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Survey data from Chief Information Officers (CIOs) about their priorities, worries and aspirations suggests that too many CIOs are still way too deep in the technology trenches. They’re also often in denial about the realities of their professional worlds, especially expectations about their role as (digital) transformational executives. The good news is that CIOs have been invited into C-suites where they’re expected to win competitive battles in all things digital. The bad news is that most CIOs are unprepared for the battles because they’re unfamiliar with the strategies and tactics now required of their new roles. Let’s look at what the new identities, missions and modus operandi should look like and the roles CIOs should play.
Alignment to Strategic Leadership
Many CIOs still believe that alignment means support for whatever “strategy” a business might generate. But savvy CIOs understand that long-term strategic alignment is unlikely to satisfy competitive requirements. Instead, they focus on nearer-term strategic priorities for which credible due diligence can be conducted. This means that CIOs should focus on strategic priorities no more than 3-5 years out: telling the Board of Directors that technology will be ready for whatever the company wants to do in 5-10 years will generate polite smiles, but not much else. A 3-5 year perspective requires CIOs to fully immerse themselves in the business strategies of their clients and their competitors. They should sit on all of the business strategy committees, councils and working groups, especially those at the executive levels. The emphasis should be on technology-as-a-vitamin-pill and technology-as-a-pain-killer, which is a huge leap from where CIOs lived in the 20th century. CIOs are now complete business strategists.
Out of the Shadows
Most CIOs still regard “Shadow IT” spending as rogue activity perpetrated by organizational terrorists. Seek-and-destroy is the mission du jour. Once Shadow IT is found, CIOs attack the terrorists with meetings, threats and other organizational weapons. It seldom if ever works, and the CIOs sometimes win the battle but lose the war, especially if there’s anything even remotely resembling a good business case for the rogue spending. But centralized technology governance is inconsistent with innovation and revenue-generating autonomy. CIOs now know to loosen technology governance to permit lines of businesses to pursue profitable revenue. This clearly does not mean that LOBs should independently procure networks, office applications or cybersecurity products or services. But it does mean that if LOBs need enterprise applications and data bases that can make them more profitable, they should be permitted to acquire and support these applications (so long as they don’t compromise the enterprise technology infrastructure). CIOs know to redraw governance lines differently today. It’s not about control. It’s about facilitation.
Expenses to Revenue
CIOs have been plagued for decades with endless calls for reduced technology spending which is consistent with the widespread treatment of technology as a cost center. Calls for reduced spending in technology infrastructure services (like networks, help desks, databases, security and applications support) are relentless. Elaborate total-cost-of-ownership (TCO) models can be found in every CIO’s office. While the industry continues to provide creative and often cheaper services, there are limits to the costs of basic services. CIOs are also often locked into service level agreements (SLAs) where costs are fixed. CIOs therefore have less room to maneuver around cost control than many CFOs assume.
A newer mission for CIOs is revenue generation. What products and services can be developed and sold from the Office of the CIO Platforms, applications, standards, outsourced services? CUNA Mutual Group, for example, has developed a revenue-generating application that supports the comparison of loan rates.
What about mergers and acquisitions (M&A)? CIOs are in a unique position to understand business technology trends and the products and services the trends enable, and identify acquisition candidates that can generate revenue-generating technology applications and platforms. CIOs should also lead the technology investment strategy of their companies through direct investments, side-by-side investments (with private equity venture capital firms) and partnerships with technology start-ups. CUNA again points the way with acquisitions of, and investments in, technology firms that will expand its suite of technology-driven business products.
Innovation to Pilots
CIOs should – along with the lines of business and the owners of revenue-generating applications – identify the technologies with the most near-term potential. They should jointly own innovation which can be formalized in an Innovation Lab or some such group that tracks technology trends and nominates pilot-able technologies. While all CIOs support an innovation mission, Innovation Labs should be well-funded and part of a much larger innovation ecosystem that includes partnerships and (internal and external) relationships with those who develop, invest in and apply new technologies. The lines of business, product owners, the CIO and the ecosystem should all contribute to the innovation agenda which includes an ongoing list of technologies that should be piloted to fulfill short-term business strategies.
While CIOs are supportive of the overall innovation mission, they are frequently timid about, if not outright fearful of, specific emerging technologies, which they often see at threateningly disruptive to their operations. Technologies that change business processes and whole business models, like robotic process automation (RPA) and machine learning (ML), threaten incumbent process owners with change and complexity. They also threaten budgets based on sometimes unrealistic ROI promises. New business models that link investments in emerging technology with measurable returns should be developed.
Emerging technologies should be synonymous with every CIO’s name. CIOs should be the champions of emerging technology adoption through “fast-and-cheap” pilots. The high ground here should be joyous. Emerging technology is not the threat that many CIOs believe it is. CIOs should be constantly seeking ways to improve business processes and even rewiring whole business models with emerging digital technologies. The pilots should be fed by user/client requirements and technology trends and conducted with a repeatable methodology that includes process/model improvement targets, hypothetical impact, a project sponsor and a schedule.
CIOs insist upon developing what they regard as strong, empirical business cases for the decisions they want leadership and their Boards of Directors to approve. They communicate with evidence: many CIOs would be solid Directors of Due Diligence. While quantitative-empirical communications can be effective (to other data-driven colleagues), they also often leave nothing to the imagination – precisely what management wants to hear. CIOs are generally not the best happy-ending storytellers, which they need to become to sustain executive support.
While quantitative-empirical business cases are useful, new initiatives are approved or rejected for reasons that extend well beyond the “case” presented to the executive committee with thumbs up/down power. CIOs need to tell compelling stories that describe the impact the investment will make only in terms of business value, especially generation of profitable revenue. While quantitative-empirical communications can be effective (to other data-driven colleagues), they also often leave nothing to the imagination – precisely what management wants to hear. CIOs that cannot communicate with happy-ending storytelling will fail to generate sustained executive excitement.
Stories should be targeted at different stakeholders with different vested interests. Boards of Directors (and their advisors) comprise the first set of stakeholders. The managers and executives who run the lines of business comprise another. Technology partners – vendors, suppliers, advisors – comprise yet another set, while the technology team rounds out the list. CIOs must communicate up, down and across. “Influence maps” and communications strategies should be developed for all four sets.
If the truth be told, most technology teams are “tenured,” have obsolete skills and have perfected the use of political survival tactics. CIOs must objectively assess their teams against a set of quantitative skills and competencies metrics. The assessments should be organized, publicized and conducted annually. Teams should not be bonded by friendships or tenure, which undermine performance and threaten the credibility of the Office of the CIO and the entire technology organization. CIOs should manage their teams at arms-length, not as the proverbial “good guy” (or woman) who defends team members no matter what the circumstances. Public accountability is a best practice.
“Staffing” belongs to HR; intergenerational team management is an emerging best practice. CIO contributions to HR should include constant movement toward the automation of routine tasks (such as monitoring and testing), the procurement of outside services (such as cloud services and staff augmentation), and ongoing training and educational programs (to include advanced degrees). Strategic staffing falls within the realm of today’s CIOs. The old in-house versus outsourcing argument is now more complex than ever. Or is it? Given skills gaps and training challenges, CIOs should broaden their outsourcing benches.
Projects to Products, Services & Programs
Professional project management is always a priority. There are two ways to manage projects. The first – which many CIOs have perfected over the years – tracks project milestones, costs and risks. The second tracks the usual metrics but also the overall business value of the projects under surveillance. Put another way, project management should focus on programs-of-projects – portfolios – focused directly on the support or improvement of products and services. The shift from projects to portfolios is an important one already noted by a Harvard Business Review Analytics Services report released in 2018. The shift is about business value from programmatic activity from which performance metrics are identified and tracked. “Projects” are not approved unless they’re part of a larger programmatic plan to support or improve a business product or service, or create a new product or service. This is the filter through which all project business cases are evaluated. Traditional project management challenges, like change management, staffing and measurement, are now more wholistic that speak directly to business value-based outcomes. Predictably, this means that many projects will be funded – or cancelled – if they fail programmatic due diligence.
CIOs are no longer obsessed about standardized project management software. There are multiple project management tool sets that track projects and programs. As with all technology-related activities, tools are as effective or ineffective as the professionals who use them. Despite what vendors swear about competitive advantages, most enterprise management tools – including project management tools – have the same features. CIOs that live in the tools weeds cannot focus on their portfolios.
Of special focus is the role that automation already plays in multiple project/ program management. AI (artificial intelligence)-driven automation will remove the biases inherent in the project/program management process, such as the pervasive “hoping against hope” strategy. Many portfolio management processes, such as probabilistic risk management, budgeting, scheduling and resource allocation – can be automated. Some of the management tools at work today use historical project management data to predict outcomes. As more data is collected, predictive analytics will improve. Intelligent simulations will become standard procedure when new project tasks are requested. Artificial intelligence (AI)/machine learning (ML)/robotic process automation (RPA) will help manage progress, risk, sizing, and key performance indicators (KPIs), among other steps, processes and calculations.
There are 7 ways for CIOs to morph to business value. Will they do it?
January 23, 2019 at 11:46PM
Forbes – Entrepreneurs