The CIO's Growing Role: IT and Innovation
As 2011 gets into high-gear, we are seeing the predicted IT spending increases come to pass; with companies often shifting their focus from cost-cutting initiatives to growth and innovation projects.
Accompanying this spending increase is a shift in the role of the CIO towards an architect for business innovation. This increased, highly visible responsibility creates additional drains on CIOs’ already limited bandwidth, thus establishing a need to build a framework for innovation that is efficient, creative, fact-based and that supports efficient time management.
How to deliver strategic value: A road map for CIOs
The CIO’s role has been evolving constantly over the last 10 years, and the integration of technology into every facet of an organization has only accelerated the pace of change. Looking toward 2011 and beyond, we see the scope of responsibilities and expectations for CIOs to deliver business results growing dramatically, resulting in an ever-growing workload. Key to this rapid increase is the CIO’s new role as thought leader for business innovation.
IT leaders often are expected to develop strategies that boost revenues, cut costs, and help ensure regulatory compliance. Adding the new wrinkle of innovation leader, CIOs also are being called on to unearth and architect differentiating solutions. These solutions are expected to drive measurable improvements in customer experience, deliver increased revenues, and deliver higher margins through advanced tools that can be integrated throughout the enterprise and across the supply chain. While some solutions may sound familiar, the expectation has shifted from simply choosing new tools to delivering game-changing results.
The common thread among these expectations isn’t the technology but the innovation and the speed with which the innovation takes place. The explosion over the past two years of personal computing devices is an example of the speed of innovation.
After Apple introduced the iPad in April 2010, for instance, employees everywhere immediately began purchasing it and trying to use them for a combination of personal and business purposes. This single product spawned an entire industry of application developers that created software built to solve specific and real problems related to using these computing devices in the workplace.
Innovative CIOs quickly realized not only the power of personal devices but anticipated the rapidly increasing bring-your-own-device (BYOD) to work trend and adapted to make the tools useful in the workplace. Issues quickly arose such as how to support devices, ensure security, adhere to acceptable use policy, and handle reimbursement. Organizations look to their CIOs to provide answers to these tactical questions without losing sight of the strategic opportunity that exists in the disruption that can be caused by any technology innovation.
This growing list of responsibilities that comes with virtually unlimited technological options shows no signs of slowing. At the same time, CEOs continue to look to CIOs for answers to fundamental issues such as obtaining more business intelligence and having better financial reporting. CFOs continue to emphasize cost savings and operational efficiency. To help control their expanding responsibilities, CIOs increasingly are relying on strong frameworks to pull everything together.
In the current climate of overwhelming choice between a lot of good IT investment, how should CIOs prioritize the many projects competing for their attention to ensure IT supports business strategy? From formulating a budget that can support critical objectives to determining return on investment (ROI) for each project, it’s critical that CIOs develop a framework to bring order and focus to their strategy.
A road map is a planning model that takes a comprehensive view of an organization’s possible initiatives and communicates the initiatives visibly and concisely. It is a proven tool to help ensure that a company’s execution strategy is coherent and can be translated effectively into action. By directing leaders to identify and prioritize projects, a road map helps to lay out an orderly, methodical timetable in which to accomplish objectives. And since the development of a road map requires collaboration among top leaders, it also improves accountability and transparency around projects.
The CIO has many strategic planning tools to draw on, but a well-executed road map takes a holistic view of the suite of projects. In the modern organization, few projects are solely IT projects -- most are business challenges for which IT is an integral part of the solution.
Technology has become so intertwined in the operations of every function and department that it can no longer be approached as a freestanding component. As a result, a road map forces CIOs to understand the dependencies within and across functions and departments before embarking on projects.
Developing an effective road map
A good IT roadmap can quickly put a CIO’s plans into a format that technical and nontechnical resources can understand; thus avoiding the risk of wasted spending and lost time that can result from taking a less structured approach to planning. To formulate a road map, CIOs should follow these six steps:
Understand and build alignment - Before a company can select a business direction, executives should be aligned on that strategy and direction. CIOs should engage top executives and stakeholders to evaluate considerations such as how the company serves customers, where it falls among the competition, how it uses information and technology, and what its alliance is with business partners.
Understanding these issues, translating them to goals, and determining the value of what’s important, helps CIOs focus on where top priorities lay.
Identify opportunities - Next, CIOs should generate a list of potential projects and improvements, including innovative game-changing ideas that deliver the values defined with executives during alignment building sessions. It’s also important to recognize that in many cases IT solutions must be coupled with process improvements to achieve a desired outcome. For example, implementing demand management solutions won’t deliver greater efficiency and savings if process bottlenecks impede collaboration among departments.
Assess impact - Potential projects should then be evaluated to determine which ones would have the greatest impact on the organization from a strategic, operational, and financial perspective. For each project, CIOs should work with management to compile a list of key dependencies and risks, current IT assets, estimated ROI and time-to-value, required resources, and critical success factors such as improvement to working capital, reductions in risk, or increased earnings.
Prioritize initiatives - With this impact analysis in hand, CIOs can begin to rank projects and opportunities by considering critical factors such as the timing and sequence, barriers to implementation, resource constraints, risks, and strategic importance.
Many organizations falter in this step because they aren’t realistic about the costs, resources, and time needed to manage projects. Organizations also risk either getting bogged down early in the process and losing steam or trying to do everything at once.
One way to address these challenges is to build a heat map -- a graphic illustration of where value lies across a range of initiatives -- that takes into account the organization’s strategy. In many cases, this prioritization exercise is coupled with a boundary setting exercise that establishes rules for projects based on factors such as geography, governance, and whether it’s more advantageous to build versus buy.
Plan resources - CIOs then must evaluate their organization’s capacity to manage and complete projects. When planning a project, organizations gauge internal resource availability and existing priorities. Other considerations include determining the risk of pulling line-level leaders away from current responsibilities to work on a strategic initiative with no strong back-fill to cover for them.
It is better to wait until back-fill resources are in place and up to speed before launching an initiative and risking day-to-day operations. For this reason, the first step in a road map simply might be planning and securing resources well in advance of building a solution or engaging third parties.
To avoid delaying projects or derailing them midstream, CIOs should recognize how the sequence and timing of projects will affect staffing levels.
Execute - A key to execution is maintaining momentum and stakeholder support. Therefore, CIOs should consider scheduling easy wins in the initial stages to gain enough momentum to sustain the initiative. This may lead to early wins such as simplifying a business process ahead of applying technology or upgrading some equipment to improve processing time.
While these early wins are not necessarily the game changers that CIOs need to deliver, they build the proper foundation to sustain momentum. In addition, CIOs will need to monitor projects and report on progress to the board at regular intervals to address any issues before they erode the organization’s appetite to complete all projects.
Seizing the opportunity
In this challenging new environment, CIOs will need to build a new set of skills to drive innovation and implement the series of projects necessary to generate measurable business results. On a fundamental level, it’s a matter of professional survival: those who aren’t effective won’t last long. However, CIOs that learn to adapt and use strategic planning tools such as road maps will be rewarded with high-profile opportunities to exert more influence on the organization.
Jeff Shaffer is with Crowe Horwath, one of the largest public accounting and consulting firms in the U.S. He can be reached at his Chicago office at 312.899.4493 or firstname.lastname@example.org.
Doug Schrock is a principal with Crowe in the New York office. He can be reached at 212.572.5545 or email@example.com
Under its core purpose of “Building Value with Values,” Crowe assists public and private company clients in reaching their goals through audit, tax, advisory, risk and performance services. With 26 offices and 2,400 personnel, Crowe is recognized by many organizations as one of the country's best places to work. Crowe serves clients worldwide as an independent member of Crowe Horwath International, one of the largest networks in the world, consisting of more than 140 independent accounting and management consulting firms with offices in more than 400 cities around the world.