How to catapult your IT value? Rethink the IT operating model

In episode #721 of CXOTalk, the chief information officer of HPE explains how she aligns IT operations with the company's business strategy. Read on to learn how weaving the customer's perspective into the core of IT activities can catapult your value to new levels.
Written by Michael Krigsman, Contributor

Chief information officers often talk about their "IT operating model." This overly complex term describes the core activities needed to run an IT organization.

IT does not exist in a vacuum. It serves specific business needs with operational responsibilities linked to revenue, cost, and risk. An IT operating model helps ensure that IT maintains operational excellence, delivers the right services to stakeholders, and supports the overall business direction and strategy.

Gartner defines the IT operating model this way:

An operating model is the blueprint for how value will be created and delivered to target customers. An operating model brings the business model to life; it executes the business model. An information and technology (I&T) operating model represents how an organization orchestrates its I&T capabilities to achieve its strategic objectives. An enterprise operating model describes how the enterprise configures its capabilities to execute its actions to deliver business outcomes as defined in the business model.

However you define it, an operating model helps the CIO prioritize investments of time and money to achieve maximum impact for the organization.

Every IT operating model should include three points:

  • The organization's business strategy and performance goals
  • Customer expectations and the lever points that create value for customers
  • Tools and technologies that enable the business to achieve its goals and deliver value

To explore the practical role of IT in delivering value to a large organization and its customers, I asked the CIO of HPE, Rashmi Kumar, to join me on episode number 721 of the CXOTalk series of conversations with people shaping our world.

The conversation with Rashmi includes a discussion of CIO innovation and a deep dive into the role of women in technology.

Watch our conversation in the video above, read the complete transcript, and listen to the podcast (iTunes, Spotify). The comments following are an edited summary of the key points we discussed.

How should CIOs bring in the customer perspective?

There are frameworks and training that companies can use. I started from TQM (total quality improvement). I worked at Toyota, so I've looked at kaizen, six sigma at many places, and now it's design thinking. All these frameworks talk about the voice of the customer and value stream maps. Understand where you are delivering value to customers.

As CIOs, we should put customers first and not have technology drive decisions around implementation. Let your customers drive the technology.

I work a lot with the startup ecosystem, coaching companies. This is what I tell them as well. Don't try to solve a technology problem. Try to solve a customer problem.

Product/market fit, which Andreessen talks about, is important for us as CIOs to keep our mindset nimble. To think like an entrepreneur to leapfrog our companies – mostly, I work for traditional companies – into that next generation of companies that we compete with right now.

What's your IT planning process?

I grew up in the architecture world, so I spend time building vision, strategy, and roadmaps. I'm classically trained to start at a value chain of the company.

Take a look at how we serve businesses. The approach is not unique to a technology company. I've worked in utilities. I've worked in financial services. I've worked in entertainment.

In every business today, the way customers want to consume services is changing at unprecedented speed.

  • If you look at entertainment, it has become about content. It's no more about the DVDs or theaters and things like that.
  • If you look at a car, now it's a mobility problem. It's not a car problem.
  • If you look at utilities, they are building data flow along with electron flow, and the business models are changing.

As we think about what we need in our employees, in our resources to drive this, start at how a company serves its customers. That's what I call the value chain. Go down to the next level and understand the capabilities we have enabled by technology. Where do we see gaping holes?

The other layer of complexity that brings in that very quickly this two-dimensional problem become a three-dimensional problem because now you have different business units which, through the same value chain, is delivering the same set of services. How do you bring homogeneity to it?

It sounds hard, but the next piece is prioritization. What are the key value stream areas where you need to bring in technologically driven transformation faster to get maximum customer value? If you get this framework right, you can come up with a heatmap to drive your prioritization decisions.

Then it comes to funding. Many CIOs drive decisions based on funding decisions. That is not the right way to do it because then you're not spending those precious dollars (which is given to you by your stakeholder) into solving the right problems if you don't have the framework in mind to do so.

What about the IT operating model?

[Many CIOs] spend a lot of time in applications creation and maintenance and support, but very little time on architecture teams and the office of the CIO team.

Those two operating model components of the CIO organization are key to ensuring they have the right relationships with your operating organization and application creation build organization. It becomes even more important in the future of an agile workforce and IT (where we are going) or product organization (where we are going towards) because we need to think about those products, and the feature set and enhancements that we want, through a bigger, longer-term roadmap lens.

How do you balance the short-term and long-term? That's important. Have a strong architecture team interacting with your business leaders, making them think behind the quarter – at least a year if not two years out – and then have the office of the CIO portfolio management team drive investment decisions through architectural input. It's machinery that is not easy, but we get greater success if it works.

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