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Back To Basics — IT Strategy In Turbulent Times |
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By Alexander Peters, Ph.D.
In this tough global economy, your firm must innovate with less. For you - as a CIO- this means pursuing two apparently orthogonal strategies in parallel: reduce costs through higher efficiencies in operations, while in parallel investing in technology-enabled capabilities to boost productivity improvements and innovation.
A first step for making this “innovate-with-less” strategy work is to eliminate duplicate, fragmented and non-standardized assets and processes by applying disciplined consolidations. A second one is to transform the consolidated capabilities into services by employing an IT-as-a-Service approach to funding and sourcing. The key challenge is however to make these services more relevant to the business. To maximize their value you will need to operate them as a portfolio able to respond to varied business requirements.
There are three basic service archetypes you can use to segment and manage this portfolio of business technology services: 1) Utility services, such as running the network or the payroll process and performing corrective systems maintenance, keep the business running; 2) productivity improvement services enhance existing business and IT capabilities (e.g., they perform component replacements and service enhancements on time and on budget; 3) innovation services change the business through new processes, products, and interactions with customers and suppliers. In addition, there is the fourth archetype –orchestrate and analyze the business’ activity patterns holistically and develop and manage the best mix of services in all other categories — utility, productivity improvement, and innovation — for optimal business results at the enterprise level.
The focus on orchestration changes your role in the enterprise – from being a traditional supplier and integrator of technology to a business technology demand manager - a catalyst and engine of change and innovation.
Demand management is not only about understanding and anticipating business opportunities and analyzing business activity patterns. Smart CIOs give it a new meaning by pushing and influencing the business' drive for innovation, seizing opportunities, sizing capacities, and ensuring that professionalized provisioning functions seamlessly deliver the expected value.
To make demand management and orchestration work you will need to consistently focus on executing a few best practices. There are the same practices that have helped many winning organizations to outperform their peers regardless of the economic conditions. They have been identified through the Harvard Business School's (HBS's) Evergreen Project, which analyzed the impact of 200 different management "best practices" on the performance of 160 business organizations over a time period of 10 years — looking at broad areas such as strategy, innovation, and business processes and at specific practices such as 360-degree feedback, supply chain management, and the use of intranets.
HBS researchers found that it is most beneficial to master four primary management practices which address: 1) strategy — build your strategy on deep knowledge of your target customers and your company's capabilities; 2) execution — streamline operational processes to consistently meet, not exceed, customer expectations; 3) structure — create a fast, flexible, and flat structure that reduces bureaucracy and simplifies work; and 4) culture — develop and maintain a performance-oriented culture that holds individuals and teams to unyielding performance expectations.
HBS researchers also identified four additional practices but found that firms needed to excel at only two of these four to be successful. These practices are 1) leadership — successful companies' leaders are committed to the business; 2) talent — hold on to talented employees and find more; 3) mergers and partnerships — forge partnership deals that best use both partners' talents, and develop a systematic way of identifying, screening, and closing such deals; and 4) innovation — use new technologies to enhance all operations, not just product development.
You can translate these insights into actions that make up a successful IT strategy.
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