Gee recommends that CIOs focus on re-aligning spending in a matter that presents:
- Higher levels of visibility. Long-term success dictates running the business of IT with the same level of rigor applied to operating any profit-and-loss environment. This is possible when there are clear channels into the supply chain, delivery, distribution and entire life cycle. Gaining visibility yields smart extraction, which allows IT leaders to learn more about effectively servicing customer needs.
- Intensified control of business. IT executives must understand their resources and operate efficiently so that it is feasible to dial their services up or down based on requirements. When running IT as a business, assets should provide the organization with a level of sophistication that delivers optimal solutions. “It comes down to whether or not you are a leader or laggard when times get tough,” says Gee. “Now is the time to double the capital expenditures to retire the old technologies that are hampering operations, streamline processes and automate data so that there is a single version of the truth. As such, you are primed and ready when the economy turns around.”
- Repeatability. By adopting best practices and leveraging their intellectual property, CIOs can operate their IT organization with consistency, which ultimately drives down operational cost.
HP Software is focused on helping CIOs unearth value from the IT organization’s daily processes by better extracting and analyzing the information they receive. The ultimate goal is to help IT leaders lower the overall risk to the system by helping with predictability and delivering tangible business outcomes, such as reducing cycle times and dealing with change.