Two big steps to enhancing IT governance

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The Evolving Role of the CIO: Part 1

Organisations are becoming increasingly digitised and it is not just a matter of which CRM or ERP to adopt. Technology trends such as cloud, big data, mobility and social business are all giving rise to new marketing, sales, operations and logistics opportunities. 
My contention is that technology is becoming so embedded in the fabric of the business and too critical for competitive performance for it to be left to the IT department alone. (And that’s a good thing, as I will contend here and in coming articles.)

The value at stake from getting technology right

As a result of the increasing business criticality of IT, CxO teams are being called on to become more involved in IT issues. There are many competitive opportunities and threats that are driven by technology trends. These can include new market entrants causing industry disruptions with radically different cost structures (cf. the NZ telecoms market) or a host of game-changing innovations. 

What’s more, major corporate investments or transformations, such as supply-chain or operating-model transformations, often have a major IT component that can imperil delivery if anything goes wrong. Disasters here can be very public and so will negatively affect revenues, profits and even the share price (and careers!).

Hold an annual ‘blue-sky’ review

CIOs can take advantage of the changing nature of IT and set in place proactive measures to engage their management colleagues on technology issues. All IT departments conduct annual planning, looking back at the past year and setting budgeted activities for the next.

However, because technology is changing so very fast, the CIO may want to consider conducting a ‘blue-sky’ review (taking from IBM’s term for looking out to the future.) Such a review (perhaps co-ordinated by an independent outsider) could report on the organisation’s wide-ranging IT capabilities and infrastructure and how these support corporate strategy and operations. 

This is essentially a review of the entire IT portfolio’s alignment with corporate and business unit strategy, focusing on major IT systems and components. These often include core systems, such as ERP, CRM and departmental-specific systems, as well as the IT operating model and resourcing plan. 

The review should also forecast which emerging IT issues over, say, the next 24-48 months which could impact the organisation, and how; likewise look at which business issues could affect IT, and how. For greatest effect, this report should involve input from both the IT leadership and line-of-business-managers.

Bring in more tech-savvy board members

More boards than ever before are asking questions to ensure management focuses on the right technology issues. Deeper board involvement can also help to cut through company politics and achieve endorsement of more integrated technology investments.

Selected board members should be recruited and charged to act as trusted advisors to IT. This means engaging continuously in discussions about the issues raised in the ‘blue sky’ review. CIOs should welcome this attention as stronger IT governance should translate into more budget and resources.

Greater board involvement in technology matters means that corporate directors, just like CIOs, have to raise their game. Many more boards are seeking better understanding of IT issues and their business implications. For boards that are lacking in this regard, the CIO can help the CEO to build the expertise that will enable the board to have more constructive dialogues with IT.

All in all, I believe the changing role of the CIO presents more opportunities than obstacles. Because information technology is increasingly becoming business technology, the CIO’s role will move to the heart of the organisation.

In future articles I will focus on some of the ‘blue sky’ issues I see as having important impacts on business technology. Click below to engage with us on The Evolving Role of the CIO.