IT performance improves when CIOs play an active role in broader business strategy, reports McKinsey. Yet the consultant says only a third of IT leaders are actually involved in shaping their organisation's gameplan and agenda.
McKinsey says a lack of strategic input means executive confidence in the ability of IT to support growth and other business goals is waning. So why does strategy matter? And how can CIOs get involved? Three IT experts offer their best practice tips.
1. Know what your customers want
Bill Wilkins, CIO at independent energy supplier First Utility, says any strategy needs to have a clear purpose and a very clear customer proposition, particularly in the retail sector. "There's no point in us having a strategy that is separate from the consumer. We live or die by how well we serve our client base," he says.
"When we were thinking about what we represented as a business, we kept looking for models that other people understood as a shorthand for describing what First Utility does best. We say that we're a blend of a low-cost airline and a tech-heavy, digital retailer, so that we can attract the savvy savers and make them sticky through a high-quality, tech-led experience."
Wilkins says this underlying business strategy drives his entire approach to IT, right down to how his firm builds or purchases technology. "We map our IT organisation on to the rest of the business," he says. The key tenets of that business strategy - in terms of being great at digital engagement and being a very efficient operator - are inexorably linked to technology.
"When we go out and look for ways to use IT to solve the operational problems of the business, we're genuinely driven by cost-to-serve as a metric," says Wilkins. "We do work with lots of traditional third-party vendors and we're always looking at cost, as well as security and scalability."
When it comes to digital engagement, Wilkins says the business is willing to spend more money in order to create a better experience. "That's where we focus on our own in-house creative team, because internal investment is the right way for us to start innovating on behalf of our customers," he says.
2. Be explicit about how IT improves performance
Ian Cox is a former CIO who now helps businesses to make the most of their technology and their people. As a consultant at Axin, Ian Cox has helped organisations to source their CIO and has sat in during candidate interviews. It has been a surprising experience.
"Some IT leaders are very poor and some are simply scared to have another experienced CIO in the room," he says. Cox believes too many IT leaders focus on technology projects and infrastructure implementations.
In many cases, CIOs still do not place enough emphasis on customer-facing examples that demonstrate the real value of the work they are undertaking. The answer, suggests Cox, is for technology chiefs to start being a lot more explicit about how systems and services can help the business to improve its performance.
"CIOs need to talk strategy," he says. "They need to talk about how they've succeeded before and about how they would put their plans in place if they were given the job in question. They also need to be aware that strategy is, in itself, changing."
Cox says the traditional approach to IT strategy is sequential - the CIO talks to the business, understands stakeholder requirements, and then maps desired outcomes with the capabilities of the IT team. That sequential approach still works to an extent, but Cox says modern technology must drive change. Rather than being an afterthought, IT must always be in the mind of senior executives.
"Just aiming to meet the demands of the business is no longer enough," says Cox. "The CIO must be on the board to help set strategy. The rest of the board needs to know what works in terms of IT. They're effectively setting the technology strategy as part of an overall approach, and the CIO must help."
3. Create a roadmap and take people on the journey
Rob Threadgold, global head of IT infrastructure and operations at ICBC Standard Bank, believes strategy is more than just a set of bullet points for establishing the long-term aims of the business. Set up correctly, executives can use strategy to demonstrate how employees can help a company to grow.
"It's important because, ultimately, you need your entire workforce to pull in the same direction," says Threadgold. "All employees, particularly in the IT department, are busy, but they're not necessarily working on the same, or the right, areas. Without a strategy, people will come in every day, lack direction and struggle to really add value.
As well running IT infrastructure for ICBC Standard Bank around the world, Threadgold is responsible for global estate services, which encompasses properties and utilities. With such a broad portfolio of employees, he says a carefully thought-out plan of action can help CIOs to make sure workers stay interested, freeing up senior executives from the strains of micro-management.
"The biggest reasons executives fail is that they get sucked into managing people, rather than leading transformation. Strategy helps you to educate your workforce in terms of why the end point that you've identified is going to provide the business with a competitive differentiator," says Threadgold.
"Strategy isn't about managing what your people are doing everyday - it's about determining where the business is going to be in two to three years. A great strategy lays out the roadmap to demonstrate why you're taking a particular pathway and how your great people will help you to reach the destination."
So, what does this plan of action look like? Threadgold says two factors are crucial: simplicity and succinctness. "Your strategy needs to be short enough that everybody can understand your plan. And it needs to be simple enough so that everyone - whether that's the CEO or a junior staff member - understands what the business and the IT department is working towards," he says.
"Any executive can suggest 10-or-so things that they believe might have an impact. The real success - and this is where a great strategy plays a part - comes from being able to identify the three things that will really help to make the business successful in the longer term."
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