In the good old days of information technology - about five to 20 years ago - the CIO oversaw the introduction of new Web-enabled technologies. This old-school CIO primarily came from the technical ranks and, as such, often had a fascination with technology for technology's sake. If the CIO owned the IT budget, he or she had the power and the freedom to acquire the latest - and often the most expensive - toys.
Not only did these CIOs have the freedom to buy technology, they had freedom to make it, too. Many CIOs decided to develop their own e enterprise resource planning (ERP) systems instead of buying them. But trying to integrate all the data and processes of their organizations into a unified system proved a more daunting task than many CIOs realized. After having spent billions on developing their own ERPs, organizations are spending billions more in tailoring ERPs they have purchased, which occasionally results in having multiple ERP versions throughout the organization. While some of the new technology has enabled productivity gains, it has not done so consistently - begging the question, "Does IT matter?"
It should be noted that there is nothing wrong with the role of the CIO or CIOs themselves, who are typically smart, talented and technically savvy people. Rather, there was a problem with the organizational model, which favored a stovepiped operational approach. Because of their "technologist" or, worse, "maintainer of the network" status, CIOs were not compelled to align themselves with the company's mission. They did not need to build relationships with other C-level executives or groups in the organization or even speak the same language. This meant that they were removed from a direct awareness of both their internal and external customers' needs.
Twenty years later, the environment has changed dramatically. Tightening budgets, government regulations and stricter controls on enterprise architecture (EA) frameworks have led to closer scrutiny of IT budgets. The CIO is forced to be a team player. The message is clear: i f the CIO can't step up, the business side of the organization will take over. But it is a tough balance. The CIO has to keep a foot in the old world while adapting to the new. In other words, while looking for breakthrough technologies to accelerate the needs of the strategic vision, the CIO still has to make sure that email and phones are up. Downtime is still critical. Straddling both worlds successfully would seem to be impossible. Some organizations have bridged that gap with a CTO. The CIO focuses on the customer and the business value stream, while his or her right-hand person, the CTO, takes care of the day-to-day operations of the enterprise. This frees the CIO to morph into a key enterprise chief process officer. This new governance and process ownership model gives the CIO the freedom to pursue a more strategic role in the organization.
The bottom line for an organization is that it's all about the speed of delivering quality products and services to ensure better customer experiences. CIOs can fit into this model by leveraging IT and infrastructure for a better ROI, creating real value. But what qualities do the "new" CIOs need to create real value? In a nutshell, they need to be completely aligned with the business needs of the organization. The emerging trend is that for a CIO, an MBA with accounting and finance is more important than a computer science degree. As such, the CIO's major focus should be on the customer. Other focus areas include the business process areas of governance, risk and portfolio management, competition, and cost containment. This article examines these areas in terms of their importance to the new CIO.
The CIO's customers include those inside and outside the organization. Both call for an enterprise-focused leader concentrating on long-term (three to five years or longer) business results.
For a CIO to interact and serve both constituencies successfully, he or she should apply the discipline of process thinking versus system thinking. Process thinking is a very powerful way to focus on the business and its goals in contrast with systems (i.e., technology) thinking, which tends to focus on technology as an end in itself. Simply put, process thinking looks at the entire business value stream to add value for the customer. If the customer will not pay for any activity, then the activity does not add value and should not be pursued by the organization. Most organizations have a lot of what is called "white space" or non-value added elements in their processes that should be removed. The enterprise business value stream for the customer should drive all other processes, otherwise they will be in danger of suboptimizing the delivery of products and services to the customer.
Paradoxically, in the past, CIOs have been at the mercy of their customers inside the organization due to immature governance processes. When CIOs had carte blanche over IT purchases, it made sense for individuals to approach them directly with their petitions for new automation. Because they lacked a process, CIOs had to winnow through legitimate IT requests and those with an agenda to decide which projects should be funded. This would lead to frustration on both sides as CIOs struggled to meet the demands of their internal customers.
To avoid this conflict, CIOs need to own the process by setting up and using unambiguous IT acquisition policies and processes. Basic key steps include:
- Defining strategic alignment with all IT projects;
- Applying portfolio management with earned value management, risk management, and ROI;
- Setting up development and process lifecycles for IT systems;
- Refining projects with input from stakeholders; and
- Communicating and providing change management over the new processes to ensure that internal customers own them too.
Another significant governance issue involves how a CIO oversees an IT project once it has been funded. An approach to consider is co-chairing the project with the business owner. Figure 1 illustrates how the process typically works. All activities in the enterprise should be traceable to the strategic plan. A good understanding of the business functions and how they interrelate helps to ensure compliance to the strategic plan. In this case, the enterprise architecture enables the strategic plan. (This model has been referred to as "paving cow paths." In other words, the business processes should be examined before implementing new technology. Similarly, one can't insert new technology in the old architecture and expect significant performance improvements. The system must be considered as a whole to understand how to create truly enabling technologies.)
From the vantage point of the enterprise architecture, one can see business plans, budgets and programs that impact the organization's internal workings, supply chain and customer experience. An important element is effective feedback through metrics that tell the enterprise if the strategy is working or if adjustments need to be made at some level. The new CIO does not need to make all the decisions along the way. His or her new role - which is far more powerful now than before - is to advocate and champion the processes and procedures that govern technology insertion.
Figure 1: Enterprise Architecture and the Strategic Plan
Risk and Portfolio Management with EVM and ROI
Risk management is closely related to governance. It is something CIOs need to incorporate to be successful. In the past, CIOs have had a tendency to not want to kill projects, particularly if projects are their "babies." But the new CIO needs to be more hard-nosed and re-evaluates projects in light of the organization's mission and bottom line.
One way to do this is through the portfolio management process, which puts all the organization's current and desired projects on the table for the business community to prioritize. Portfolio management emphasizes the process of balancing investments against many factors to achieve results and ROI and manage risk, resulting in an effective use of resources.
Because of his or her extensive knowledge of IT services and products - often among the most costly areas in an organization's budget - the CIO's active participation in this process contributes immeasurably to control of risk. As organizations implement and transition through each of the four portfolio management phases - discovering all of their projects, selecting those most valuable, controlling the projects going forward, and evaluating them once deployed - the portfolio management goals of maximizing value, aligning investments, optimizing the balance of initiatives and achieving operational excellence will be realized.
As organizations need to increase their agility in delivering products and services to stay competitive, the CIO likewise needs to understand the enterprise business value chain/stream as well as the supplier and customer value chain. One of the best ways to gain insight into the supplier chain for materials, services and products is using the supply chain operations reference (SCOR) model, which enables metrics to be captured. This concept works well for both commercial and government organizations and allows CIOs to map better, quicker and timelier deliveries to their ultimate customers. Metrics for the supply and customer chains can be incorporated into enterprise electronic performance dashboards as well as the enterprise balanced scorecards. Thus, the SCOR model can help the CIO see the complete business picture of the organization and manage by data, not subjectivity. Controlling inventory for just-in-time (JIT) delivery and eliminating the wasted days for long lead times will have the customer pull for products and services when they are needed in a JIT environment flow. The big win for the CIO is that he or she now has a true line of sight into the operations from the supply chain to the customer.
It's not always best to be the first into new markets or to adopt new technology. There is much to be said for setting a course and seeing it through. Sometimes waiting a little while gives an organization time to incorporate best practices and lessons learned from others. It generally behooves a corporation to focus on its own product, making sure that it is high quality and serves customer needs. At the same time, it is wise to keep an eye on competitors and adapt new technology and practices as appropriate.
The best way to contain costs is to make sure that money spent is wisely spent. This can be done most effectively by ensuring there are good business cases for capital expenditures. Many investments can be touted as saving lots of time or money, but the new CIO needs to ask if they really improve the business by generating increased revenue, profits, or some other benefit.
In the 21st century, the organization will support the new CIO role, in its emphasis on mapping the enterprise and value stream to business processes in delivering new products and services the customer. With these skills for today's CIO, the organization can respond rapidly to make necessary changes, which could include less funding for or eliminating obsolete products, services or programs; crafting new products; and meeting aggressive time tables for the customer value chain.
The time is now for the new boss to lead the charge for organizational and transformational change. In summary, the job of the CIO is to make sure the organization's business processes are enabled by new technology - not the other way around. This process approach impacts the organization as an enterprise, not just the IT department. The CIO today will master innovation in new technology and better alignment of business, and make them both work for the health and profitability of the organization.
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