Rethinking the Run, Grow and Transform Model of IT Management for Digital

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Businesses may need to rethink on the suitability of Run, Grow and Transform approach to IT management in the digital era.

Run, Grow, Transform (RGT) is a classic model of managing IT in an enterprise.  This approach would align with the way businesses have been traditionally managed and guide IT investments accordingly.

Gartner offers the following definitions of the three categories:

  • Run-the-business and hence Run-the-IT is about cutting costs, improving price-performance ration and lessening the risk. IT Initiatives are aimed at essential business processes and more importantly ‘to keep the lights on’.
  • Grow is about improvements in operations largely within current business models. IT initiatives are looked at in the areas of sales improvements, customer service and product development.
  • Transform refers to reaching new horizons for the company that may include new markets, products and business models. These are large bets in business terms and IT initiatives will strongly align with the strategic direction of the company and transcend multiple areas of operations.

Businesses attempting to move up the digital value may have to rethink the suitability of this model, more specifically the IT management and cost allocation. IT organizations’ effort and budgets are typically split across these three categories.  A classic problem of this model has been the disproportionate focus on Run as  CIOs spend more time in running the legacy systems and tend to allocate upto 60% (if not more) of the annual budget on maintenance due to business demands and other legacy reasons.   ‘Grow’ and ‘Transform’ are treated casually thus constraining the ability organization to be ‘future-ready’ and competitive.

Digital requires businesses to constantly innovate on their business models, make real-time changes to products and processes and place bets that are risk prone. In this refresh, technology becomes the driver to bring in new capabilities into the business operations. The continuous tweaking when pursued relentlessly, can result in transformative outcomes and even being disruptive.  The risk of failure is equally high and in such cases, the companies would need to quickly pick themselves up, dust off the setbacks and continue the quest. 

When companies acquire digital capabilities pursuing a larger goal to become customer-centric and achieve revenue enhancement, no longer will they be able to clearly distinguish the changes as Run or Grow or Transform as their attempts could straddle these three areas. This has implications for business functions and IT and more specifically, CIOs need to identify themselves with such pursuits and bring appropriate changes to their working methods, team structure and more importantly not constrained by pre-determined cost allocations. Companies need to allocate their budgets that should result in acquiring or enhancing capabilities for the organization.

transformation-vector-1156880An Alternate Model

Various models such as two-speed or multi-speed have been propagated by industry experts to manage IT for digital. They all have their pros and cons. As an alternate method, they can look at 3 key areas where IT spending can be channelized – Automation, Analytics and Artificial-Intelligence (AI) or 3A Model of IT Management.

Automation – Automation involves digitization of processes that are largely manual. Legacy enterprise systems such as ERP are tailored to typically cover the repeatable processes across functions thus leaving gaps in addressing less frequent situations. When these processes hit the business, organizations resort to ad-hoc or untested methods that may potentially affect customer experience and destroy the carefully cultivated image. Such occurrences will only increase due to ever-changing customer expectations and increasing competitive conditions.  Organizations can prepare themselves to tackle such situations by continuously identifying gaps and improving the levels of automation, the implementation of which may require some form of the combination of extending enterprise applications, developing new applications and bringing in technologies such as the Internet of Things (IoT) to plug the gaps. A higher level of automation results in higher productivity and timely and error-free processes.

Analytics – With the volume of available data growing exponentially,  organizations hitherto relying on mostly structured data coming out of their enterprise systems for decision making, can now build sophisticated analytics that can help them take more impactful and real-time decisions using technologies such as big data. To build traction, organizations have to acquire data management skills, enhance existing data marts, build prototypes and continuously look for potential data sources. These require launching and managing multiple initiatives across functions and level s and integrating them for management dashboards.

Artificial Intelligence – It may be early stages for AI to be an integral part of the digital agenda of the organizations. However, the advancements in the machine learning and robotics provide benefits that can result in a disproportionately higher level of overall organization performance by improving process efficiencies, becoming agile and enhancing the capabilities of the workforce. Though a general perception is AI / machine learning will eliminate jobs performed by humans, organizations can realize the true value by ensuring that AI co-exists with humans to achieve the desired business benefits.

Characteristics and Benefits of 3A Model

  • The operating model of the 3A approach would encourage innovation and collaboration as it necessarily brings the business and IT together as decisions have to be made jointly on how technology solves specific business problems. In the RGT model, the IT would tend to operate largely in isolation as the main focus would be ‘to keep the lights on’.
  • The CIO, thus need to become more visible in the organization as he/she has to involve the leadership and the lines of business in decision-making on business direction and overall performance.
  • A major intent of following the 3A would to considerably shift the cost control focus to a revenue enhancement one.
  • Automation, Analytics and AI investments span the RGT categories. The difference is in expected returns – investments in 3A result in improving the digitization levels and it would have to be tied to specific outcomes.
  • While it is recognized that companies would still have expense heads such as AMCs and staff salaries that typically form part of the ‘Run’ budget, CIO’s should be conscious of incurring such costs that do not add appreciable value, a bugbear of ‘Run’ spendings, and attempt to relook and assess if such costs can be restructured to align with 3A model.

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The RGT model restricts the ability of the organization to pursue a purposeful digital transformation as most of the costs invariably get allocated to bottomless pit of  ‘Run’ that do not provide appreciable returns. Moving to 3A model dispenses with such a maintenance focus and shifts the decisions to technology investments that can add value to the business. More importantly, the model brings a collaborative approach between business and IT that is crucial in digital pursuits.

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Transition of Managers in Traditional Organizations in Digitization

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Mid-level Managers in traditional organizations need to prepare themselves to operate successfully in the digital makeover. There are atleast 5 fundamental shifts they need to consider to safeguard their positions.

Traditional organizations in their pursuit to become digital businesses oversee a significant level of automation that transforms manual tasks forming part of their long legacy operations.  Automation inevitably leads to shifts in people’s roles and responsibilities forcing companies to redraw their competency maps.  Employees across levels need to become tech-savvy, assume new responsibilities and work in tandem with systems and machines that will increasingly take over some of their tasks.

While digital implementations touch many parts of the organization, the degree and nature of impact generally vary across levels and functions – from C-suite to shop floor and from operations to sales. The functional managers, comprising the middle layer, are no exception to the onslaught of these changes. In fact, they are impacted in more unique ways than one when compared to their colleagues in rest of the organization or counterparts in new-age organizations. This article turns the spotlight on them and discusses the shifts they need to consider if they wish to travel along with their organizations’ digital journey.

A Short Profile of Mid-Level Managers

Let us look at a typical profile of mid-level managers say in a mid-sized traditional organization consisting of 1000+ employees. They are largely ‘Gen X’ population in the age group of 35 to 45 or 50. They look for stability in the workplace, consider savings crucial to building families, make long term investments like housing and value work-life balance seriously.

In the organization hierarchy, they are first and second line managers reporting to department heads and supervising a sizeable number of workforce. They typically hold designations such as Mangers, Deputy Managers or Supervisors.   C-suite expects them to deliver results on a daily basis as per corporate mandate and plans. Thus they are extremely execution focused with no role in shaping strategy or contributing to the plans they get to follow.

Digital Impact and Implications

As their organizations go Digital middle-level managers need to go through a transition that is rooted in a mindset change and transcends multiple areas; newer responsibilities, working methods, technology and business skills etc. However, not all managers are primed to absorb such changes.  To successfully operate in a digital landscape, they need to consider at least 5 fundamental shifts, when practiced consistently can help them safeguard their positions, assume higher responsibilities and contribute meaningfully to the demands of their organization.

From Functional to Process Focus (or Business Model Focus)

Existing Role– Mid-level managers are highly functional oriented and perform pre-defined tasks related to their departments such as Sales, Finance or HR.  They work more closely within their operating groups and normally have an arms-length relationship with other departments.

Digital Impact – Digital leaders tend to move their businesses from rigid functional structures to dynamic and flexible structures as they reinvent their customer engagement processes and establish new business models.  The constructs are never permanent and strengthened continuously to gain the crucial competitive advantage.

Shift – Managers need to move away from the comfort zone of their functional focus (‘head down’) to a broader process or business model focus (‘head up’). They should be more tuned to handling cross-functional responsibilities and need to learn the broader contours of other functions if not the nuances and contribute to effective execution of the end-to-end processes than parts of them.

From Controlling to Enabling

Existing Role – Mid-level managers mostly operate in the tactical and transactional levels with ‘controlling’ as a key responsibility that gains significance where manual operations are high.  As controllers, they ensure that the pre-set business processes are followed all the time and people reporting to them perform their assigned tasks in time, without errors and as per standards. Managers periodically assess deviations and recommend changes to the processes that may sometimes implement a higher level of controls.

Digital Impact – Controlling can be a major casualty in digitization. Automation brings in inherent benefits such as improved output, quality and speed and reduced data errors all enabled by technologies that cover not just processes but also extend to functioning of machines and physical movement of materials.  For example, an IoT implementation in manufacturing would considerably reduce the supervisory tasks of a maintenance manager overseeing the performance of shop-floor machines and a Robotics Process Automation in a customer service centre would reduce the supervisory tasks of a service manager.

Shift – As technology takes over the ‘controlling’ tasks, managers need to move away from a controlling mindset to a more analytical mindset.  They should learn to read different levels of analysis and align details to outcomes to assess the performance of the processes or business models. They should also actively engage with leadership to recommend improvements contribute to planning.

From Individual to Team Players

Existing Role – Traditional organizations take pains to define detailed job descriptions for each and every role so that the individuals performing the roles have clarity and operate within the scope of the role. The boundaries are clearly drawn and the managers are trained to perform their specific role and not encouraged to intervene in other areas.

Digital Impact – Digital organizations expect employees to work more in a collaborative environment and engage with each other to solve business problems and reshape business processes continuously. They value teamwork more than the individual contribution.

Shift – As teams, managers need to work closely with other members of the organization across functions, provide inputs in their respective areas of expertise,  consider other inputs and work towards a process of collective decision making.  Managers also need to build professional networks outside of their operating spheres to learn from multiple sources.

From Risk Avoidance to Risk Taking

Existing Role – Managers are mandated to avoid or minimize risks at any costs and hence asked to stick to defined processes and not engineer new methods themselves. At most, they are encouraged to submit their suggestions for improvements that go through an evaluation process and implemented if beneficial.

Digital Impact – Digital companies follow a ‘fail-fast’ approach to bringing new practices and this can be effective only if managers are encouraged to take risks.

Shift – Managers need to learn to take risks as they will be increasingly expected to implement changes to business practices on the go and try new methods of working that can potentially yield business benefits. Towards this, they need to assess competing approaches to business actions, compute trade-offs and be decisive in their selections without the fear of failures. More importantly, they need to continuously learn from the hits and misses to improve their results.

From Change Agents to Change Makers

Existing Role – Managers are the go-between the leadership and the workers and more often called to perform the role of change agents. Towards this, they need to understand the change – be it in business plans, structure or processes, convince the people at lower levels to accept the change and manage resistance.

Digital Impact – Organization structures and positions may be redrawn continuously leading to job changes or loss at times across levels. Further, due to automation, workers such as shop-floor personnel may need to learn new tasks and work with machines that can take away their routine tasks.

Shift – Mangers need to step up to design the changes that affect their groups than merely accepting orders for changes. They need to work with their superiors to influence the change design as they are in close touch with the workers and know their reactions. They need to communicate even more with their ward, identify skilling needs and protect top performers of their teams through appropriate interventions.

business-men-mdRole of Leadership

Leadership has an equal role to play in transforming the middle-level managers and preparing them for their digital pursuits. Their involvement covers a wide range of interventions and decisions-  from providing them cross-functional experience, sponsoring skill enhancement programs,   appropriately changing their performance evaluation processes and empowering them with a higher level of responsibilities.  Also, leaders should take their managers into confidence as they acquire digital capabilities and make them participate in planning the initiatives.

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Digital forays of incumbent organizations are bound to affect the roles and responsibilities, working methods and metrics significantly.  Middle-level managers should no longer expect to work in a stable environment with a clearly defined job specs. They need consider the changes that can prepare them to become an integral part of the emerging organization and contribute to the growth.

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Change Management in Digital Era

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Digital forays have to be constructed on a strong foundation of organization change management that can potentially become challenging and complex due to the very nature of the pursuits. Companies need to shun the traditional sequential and project based approach to change management and practice a continuous change process that is hard-wired into their digital strategy.

Businesses are increasingly seeking to be digital to propel growth and compete successfully in the market place.  As they move from taking baby steps to attempting transformational changes, they realize that some significant characteristics define their journey to become truly digital:

  • The status quo is often challenged in the attempt to re-define operating models to become more customer centric or introduce innovative products and services or achieve operational excellence.
  • The impact is almost always cross-functional as different functions necessarily need to come out of their silos and synchronize their moves.
  • Established structures, processes and platforms get re-modeled swiftly and employees shaken out of their routines to achieve the desired makeover.

When companies pick digital momentum, such characteristics compel them to operate in a continuous change mode with intensity levels varying along transactional – transformational -disruptive spectrum.  In such a dynamic environment, Change Management (CM) becomes crucial and in fact forms the foundation to rally the organization forward and realize the aspirations. Several questions arise when we look at managing change in the digital era – How should companies strategize and execute CM? Can traditional approach to CM be effective to bring in fast-paced culture? What team structure,  methods and tools can help? This article presents a perspective and recommends a different approach to CM to successfully operate as a digital enterprise.

Importance and Challenges of Managing Change

Change Management has always been a complex subject. Businesses have seen more failures in transformation projects primarily due to their casual approach to organization change. Various studies expound the inherent difficulties in effecting change and arriving at factors that can guarantee success.   Generally, the blame for failures is directed, rather misdirected, at one word ‘resistance’. In fact, research has shown that the actual cause is not the resistance of people but the inability of companies to handhold their employees to navigate the change.

CM can only become more complex and challenging in the digital world due to the very nature of the digital programs.  In a radically shifting landscape, traditional methods of CM may not sufficiently address the demands of digital because of some inherent assumptions these were built on.  Here are a few pointers:

  • Managing change is relatively easy when organizations know where they are headed to. With clarity, they can attempt to sufficiently address the rational, emotional and political factors of those impacted to influence them positively. However, digital initiatives come with uncertainties as companies attempt new business models and unproven solutions with rapid implementations, making it difficult to ascertain outcomes in advance. Such moves may not provide the clarity in scope to plan CM efficiently.
  • Traditional methods of CM typically are structured to be carried out as a series of sequential tasks (as in Plan —>Assess —->Design —>Implement) in a project mode. This is possibly because they were designed to align with enterprise projects such as ERP implementations that are carried out in a sequential mode over long duration typically bringing substantial changes. In the digital era, we find businesses increasingly moving away from such big-bang implementations to adopting a more modular approach and combining them over a period of time to effect larger transformation. Following a sequential process to CM will be detrimental to such a strategy as companies have to shift gears quickly and cannot afford to be in a ‘catching up’ state of organization changes.
  • Further, traditional methods recommend a top-down approach to change that is normally carried out by a few executives (or consultants) who would be expected to know the degree of impact and come up with appropriate interventions for the entire organization. Employee involvement happens too late in the change cycle. Successful digital companies have realized that the changes will be effective if they are not seen as a push from the top but designed by the employees themselves working in a collaborative mode. This ensures the crucial aspect of buy-in from those impacted much earlier while they understand the business shifts and prepare themselves to cope with the change.
  • Companies cannot follow a fixed template for change, another classic legacy approach – every initiative requires different treatment – the impact level may depend on the scope of the digital programs.

A Different Approach to Change Management

Organizations should move away from a sequential and project approach to CM and practice a continuous process that will not only keep pace with the intended business changes but also minimize the side-effects of disturbances to the day-to-day operations and employee involvement.

To start with companies need to establish a dedicated CM team that will form an integral part of the digital strategy team and jointly govern a Digital Program Office.  It will be cross-functional with members hand-picked from key departments consisting of unit managers, influential executives and where required representatives of business partners to act as change agents. They, of course, need to believe in organization’s vision, assess the impact of the change and more importantly be willing to change themselves first.

The CM team has to follow a more fitting change approach and here is a suggested methodology that involves 5 stages carried out on a continuous basis:

  • Imbibe – The CM team should understand and absorb the intent of the digital programs, contribute to strategy, assess the possible impact and align the change plan to the business context. Further, matured digital enterprises may pursue multiple programs in quick succession addressing different business demands. The CM team not only need to multi-task but also assess the possible cross-impacts of such multiple programs.
  • Initiate – Initiate involves preparing a CM plan covering communications and implementation aspects of the change programs. As a pre-requisite, the team needs to conduct an impact study that assesses the changes to the organization across structure, roles, and processes and also examine possible hurdles that can derail the initiatives. It can tap into organization history or responses to past programs and ensure they are prepared with adequate measures to counter the hurdles.
  • Include – Employees and business partners should be encouraged to contribute to effecting the change by sharing ideas on the process and implementation. Towards this, the CM team should bring in the stakeholders on to a common platform where such exchanges can be facilitated. In fact, such an exchange need not be pegged to a project but can be a continuous process. Thus, the ideas and suggestions need not necessarily be restricted to problem on hand but can be more wide-spread and possibly can be used for future programs. The CM team should distill the ideas and suggestions and consider them for bringing the required changes.  The company can introduce appropriate reward and recognition schemes to encourage wider participation by the employees.
  • Influence – The stage is the classic process of influencing and convincing the employees to align with the new operating models and handholding them to navigate the terrain. CM team can use a mix of traditional and innovative methods including
    • communicating through various channels, using platforms such as social media to connect with the employees,
    • addressing ‘what-is-in-it-for-me’ concerns and
    • conducting one-on-one counseling sessions with employees to address concerns and fears that are deeper in their minds and not normally brought out during regular interactions.
  • Implement – Implement stage is, without doubt, the critical piece of CM. The team needs to work with the various functions of the organization for implementation. The changes may cover, depending on the impact, organization structure, roles, appraisal methods and compensation structures.

driving-change-methodology-slideThe 5 stages may overlap across digital programs and the CM team would need to evaluate how best to leverage the efforts of earlier programs and minimize the effort for the current and future programs.  The graphic shown here is an early attempt to depict the continuous process of change. The circular representation of the stages is to convey a ripple effect of a proposed change impacting a larger part of the organization.  The effort at every stage would involve CM tasks carried out for a specific project as well as leveraging that of earlier and parallel programs (represented as overlaps).

Guiding Principles

Top management commitment, continuous communication, one-on-one interventions at every stage are some basic tenets of managing change.  To operate successfully in a digital environment, companies also need to consider the following key principles.

Leading the Charge

As noted earlier, the CM team has to be cross-functional and form an integral part of the digital strategy team.  There is an on-going debate on ownership of digital programs whether a company needs the services of a Chief Digital Officer or should do with CMO or CIO. However, not much is said about the responsibility for change.  Irrespective of the ownership of the digital programs, the CEO should directly be involved in CM, providing directions and frequently reviewing the progress. He/she may appoint a senior executive to own responsibility for CM and provide on-the-ground support (call it Chief Transformation or Change Officer).  The Board has an equally vital role to play and they should be part of the process.

Empowering the CM Team and the Stakeholders

Organizations should promote an open and transparent culture where every employee has equal stake in bringing the new order.   The employees and business partners should be seen as the designers of change than just consumers.  The CM team itself along with the Program Office should implement a flat structure, encourage open communication and collaboration among the members.  The CEO and CXOs should be willing to listen to and act on team members and employee suggestions and consider them on merit even if they are non-traditional.

Demonstrating a Sense of Urgency

Companies have to operate in a fast paced environment of change, taking decisions in real time and implementing swiftly.  A sense of urgency should pervade all digital actions and the CM team has a significant role to play in achieving the momentum.  It should be comfortable in assimilating data from different sources to study the impact or understand the reactions of the stakeholders. Further, it should continuously explore quick-win opportunities to demonstrate the benefits of change and boost the confidence levels of stakeholders before rolling out in fullness.

Implementing New-Gen Tools to Support CM

Companies should consider deploying platforms that bring the employees together for collaboration and sharing ideas. They should evaluate leveraging social influence and gamification mechanisms to drive change in attitudes and behaviours by integrating such principles into the collaborative platforms.

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In the digital era, organization change cannot be realized by following a piecemeal approach driven by a small group of managers.  A continuous change process, a more inclusive and collaborative structure and agile execution are crucial to usher in the new business order that is impactful and employee oriented. CM, thus has to become an organizational capability of companies wanting to move up in the digital ranks.

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A Board Committee for Digital Journey

Digital efforts due to their profound impact on business landscapes require establishing a Board Committee with a mandate to guide the company’s strategies and govern the realization life cycle spanning opportunity identification, investment decisions and implementations.

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Businesses pursuing a strong growth agenda are realizing that technology is inextricably linked to their actions on the ground.   Their business strategy and technology strategy are increasingly becoming indivisible as they attempt to harness IT solutions to effectively compete and sustain growth in the market place. A study by Gartner on CEOs’ priorities for next two years indicates the importance CEOs have placed on technology.  In the study, IT is ranked 5th surprisingly ahead of profits and new product that are ranked 6th and 8th respectively.

There is no industry that has not been impacted by digital. The intensity may vary but not the intent. Companies can hardly take a ‘will not affect us’ position when they witness changes around them. Hence, it is impinging on them to be pro-active and continuously reshape their strategy fusing strong business models and impactful technologies.

As digital takes the centre stage in the strategy conversations, companies try to ascertain who should lead the digital programs; whether it is CEO, CMO or CIO or the need for a new role like Chief Digital Officer and who the principle stakeholders are. However, while this debate gets traction, one group of key stakeholders does not seem to appear frequently in the deliberations; the Board of Directors. The Board’s involvement seems to be largely limited to providing approvals for digital investments and possibly review them if they come up during Board meetings.

When we try to investigate the extent of Board’s involvement, a quick scan of the constitution of the Board of a few randomly picked companies, would tell us that most of them, including a few leaders, do not have a Board committee for technology. While it is common to find committees for Audit, CSR or Shareholder Relations there is not one for technology and /or innovation. There could be reasons that are legacy related but as the businesses are increasingly driven by technology, one wonders whether the Board should play a more active role than be a passive participant. Consider the following:

  • Technology is no longer seen as a mere enabler of business process but a strategy that can shape and employ new business models
  • Nimble and new age competitors that have technology as the core of their businesses have the potential to disrupt the incumbents to the extent of even marginilising them in the market place
  • Relationships with customers and vendors are increasingly determined by technology savviness than purely based on traditional strengths like brand or products. A study by McKinsey suggests that about half of M&A successes depend on IT, which emphasises the strategy play of IT.

Given the high stakes, the rationale for the existing committees could well be applied to justify the need for a technology committee or better, a broad based digital committee. It can be modeled along the constitution of other committees with an aim to provide guidance and conduct periodic reviews of the digital programs.  The charter of a Board committee normally covers the mission, membership, meeting frequency and duties and responsibilities. Let us see how these apply to a digital Committee.

The Mandate

The mandate of the digital Committee would be to assist the Board and guide the company in the digitization efforts.  The committee can support the executives to strategise transformative digital programs to be an early mover in the market or quickly respond to competitors’ actions that may threaten the company’s position. The role of the Board committee becomes more prominent for small and mid-sized companies that may lack credible leadership across levels and resources to pursue successful digital programs.

Membership and Meetings

The committee should ideally be chaired by an independent director in the Board and can consist of fellow directors with need based support from executives. They can enlist experts and consultants to guide them where required. The committee can work with a structured plan that can act as a baseline and meet as frequently as possible with agreed minimum number of meetings.

The Responsibilities

The digital Committee needs to focus inter alia on 4 areas:

  1. Digital Strategy
  2. Portfolio Management
  3. Leadership and Resource Management
  4. Program Management

Digital Strategy – Asses Strategic Importance of Technology

puzzle-1686918_1920Digital strategy requires a radically different approach from a traditional IT strategy while assessing the potential of technology and thus goes beyond defining an IT plan for the company. It involves crafting new business models with technology at the core. The impact is mostly organization-wide and demands an effective change management.   The company has to continuously assess the opportunities presented by technology developments and threats from competition and bring in changes that are rapid and continuous. Hence, businesses require a well thought out digital strategy that is rooted in their current market position and desired future landscape. The long term implications demand the Board’s attention and thus the role of digital committee in integrating business and digital strategies.

A starting point for the committee could be to measure the effectiveness of existing technologies in their capability and flexibility to address the current business issues, respond to changing market conditions and scale up for future possibilities. The committee should guide formulating a digital strategy that can propel the company into the desired growth trajectory. The committee should also help move the strategy exercise beyond the CIO’s office by encouraging organization-wide participation and enlisting customers, business partners and industry experts where required.

The committee should continuously challenge their CxOs to ably leverage technology to further gains in areas such as business performance, employee comfort and customer satisfaction.  Their readiness should be measured against the new-age or technology savvy competitors’ efforts that may have the potential to threaten the position of the company in the immediate or near terms.  Armed with such reviews, the committee should periodically monitor the progress of technology strategy execution and ensure alignment and refinement to the changing business contexts.

In short, the committee should direct digital strategy in the following ways:

  • Establish a ‘Digital Maturity’ scale that can reflect company’s position and market actions and that can measure the effectiveness of the current usage of technology and plans for the future.
  • Collaborate with the leadership team, customers and business partners to jointly formulate or refine technology strategy
  • Periodically review the technology strategy execution and jointly address implementation issues.

Portfolio Management- Construct a right portfolio of digital programs

IT Portfolio management would typically mean optimizing the IT assets of the company by refreshing the portfolio through introducing or dropping IT assets due to technical reasons such as obsolescence, scalability etc. Such decisions normally fall in the domain of CIO. However, companies need to take portfolio management to a more strategic level where the decisions are based on business imperatives and future demands. This is where the Board committee can step in and guide the executives.

In most organizations, a substantial portion of the IT budget, even to the extent of 70% go to maintenance of existing IT assets and the rest on fresh investments. This undermines the company’s ability to explore and invest in future-ready technologies. The Board should guide the company to swap the ratio in gradual manner.

The future-ready can be looked at in two categories – the near future state and future state; the near future state is those technologies that have been proven but not yet part of the mainstream usage. An ideal company would have tested and accepted prototypes or already using these technologies in a small way. SMAC stack can be a good example for this category. The future state is the technologies that are in early stages of development, not yet proven but the company can start building prototypes. A good example could be IoT or Cognitive solutions. The Board would need to ensure appropriate investments in the future technologies while optimizing the spend on operational systems.

To summarise,   the Board’s involvement in this area could cover the following:

  • Ensure the company bets on immediate and future technologies
  • Budgeting that commensurate with the bets
  • Align performance measures and reviews to the investments

Leadership and Resourcing- Enlist right owners and adequate resources empowering them for success

Some companies still see digital as a technology foray and any attempts on digitization land at the door of CIO.  A seasoned CIO could be qualified to lead digital programs, however it may not always be effective as digital is often and should be deeply welded into the differentiators be it customer service, marketing or operations.  Hence, in order to realize the intended benefits and to fix end-to-end ownership, the efforts may need to be led by the most appropriate head. It could be function heads such as the CMO or Chief of Operations by a CDO.

The Board Committee is best placed to formulate guidelines on ownership and governance for digital programs that can cut out layers of decision making and minimize ‘baton-passing’ risks. The framework thus developed could empower and encourage the right owners to lead and navigate through the complexities of business models, technology and people alignment. A number of digital programs may need to be executed rapidly to either grab an opportunity or solve a pressing problem. Such fast paced moves bound to have their share of missteps, hence it is important that the framework encourages owners to take risks without the fear of failures.  The Board may choose to intervene to sufficiently resource the programs to ensure there the programs do not face any hurdles.

Hence, the Board can assist in the area of leadership and resourcing in the following ways:

  • Formulate guidelines and mechanisms to plan and execute digital programs
  • Bring in the right leadership to own the programs and ensure adequate resources to support the programs
  • Evaluate business case and approve investments
  • Help bring an high performing culture and encourage the teams to take risks and not intimidated by failures

Program Management – Provide for execution oversight and course corrections to ensure benefit realization

Execution is where the rubber meets the road and comes with inherent risks due to complexities involved. Many technology projects fail due to increased costs, inordinate delays and poor outcomes. According to an Oliver Wyman analysis, the world’s largest 500 com­panies lose more than $14 billion every year because of failed IT projects.

The Board has to take active role in reviewing the progress of the digital initiatives periodically and ensuring the value is realized on the investment.  Where possible, one of the members of Board digital Committee can be drafted into the Steering Committee of implementation projects to monitor the progress and intervene when required.

Digitization is generally an enterprise-wide effort and depending on the areas could also focus on extended enterprise involving business partners and customers. The transition could be quick and may disturb the existing structures and positions.  Hence, driving change is crucial to achieve desired results.   The committee needs to strategise change management programs, communicate frequently with stakeholders to demonstrate that they are fully behind the initiative and ensure participation across groups.

Most companies miss out on learning and gaining knowledge. What one arm of the organization does is not known to other arm. It is critical to bring in a learning culture in the company to know what works and what doesn’t and use the learning to improve in the execution of digital programs.  The Board committee should address this common flaw and force executives to share experiences across functions and group companies.

In short, the Board can involve in execution in the following ways:

  • Measure value of incumbent IT projects and ensure they are in right track, adjust project mandates on the fly to suit business conditions
  • Drive change, connect with stakeholders more frequently to know their feedback and ensure course corrections
  • Encourage organizational learning that cuts across past and on-going programs

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The responsibilities outlined may indicate a higher involvement of Board in areas that normally fall in the executive domain. So do we expect the Boards to be more ‘hands-on’?  To what extent can they question and challenge the plans and proposed decisions of the executives?  The answer lies in recognizing what digital can bring in. It can both be an opportunity and a threat; when pursued incisively by the company it has the power to shape the business for the future, on the other hand competitors can potentially destroy the position of the company by their calculated moves.  The companies thus face opportunities beckoning growth on side and threat of even closure due to early start competitors on the other side.  Because such changes are rapid, Board’s direct involvement will ensure that the company’s sails are set in the right direction to navigate through a rough and highly competitive business environment.

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Post Script: The trigger to write this piece came from working with two Board members of a medium-size company I was consulting with. The independent directors were seasoned professionals with experience of running companies themselves and technology evangelists. They guided the company in digital efforts, helped sell the idea to other Board members and assisted the CEO in resolving couple of knotty issues. Their involvement helped cut short the decision cycle during planning and they continue to be actively involved in the on-going implementation.

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Road to the Board – The Transformation of a CIO

As the CIOs prepare themselves to play a more strategic role in the Digital world and become part of the C-suite, there are certain traits they need to develop and practice to make a meaningful contribution to the direction of the businesses.

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According to some experts, the title CIO was probably created in late 80’s / early 90’s. The Chief in the tile reflected the growing importance of the position, a marked change from other tiles like IT Manager or IT Director given to IT heads, as companies started recognizing the role of IT in their businesses.  The title meant that the position would have same level of influence in the organization as the other ‘C’ level positions, like CFO or COO had. However, for inexplicable reasons, the role did not live up to that expectation.

The developments in technology in the 90’s had considerable influence in managing the businesses  as companies moved from largely manual operations to centralized data processing and further to networked enterprise applications. IT was becoming more integral to the business. CIOs have always front-ended these initiatives and though one may argue these were not transformative in nature, companies did benefit to a large extent. Despite such achievements reaching the top echelons of the organization eluded the CIOs.  In some organizations, the role reported to another CxO (CFO in most cases) and not to CEO.  Not many companies bothered to invite their CIO for a strategy discussion and worse still there was still a certain degree of distrust towards technology and CIO in particular.

The digital era we witness has once again turned the spotlight on the CIO possibly more sharply this time. Companies are increasingly recognising the true potential of IT to navigate the business uncertainties.  The advancements in technology such as cloud, mobility and analytics coupled with success of ‘digital’ businesses have compelled companies to look at IT more strategically than ever before. If there is a radical shift that defines IT then it is its leverage to power revenue enhancement than the traditional cost containment.  In this transformation, it is only natural that the CIOs occupy the centre stage as they understand where technology can meet the business and thus potentially step up the pace of the change. As a consequence, the IT box buried under Finance or operations in the company map suddenly seem to get the arrow pointed from the CEO.  Board invites CIOS for PoVs,  CxOs expect CIOs to energize the strategy deliberations and the business divisions that were treating IT at arm’s-length now look up to their CIOs to realise their departmental goals.

Not all CIOs are primed for such higher stakes.  Some CIOs  easily make this journey because of their inherent leadership qualities but most find it difficult. What can CIOs do to stand up to the expectations?  How can they prepare themselves to perform a role that will become highly visible at every major decision?

This article presents a few suggestions to the CIOs to navigate the route and become an integral part of the C-suite.

 Common C-Suite Traits

Before we discuss specific actions for CIO, it may be worthwhile to look at some common traits of C-suite leaders. Borris Groysberg et al, in their HBR article ‘The New Path to the C-Suite’ share a few. They say that the C-level executives have more in common with their executive peers than they do with the people in functions they run.  Not only are they expected to support the CEO but also when required challenge and contribute to key decisions. At that level, the technical and functional expertise matter less than the leadership skills and strong grasp of business fundamentals.

A study conducted by the same author on the most prized skills of a C-Suite executive listed a few common ones – (a) strategic thinking and execution – the ability to think on a global level and have unwavering focus on execution (b) deep familiarity with a specific area of operations , in areas like manufacturing, markets, financials or even technology (c) team and relationship building – building and leading teams and working collegially (d) communication and presentation – possessing the power of persuasion and achieving organization buy-in and (e) change management – the ability to lead change transformation. Additionally, the study indicated traits such as integrity, ethical conduct, inspiring leadership are highly valued.

CIO in C-Suite

If the CIOs have to play the role of strategists and influencers in their organizations, it is clear that they need to imbibe the traits of C-suite executives, draw inspiration from successful leaders, learn from their thinking and actions and adopt the learnings in their areas of operations.

There are four transformative traits that can help the CIO in his journey to be part of the leadership circle. These are:

  1. CIO as a Business Proponent- Ability to look at the business holistically and into the future
  2. CIO as a Team Builder – Ability to build and sustain a high performance IT Organization
  3. CIO as a Risk Taker – Ability to place bets and prove outcomes
  4. CIO as a Learner – Ability to invest time in enhancing personal proficiency

Not all these traits can be gained academically by attending a few training programs. CIOs have to demonstrate through sustained actions and prove their capability to the leadership.

CIO as a Business Proponent

CIOs should gain the ability to view and analyse business holistically across functions and operations. They need to understand the current business imperatives and the future direction and pro-actively assess how they can build the bridge to the future through technology.

business-1370984_1920Contributing to the Decision Making – The businesses of today operate in an increasingly complex environment requiring rapid responses to solving issues.  Decisions on markets or customers need to be taken quickly and effectively. A long lead time between a request for some information and supplying that information would weaken the decision process, a situation companies wish to avoid.  CIOs as the custodians of IT applications and infrastructure have larger control on the data their organizations accumulate. CIOs should make the effort to bring in a data based decision process by pro-actively identifying decision areas or red flags, employing appropriate data mining and analytics tools and providing relevant information to the CxOs, instead of waiting for the requests.

Participating in Business Reviews – As a corollary to the above, CIOs should offer to participate and contribute to the business reviews by sharing their observations of business and making presentations on the companies’ performance as supported by the data.  During the meetings, it is important for the CIOs to see the situations from the business point of view than the comfortable technology view and make recommendations on possible course of actions on the business front. It may be difficult to convince the business leaders and be recognized as a serious contributor in the initial stages, but a relentless persuasion using data can change the minds of the leaders.

CIO as a Team Builder

If the CIOs have to focus more on strategic affairs, they have lay the foundation and build a strong IT organization that can run efficiently and manage the regular demands with little supervision. IT delivery is always a team work considering the range of skills required. Poor team structure leads to inept resourcing, inability to resolve operational issues and other risks reducing the CIOs to fire-fighting mode and severely restricting them to do justice to their ‘C’ tag.

Running IT department as a business – CIOs should attempt to run their departments like a business right from developing a vision, formulating and communicating clear objectives, documenting the business plan, following consistent measurement systems and all the works. CIOs also need to publish the monthly / quarterly performance for the stakeholders to communicate the hits and misses of the department.   Another important indicator of the way the IT organizations function is how the IT budgets are structured. There have been a number of studies which point out that more than 70% of the IT costs are spent on maintenance of existing systems leaving a much smaller share for future requirements. If their organization suffers from this issue, the CIOs should make effort to swap this ratio as early as they can. They need to re-orient their approach to budgeting and evaluate measures towards running the existing operations tightly and investing for the future.

Building a high performance team – A team that is self-sufficient and empowered can relieve the CIOs from the daily chores. An approach CIOs could consider is structuring the team differently for the current operations and the future requirements. The ‘Run’ team (managing current operations) would stress on governance, risk mitigation and continuous improvements. The team for the future would be more risk taking, working closer with the business functions and willing to experiment. Overall, the CIOs should bring in a culture of ideation, customer orientation and knowledge sharing.

CIO as a Risk Taker

A key characteristic of C-Suite leaders is their ability to take risks and lead from the front on new initiatives.  For companies, the digital transformation is about placing bets on a number of technologies that are in the offer and choose the right mix and scope of such technologies. CIO is best placed to explore and bring these technologies to the business. There may be many first time attempts which may not provide the required results and thus may require multiple trials. CIO should take such risks considering that the value of successful attempts even if they are small in number will far outweigh the value of large number of failed attempts. Most CIOs are normally tuned to taking up safe projects that are proven in the industry and taking bets is not natural to them.

Gaining Value by Loosening Control: Many CIOs still believe having direct control on IT assets is key to managing them well and probably to their survival.  They wish to own the software, locate datacenters in proximity, restrict access to data, have their team working under their eyes and get involved in procurement of all IT needs. However, as the technology becomes more pervasive and widely spread-out, decentralizing is crucial to get the best results. CIOS should identify areas where decentralizing can help, establish guidelines and facilitate business functions to support themselves to the extent required.

Bets on Automation: The availability of multiple technologies across the operating spectrum has provided the organizations the tools to drastically enhance the automation levels and reduce manual dependencies.  The options can be overwhelming and risky but CIOs should make those bets and move into a continuous  process of prototyping and rollout across these technologies instead of waiting for them to be proven in the industry and taking them in a bing-bang’ approach. They also need to learn to put together a business case quickly for the changes they propose and continuously evaluate the results against the business case and take corrective actions.

CIO as a Learner

The most important quality among all is the ability of the CIOs to push themselves on to a continuous learning path. On one hand we see the business getting more complex and dynamic and on the other hand, we see an exponential change in technology.  Some get hyped and die soon and some really prove their worth to the business.  CEOs and CxOs often turn to the CIOs to get their perspective on what will work and what will not for their businesses. Only a continuous learning process will help to be on top of the situation.

CIOs need to dedicate a few hours every week towards learning the business and technology developments through primary and secondary sources. It may help to have clear learning goals and plans not just for them but also for their team members.  The advent of MOOC, for instance has transformed the learning process offering a number of courses on business and technology and a majority of them free.

Looking into the future – CIOs typically would have a good knowledge of the on-going activities of the company due to his and his department’s involvement in the day-to-day support. It is equally important to understand as much the vision and direction of the company. There is no better person than the CEO to articulate them be it on the emerging areas where the company is looking for growth in the immediate term or future areas where the company would find itself in the longer term. CIOs would need to linkup to their CEOs or CEO’s office on learning sessions and on similar lines connect with CxOs for their perspectives. They should also get into the habit of doing research through secondary sources to understand the industry, market and competition.

mark-516277_1920Strengthening the fundamentals – CIOs need to invest substantial time to strengthen their business fundamentals and they can do this by seconding themselves to work in another function. Most of the time, their knowledge of the business is based what the functional people say than what they themselves experience.   They could spend a few days in Sales to understand say customer journey cycle or with supply chain to know the distribution challenges. They have to pro-actively seek time from other CxOs for one-on-one sessions for a constructive exchange of ideas on business and technology and in the process figure out ways to power business through technology.

Developing Technology Proficiency:  CIOs should keep track of the progress of their domains in the industry. There are a number of ways CIOs can equip themselves with the developments. Industry seminars, CIO forums and peer groups discussions provide great learning experiences.  CIOs should encourage his team to build knowledge portals and share their learnings and articles of interest. There is a tendency to learn through ‘trial and error’ which may be individual oriented have a high rate of ‘giving up’, instead CIOs should move their team towards a group learning process and be themselves active in that learning circle.

Developing Personal Proficiency: As the CIOs will become key influencers, it will help their cause if they consciously develop in them certain fundamental skills that make c-suite executives stand out. Clarity in communication, compelling presentations, preparing clear business cases, being ease with numbers are some traits commonly observed among the C-suite executives.  This is important for the CIOs as they present business cases, they need to avoid technical jargons, use the business taxonomy and more importantly articulate the business benefits than technology specifications.   Further, managerial skills that a CIO ought to be proficient in, like stakeholder management – understanding their positions and converting the opponents –change management, program management continue to be critical qualities that CIOs should invest further.

Character Shifts

So, here is a summary of what can be some o f the key shifts for the CIOs:

From

To

Technology geek Business leader
Order taking Direction setting
Functional impact Organizational impact, seeing ‘Big-Picture’
Sequential / linear thinking Multi-tasking, addressing inter-dependencies
Measuring cost and time Measure outcomes
Control freak Facilitator

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It is indeed an interesting time to be a CIO. The renowned computer scientist Ray Kurzwel  said in the beginning of this century that the progress in technology in 21st century will be more like 20,000 years of progress at the prevailing rate that time. He defined it as ‘Law of Accelerating Returns’ where the ‘returns’, be it chip speed or cost effectiveness would increase exponentially.   As the technology is making deep inroads into businesses, CIOs are best placed to bring about the changes rapidly and effectively.  Locking the opportunities coming their way and being the one to take the initiative and risks, would make the CIOs central figures to orchestrate the business transformation and be recognized as one among the C-suite  leaders and move further to become part of the Board.

In the article “Unlocking the performance of a CIO”, the author Joe Peppard quotes a CIO who urged other CIOs to ask this question, “ Are you a business leader with special responsibility for IT or are you an IT leader delivering to business”.  The time has come for the CIOs from being the latter to becoming the former.

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A Case for a Position of Information Technology Operating Officer (IT-OO)

An IT-OO can help a CIO take up a more strategic role in the company by taking over and running the IT operations much as the same way a COO would run the operations at a company level.

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The need to go Digital is one of the top agenda items for the forward looking companies now. There is a strong belief in these companies that IT is crucial to become digital and achieve growth at a faster pace. The business divisions that would treat IT at arm’s-length and look at them on need basis now see them as an able partner who can stand with them to realise their departmental goals.

A major consequence of the digitization journey is the changing role of a CIO – a subject that is often discussed among the CIO fraternity, in the management forums and even in the Board rooms. A variety of perspectives can be seen in thought leadership articles and debates.  If we have to summarise the substance of such discussions it could run as follows: CEOs expect CIOs to play a more strategic role and contribute towards setting the direction for the company, a CIO has to step up as an advisor to the business and even seek a position in the Board and he/she should get away from operations mindset and devote more time towards enabling new business propositions.

One of the approaches suggested as part the IT re-organization and the role of CIO is for companies to implement a two-speed IT architecture that brings in the capability to develop customer facing processes rapidly and at the same time follow the regular possibly slower speed for the back-end systems management.  As we see the focus shifting to futuristic IT structure and CIO and recommendations on achieving them, a key aspect that is not deliberated much in this debate is continuity that is required for core back-end systems that support the existing operations of the companies. Several companies have implemented ERP solutions or equivalent investing heavily in software, infrastructure and training with the expectation that they will serve the company for several more years. Moreover, such investments require adequate maintenance so as to get the best out of them.  Hence, this article is not about the changing role of CIO, instead is on creating a leadership role for managing the back-end core systems. The role can be compared to that of a Chief Operating Officer (COO) that oversees the operations of the company and hence can be called as IT Operating Officer (IT-OO).

Explaining IT-OO

The need for an IT-OO can looked at from the following lines of argument:

  1. to give due importance to existing operations of the company
  2. to avoid possible dilution of the emerging role of a CIO
  3. to align the IT operations and changes to the strategy of the company

The mandate for the IT-OO could be:

  • Provide necessary support to running the business on a day-to-day basis
  • Keep the costs as low as possible
  • Assemble and manage a team with the requisite expertise and provide the ample opportunities for career growth
  • Adopt leading practices in the areas of governance, risk management and security

IT-OO will work under the overall direction of the CIO but will be empowered in matters related to legacy systems.  We propose three major work areas of an IT-OO.  There could be areas bordering existing and emerging businesses which need not be construed as conflicts but balanced as deemed right by the CIO.

Business Partnership

The business partnership requires an ‘external’ focus. Key responsibilities will include effectively engaging with businesses (internal customers and through them possibly external customers) on one side and vendors / service providers on the other side.  IT-OO would work closely with the business to understand and fulfill on-going requirements, provide the required support and bring about improvements where necessary. On the other side, he/she would work with the vendors supporting the legacy systems to get the best value from them.

A key aspect of the business partnership is to manage the expectation of the customers and to moderate their demands that require investments beyond the plan. This may be crucial when improvements that are brought in at the customer facing front-end processes that are work-in-process conflict with the back-end demands. To achieve this, an IT-OO will have adopt a more pro-active approach to engaging with the business and learn the art of stakeholder management.

IT Operations

IT Operations demand an ‘internal’ focus. The operations cover primarily application and data centre maintenance, data management, governance and team management. In addition to regular maintenance tasks, IT-OO should be in a position to take up projects that bring about improvements towards on-going maintenance. The governance may include adopting industry leading practices for systems maintenance and upgrades that cover areas like security, risk mitigation, regulatory compliance management and quality audits.

A key aspect of IT operations will be budgeting and control. Studies show that in most of the companies more than 70% IT costs is incurred towards upkeep of the legacy systems leaving very little share for investing in emerging areas.  IT OO would be tasked with preparing and controlling a budget that could be clearly distinguished from the budget for emerging areas. Deviations, if any could be allowed only with a support of a strong business case.

Another key aspect of IT-OO’s responsibilities will be to direct and oversee the performance of the team associated with the legacy systems. This assumes greater significance if there is a parallel team working on emerging areas leading comparisons such as new Vs old.  IT-OO could work out methods like job rotation that would give the team chances to work on new technologies and experience new ways of solving company’s problems.

Alignment to two-speed architecture

The alignment decisions will cover transitioning new technologies that are rolled-out into maintenance portfolio after a settling time, sun setting legacy applications and adopting a continuous process to re-organize the legacy portfolio for better upkeep.

A key aspect of the alignment is to synchronise the legacy back-end with the emerging front-end and take care of the integration demands. This assumes greater significance when the alignment has to consider a number smaller scope services being rolled out in the front-end sometimes may be quickly discarded or revamped based on customer feedback. Overall, IT-OO has to ensure the ‘business-as-usual’ is not disturbed and at the same time ensure the two-speed approach works efficiently.

empty-choice-diagram-2-1614759A Comparison with the Role of COO

Why do we have to call this position IT-OO? There are a lot of similarities between what the Chief Operating Officer (COO) does for a company to what IT OO would do to IT.  Here are a few points:

COO

IT-OO

Overseas day-to-day operations of the company under the direction of the CEO Overseas day-to-day operations of IT under the direction of the CIO
A “head-down” approach to business compared to “head-up” approach of CEO (to look into the future) A “head-down” approach to IT compared to “head-up” approach of CEO (to look at fulfilling emerging business requirements)
Creates operating policies Responsible for IT policies and governance
Works with departments to coordinate tasks and resolve conflicts Works with departments to fulfil on-going requirements for IT and prioritize tasks. Resolves conflicts of back-end and front-end synchronisation
Helps synchronise the existing resources to new investments Helps synchronise legacy back-end to emerging front-end

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As Companies are testing out two-speed IT, a CIO may have to spread his/ her efforts really thin if he/she has to manage the two-speed structure. By bringing in an IT-OO, CIO can focus more on strategic aspects leaving the running of the operations to IT-OO. The success of this position would depend on the autonomy provided to the role and not a subservient one to the CIO.

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Digital – A Perspective

Digital’s progress is signified by six trends we have witnessed in the recent times. Digital initiatives in turn influences these trends to become mainstream.

The terms ‘Digital’ and ‘Disruption’, either independently or combined with each other or combined with other terms (‘Digital Economy’, ‘Digital Quotient’,  or ‘Disruptive Models’) can be found in the top  bracket of the business lexicon now-a-days and so much so that if the usage trend continues these will possibly stake claim for the ‘word(s) of the year’.  In the recent times, there have been many definitions, point-of-views and scholarly discussions on ‘what’ and ‘how’ of Digital. We also see some early actions as service providers rush to their clients with their digital offerings and claim break-throughs in deals and CIOs indicate digital as their top priority justifying the hype.  However,  there is still a lot of mystery surrounds these concepts and the fact remains that the businesses are still unsure of what is in it for them though there are making attempts to explore and learn from the early forays of the peers.

If we read through some thought leadership articles, hear what CIOs have to say or go through the service offerings of vendors, Digital seems to mean different things to different people. More content gets added every passing day. In such a situation, adding more substance may possibly add to more confusion; alternately if we think positive such content may also help get more clarity. Hence, here is a stab at unpacking Digital and the impact it may have on the businesses.

This perspective is influenced by six trends we have witnessed in the technology domain in the recent times. These trends have caused considerable shifts in the way technology is perceived and used and may have played a role in shaping the advancement of Digital either independently or collectively.  Before we look at these trends, it may be worthwhile to share what we consider as the basic tenets of digital. There seems some agreement on these tenets in the industry albeit at a high level. One, digital is not a technology or a set of technologies but ways of running the operations efficiently with technology at its core; two, it is not a pre-defined template that is applied to business problems but an approach to anticipate and avoid problems; three, it is not just automation of customer processes but ways of converging the organisation towards better customer engagement and experience and finally it is not a goal or a destination but a journey to achieve sustained growth.

Working from this premise, we can see how these trends have influenced the advancement of Digital which in turn is transforming these trends into mainstream and thus the evolution becomes iterative.  There is nothing like a project or a method when completed would make a company Digital. However, riding on these six trends may make an organisation become more digital.

  1. Technology powered business models

result-1In the past, technology was seen as an ‘enabler’ that supports the business goals and solves problems.  The problems could range from managing large volume of customer accounts for a bank or making inventory visible across the supply chain for a manufacturing firm or bringing transparency in contracts for a government. The demands of the business would determine the choice of technologies and for the choice to be proper, the specifications have to be clear. Thus IT always followed the business and enabled the requirements.

There has been a role reversal in the recent times in that the technology can determine the business. The advancements in technology have powered new business models that are entirely technology driven. The growth of e-commerce and the emergence of new age companies like Uber and Airbnb are prime examples of the role reversal.   The term ‘disruption’ is associated with these companies and rightly so. These companies had technology define their businesses and went further to change the way people interact with them. To book a taxi through Uber or a room through Airbnb, the customers would need to use a technology. The success of these enterprises can be expected to rub on to traditional companies in many ways than one and may prompt them to look at technology with a different perspective to see if there is an ‘uberization’ opportunity.

  1. IT in the Board

If you pore over the organization structure of yesteryear companies, you will find IT represented as a box possibly buried under finance or operations rarely making it to the top layer reporting to the CEO. In these organizations the CIO was never a ‘CxO’ , a label normally reserved for top management.

Cut to today, with technology gaining more traction, playing a more crucial role in running the businesses, IT  has moved out of the box and is longer a function or a department but has become a partner in business to the other functions. CIOs are more frequently seen in Board deliberations and slowly gaining the role of advisor to the business, a major shift from the past where he/she was taking orders from the business.  Traditional consumption of IT was largely in the areas of Finance, Production, Procurement and Sales where transaction processing was crucial. Increasingly we see functions like Marketing becoming major users applying IT to customer profiling, campaigns and promotions. Digital Marketing, Social Media integration and automated campaigns are routinely discussed by the Marketers with their technology teams.

  1. Empowered Customers

Businesses know that their customers have 24/7 access to information on the go thanks to proliferation of mobile and other pervasive devices. They also know that their customers are much smarter in using the technology and capable of doing research using multiple sources before making their purchase decisions. Social media has added another dimension where opinions/feedback are shared at will that greatly influence buying behavior of the customers.  An experience of a poor delivery or a bad service spreads fast in the virtual world that keeps the companies on their toes to track and address problems instantaneously.  With the market expanding and customers getting more options to source their requirements from, they become fickle minded and more demanding. On the other hand, companies make all out efforts to retain their customers, work towards brand loyalty and look to reach out to them in as many ways as possible. When the communication channels go up, customers expect to have the same experience across the channels thus forcing the companies to address the demands with cutting-edge technology.

  1. Data for Decisions

As the businesses go global and the competition intensifies for the same set of customers, data in various forms – structured or unstructured, from variety of sources – internal or external – become a powerful source in understanding the customers better. Analytics that crunches massive amount of data to see hitherto unknown patterns of market and customer behavior, has taken centre stage in most companies. Developments in the areas of Big Data have extended the scope of analysis and the insights gained from the analysis are fed into improving existing products and designing new products that are centred around the needs and aspirations of the customers. IT teams are suddenly augmented with new disciplines such as data sciences and statistics.

  1. Connected Devices

The ‘Connected Life’ is becoming a reality with the prediction that there will be an exponential growth in more and more devices getting connected on to internet. From industries such as mining to construction to customer appliances, plethora of devices can possibly store and transmit data providing multiple possibilities in managing the physical assets and using the data for variety of applications such as supply chain efficiencies in factories and health monitoring of individuals. Though early stages, companies are attempting to explore areas where they can bring in next level of automation and data convergence to make better market decisions. The significant shift will be when the data from the connected devices will be used for not just for problem detection but also for predictions, course corrections and risk mitigation.

  1. New Model Sourcing

Cloud computing, ‘As-a-Service’ delivery models Thumbs up in business or life indicating successhave provided companies  completely new methods of procuring and managing technology.  The benefits that come with such sourcing models such as capex-to-opex shifts, outsourced support and maintenance, demand alignment have already been proved in the market and these use cases have sufficiently moved from the concept stage into execution.   These services have direct impact on resource utilization of the businesses. Even today, a large portion of the IT budget is locked up for maintenance leaving very little for ‘future-ready’ technologies. With such cost saving services at their disposal, companies can look at their IT budgets differently, moving from single-minded focus on cost-cutting to revenue enhancing investments.

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The business environment is getting more complex and volatile and companies have come around to accept the ‘new normal’ in their respective domains.  Technology can play a crucial role in managing the complexities by helping companies become Digital.  These trends signify the shift to become Digital is multi-dimensional and as the adoption rate in these dimensions increases, we will see more developments resulting in strong technology driven organizations of the future.

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