CIO At the Table
28 Apr 2008
by Charlie Feld, Senior Executive Vice President, Applications Services, EDSIs Your Technology Team Part of Your Governance Team?
Enterprise Governance
The role of governance takes on greater significance in today’s “always on” world. To stay competitive in this environment, organizations must take into account end-to-end customer experiences, longer-term objectives and corporate goals when making decisions. They must also develop effective IT strategies that align technology decisions with their business goals and objectives. EDS believes governance facilitates this process best when it is viewed at an enterprisewide level. It’s not just IT governance anymore.
IT has the potential to bind your organization together and create real value across the enterprise – or turn into a costly endeavor that drains time and resources. And while the processes and paths for achieving one or the other are not that far apart, the end result can have a significant impact on your business and your bottom line.
In either case, technology isn't something you can ignore in the 21st century. No matter what your industry, IT is at the center of the action. Manufacturers are integrating technology into production and products, banks keep currency in a database instead of a vault, retail thrives on point-of-sale transactions and online expansion. And it's much more common to buy movie tickets online before you get to the theater. Markets don't have to be high-tech for technology to matter in this global, consumer-driven economy.
Yet many organizations continue to misstep, not quite understanding the role of the CIO, the part that IT technicians should play in daily operations, how to make investment decisions, set sequence and priority, or even the best way to capitalize on the latest innovations to expand and change the products and services they are taking to market. It's a learning curve: IT as a whole is relatively new to the business world, developing for the most part over the last few decades, and leaders are just beginning to learn how to manage and assimilate it into the mainstream of operations.
What most senior leaders fail to grasp along the way is that making IT work has as much to do with business as it does with technology itself. Sure, the right software, hardware, and service providers are important, and keeping systems up-to-date goes a long way in making a company run smoothly. But you have to do more than invest in good infrastructure and applications. You have to integrate and align IT with the enterprise's overarching goals. And you can't do that until you change your internal operational model to one that integrates senior business and IT leadership in a real dialogue.
A More Holistic Approach To IT Governance
The first and most critical step is to move IT out of it's traditional silo and broaden the role of the CIO, spreading both function and action across the enterprise. Who or where the CIO reports within an enterprise is important; however, it is more critical to have the position focus on the end-to-end enterprise. The CIO should be the chief “systems” person and needs to grasp the enterprise-wide view as a whole – not just the “IT systems,” but the gaps, strengths, weaknesses and interdependencies throughout the business functions. When done well, the CIO is a true “systems thinker,” and understands how the enterprise really needs to work as a complete engine. If not the CIO and CEO, then who is the integrator?
This move to broader systems thinking should widen the aperture of the leadership and decision makers and provide them visibility into actions that affect enterprise productivity, speed, quality, customer service and growth opportunities. With this kind of robust agenda, the entire executive team needs to be engaged in the systems dialogue.
A 21st century enterprise requires a more modern IT governance model or framework for decision-making and investment. At its heart are decision rights and investment mechanisms. This new framework should help management guide investments in both capital and human resources that align the technology with larger enterprise needs. A future-looking CIO should see the points of integration between functions and be capable of designing a seamless enterprise. Over the last 20 years, most functions have implemented systems and process improvements. However, it is in the seams between functions and organizations that customers get lost and productivity leaks. By moving to a level of “end to end” thinking, the CIO can help the organization achieve business, financial, and productivity gains. In fact, “CIO” might be better defined as Chief “Integration” Officer.
This move also helps the company make smart technology investments. Having a systems view of the enterprise goals means that the CIO and her staff can develop long-term IT renewal plans, not just fund upgrades and replacements each year. In fact, if you have a clear roadmap and make a gradual refresh to technology over a 3 to 5 year period, you can make great progress without huge additional investments.
The company can also implement a more agile IT infrastructure, applications and common architecture – a move that not only maximizes an IT budget, but starts to connect departmental functions, decisions and processes in a more transparent way. This sets the groundwork for developing strategic goals at a portfolio level and a horizontal, rather than vertical, service point of view. Technology interfaces and customer interactions tie together, bringing the business closer to an idealized end-to-end operations structure. This more standard and centralized IT structure doesn't necessarily bind an organization to centralized decision making. In fact -- although its almost counterintuitive -- global, standardized, simplified work actually provides the flexibility for decentralized decisions out on the edge where business unit leaders know their markets, customers and competitors best.
Getting IT Right Starts At the Top
Success in the 21st century is, to a large extent, being redefined by technological advances. Because we are becoming more global, more “always on,” more dependent on this complex technology, many senior leaders are turning to outsourcing, moving expensive networks and data centers into the hands of IT experts. While this generally is a smart move, it makes internal management of IT more – not less – critical. Long-term plans and objectives must be more well-defined and articulated to consultants and technology partners. And the overarching governance framework must still reside and be managed internally to assure what you're going to do (investments and plans), how you're going to do it (methods) and who gets to decide (decision rights and roles and responsibilities).
A modern enterprise can outsource everything but its leadership. And contrary to much of the “common wisdom” of analysts, academics and the press, the role of the CIO is more critical going forward than it has been in the past 20 years.
Giving your CIO a seat at the table and a voice in enterprise management will assure that you get IT right, optimizing resources, creating value and giving your business an edge in the 21st century.