Reorienting IT From Cost Center To Strategic Weapon

Posted on December 22, 2015

Written by Michael Stoyanovich
Technology Principal, CEO to CEO, Inc.

You can have an IT function that drives incredible value creation at your organization. To get there you must first accept that you have this problem in IT: neither you nor your employees think IT adds much value to your company.

According to 2015 data from the CEB Group, over 60 percent of employees believe IT is ineffective in helping them be productive.  Employees expect a customer-like experience.  They want a personalized work experience with individually relevant information (like their consumer apps deliver).  How often does your IT team deliver that experience?

And then there is the c-suite’s opinion.  In a 2014 McKinsey report, a majority of business leaders noted IT was failing to meet corporate productivity improvement targets and not supporting corporate strategic goals.

In that same report, IT effectiveness was rated as declining in 5 key areas:

1. Sharing knowledge
2. Year over year productivity gains
3. Creating new products
4. Entering new markets
5. Tracking customer or segment level profitability

The problem is that your IT staff is primarily focused on infrastructure and transactions… not internal or external customers.  Most IT teams and their systems focus on systems of record, their enabling ecosystems of networks, and storage and security devices.  They’re not focused on end-user engagement and organizational productivity, business intelligence or value creation.
This is IT as a transaction enabler; ensuring each email was sent, every database record was updated, each data packet or phone call routed … and all done securely.  Important infrastructure, yes.

Just as your physical foundation needs to be properly constructed, well-maintained and managed, IT infrastructure is not to be ignored, and if you neglect it, it will harm you.  But it’s not enough anymore.

Consider a midsized company that I was engaged with earlier this year.  They had two IT support staff, a database developer and an outsourced IT service provider.  But the leader of this company asked me why his IT team couldn’t do more than “keep the lights on.”  My answer was that he lacked the IT leadership that leads the way to value creation.

You must build on top of the foundation.  In order for IT to add value to your company, you must redirect your IT team.  It must spend resources (time, money, effort) on:

• Increasing the productivity of your organization
• Measurably increasing end-user quality and service experiences
• Providing actionable business information to your business managers (via reporting, KPI, ‘big data’ enabled insights, etc.)
• Providing or enabling new revenue streams via new products or services
• Cutting costs throughout your organization, not just in IT

What you need is an outward focused IT organization that is systematically focused on employee engagement and building corporate value.

How do you get that?

First, reorient your IT with a leader that is both a technology visionary and a “hands on” business leader – someone who finds ways to use technology to improve the business, and ensures the IT organization is working for, and responding to, the business.  This leader should know your customers and your employees, and understand your financial statements and business environment.

Second, your digital products and traditional IT teams need to be molded into a unified IT organization and you need to use DevOps as its guiding “worldview.”  DevOps is the integration of digital product development with traditional IT and continuous delivery. Developers are focused on continuously integrating features and functionality into your digital products while operations professionals are focused on your cloud (external or hybrid) infrastructure – enabling an easy-to-operate, elastic, well-managed environment for your digital product suite.

According to a recent Computer Associates white paper, implementing DevOps leads to a:

• 23 percent improvement in business collaboration (among employees)
• 22 percent increase in application quality
• 22 percent increase in customers
• 21 percent increase in new services offered
• 20 percent improvement in time-to-market
• 19 percent increase in revenue
• 18 percent cost savings
• 17 percent increase in (app) deployment frequency

Third, you need to change your culture in IT to:

• Focus on the customer – internal or external.
• Do things right the first time – not perfect, but right. There is a difference.
• Be/act empowered, including the ability to ‘stop the line’ to fix issues immediately when they occur.
• Embrace continuous improvement and have a learning organization.

Fourth, you need to have a corporate strategic roadmap and have your annual IT activity roadmap tie into it.  IT activities must support corporate goals and broadly help:

• Increase revenue
• Provide actionable organization intelligence so your operational leaders can better manage the operations
• Cut organizational costs
• Increase (product/service) quality
• Increase organizational productivity

Follow this approach, and you’ll find that your IT will lead to a direct increase in organizational value: a better bottom line.