The days of pure infrastructure IT, in which the CIO is responsible for little more than feeds and speeds, are ending. The path of modern CIO success requires meeting expectations from the business while reducing costs and finding ways to drive innovation. Because these goals can appear mutually exclusive, accomplishing all three together is a significant CIO challenge.
During a CxOTalk conversation with three senior IT leaders at Intel, we discussed their model for transforming IT into a genuine strategic partner with the business.
In advisory sessions with CIOs and their direct reports, IT transformation is one of the critical themes that arises most often. The significant challenge exists because developing a strategic relationship between IT and the business is a multi-faceted effort that demands change and adaptation on both sides.
The following 12-minute video summarizes the rich discussion with Intel. You can also watch the entire conversation here. The video is valuable because it distills the practical experience and wisdom of people driving IT transformation on a daily basis. I learned a lot during the discussion and am sure you will as well.
Intel uses a pyramid, shown below, to explain IT leadership in three stages: operational excellence, business partnership, and strategic contribution. The pyramid reflects the complex reality of IT / business relationships and the need for IT to deliver at multiple levels simultaneously. This approach offers a practical means for IT to address achieve goals that otherwise may appear to be in conflict.
Operational excellence.David Aires, Vice President and General Manager for IT Operations at Intel, explains that partnership results from a value chain that links basic infrastructure to the final user experience of IT customers, some of whom may be external to Intel. He says, "Delivering operational excellence across all of IT in everything we do," creates the foundation for building increasingly valuable relationships with the business.
It is important to understand that operational excellence encompasses "every aspect of basic delivery within IT," not just infrastructure. From delivering projects on time, to running the help desk and keeping customers satisfied, operational excellence is the starting point of partnership with the business:
If you don’t do this part with excellence, no one will let you go up the pyramid. If you can’t keep the network operational, nobody will listen to your ideas on how to improve their business or design their business models. So, we have to do the operational excellence piece extraordinarily well just to get a seat at the table for the higher value activities.
Business partnership. The next layer of the pyramid involves building on operational excellence to collaborate with the business, thus earning the right to influence business decisions.
At this stage, IT is no longer just a cost added to the business; it helps the company gain a return on that cost by adding business value. Aziz Safa, Vice President and General Manager of Enterprise Apps & App Strategy, suggests looking at business gaps to find ways that can leverage IT to solve business problems. He gives an example from Intel’s manufacturing operation.
Intel manufacturing operations include the steps sort, final assembly, and test. Historically, Intel tested parts at sort and again during the later test phase; however, data from the initial test was unavailable to the final testing operation. By developing a means to carry initial test data forward to the final stage testing, IT "dramatically" reduced costs and time to market.
Business transformation. After developing excellent operational capabilities and delivering business value, IT can help enable strategic and transformative changes to help the company grow.
Darcy Ortiz, General Manager of the CIO Strategy Office at Intel, explain the need for a new mindset in both IT and the business. Typically, she says, IT projects deliver technology systems on time, within budget, and with similar project-oriented metrics and expectations. Although she wants to deliver IT systems that meet traditional expectations, the real objective is achieving “big hairy, audacious” business goals. The focus is on business improvement rather than IT projects.
Accomplishing business goals requires that IT collaborate with the business because IT cannot control all the business objectives or actions required to execute and achieve them. The solution, therefore, is a conversation that brings IT to the table, contributing jointly with the business to develop shared goals and solve problems together.
Three ways to increase IT value
The Intel discussion highlighted several ways to drive higher value relationships between IT and the larger organization.
Understand the customer. David Aires notes that everyone who adds value in the company has to deliver a result to someone else. The customer is whoever is receiving the output for a particular activity.
Ultimately, it is necessary to align the efforts of IT and the business together, to meet the needs of the external person who actually pays the bills. Having clarity around the customer’s identity, and their needs is necessary for IT to deliver the right value, activities, and results.
At the same time, create a true customer service mindset within IT. Take the initiative to solve the customer’s problem without following a rulebook and without saying "no." When IT defaults to "yes" with customers, great things happen!
Engage the business. In many companies, people in the business view IT strictly in functional terms at the bottom of the pyramid. To overcome this perception, find ways to help people in the business see that IT can deliver real value. Doing so requires relationship building and effort to understand the real business goals then align IT activities around them.
Start by building the base layer, showing where you can add value and demonstrating that IT has the capability to deliver results, which will eventually help the business increase confidence in IT. Some groups may be skeptical, and it will take time to develop those relationships, while others may welcome IT and embrace the opportunity to work together.
Without these relationships, IT will remain at an operational level, and the company will not benefit from the value that IT can offer. It must learn to perform at a level where you get beyond the conversation about the most mistakes or outages; ask business partners for the opportunity to allow IT to contribute at a higher level.
Earn a seat at the table. Start by demonstrating a history of repeatable and flawless performance. However, the IT organization must set the bar higher than delivering operational excellence alone. Invite innovation into the business relationship, so IT evolves to the point where it has sufficient credibility and opportunity to support real transformation on important issues.
CxOTalk brings together prominent executives, authors, and analysts to discuss business leadership and innovation. Conducted live and unscripted on open video, CxOTalk offers a rich source of thought leadership from the top practitioners and thinkers in the world. Join co-host, Vala Afshar, and me every Friday for a new episode of CxOTalk. We are grateful to Intel for sponsoring this episode.