Is your IT infrastructure properly aligned to drive business value?
TECHNOLOGY BULLETIN |
Is your technology infrastructure taking an active role in enhancing the company’s core mission, vision and values? A significant paradigm shift is underway within many businesses, as executives begin to recognize the value of the information technology (IT) function and seek contributions at a strategic level. With this competitive shift, companies need to refocus on aligning business goals with IT.
Historically, technology was a supplement to the business, supporting certain business activities and proprietary or back office systems. Network engineers may have been invited to meetings, but were largely there to listen; IT was out of sight and that’s what many businesses wanted. However, a new relationship is emerging between executives and IT staff, as technology capabilities are expanding to efficiently deliver information, attract attention and grow the business.
In the past, talking about technology typically meant something was wrong. However, IT is rapidly moving beyond the back office and becoming a driver for growth and development. Organizations are talking about technology now not only because issues exist, but because technology is increasingly driving business success.
Businesses that adopt progressive IT strategies bring technology capabilities into the spotlight and optimize the potential of the function. IT must not only serve as a utility that provides email and Internet access; instead, it should be a focal point of business strategy, adding insights in areas such as social media awareness, search engine optimization and advanced business analytics. For instance, most businesses have huge amounts of data and IT can mine and manipulate that information, and leverage findings for faster business growth and development.
IT and non-IT personnel must understand the direction of the business and the goals for the next 12, 24, even 36 months. Many organizations have strong executives who understand the direction of the business and good technology personnel that keep systems stable. They may also have very clearly communicated short- and long-term goals and built a bridge between those objectives and technology. However, many companies do not have an IT resource with the dual vision to see where the company is technologically and what it needs to accomplish to reach overarching business goals.
Many strategies break down because IT and executives are not speaking a common language. Organizations might bring the right people together, but may not have the right translator. IT collects and manages a great amount of valuable data, but often does not know how to translate it into a format for business leaders to develop a strategy around it. IT and executives must find a way to communicate to utilize technology’s full potential to drive business decisions.
As technology evolves, the role of IT is always changing. Organizations must step back and determine who owns functions such as the corporate website, social media, process improvement, data analytics, financial planning and analysis, and innovation. Each of these should be front and center when discussing business alignment with technology. Many large companies have trouble understanding the larger implications of technology, and those struggles often extend to middle-market organizations.
Instead of simply focusing on internal concerns, IT should have a dual role within the organization. From an internal perspective, IT should focus on doing more with less by managing staff expense, software applications, servers and workstations, and maintenance costs. However, the function should also enable business objectives by increasing effectiveness by helping the business compete, delivering high-impact projects, improving client satisfaction and driving change.
Companies must carefully define the role of IT and where the function should report. Many organizations choose where IT reports based on whether the ultimate goal for the function is strategic or focused on improving business efficiency and the utility side of technology. However, as mentioned earlier, the two goals are not mutually exclusive, and successful organizations leverage both of those responsibilities.
Using traditional business titles, the chief information officer (CIO) is the strategic arm of IT and report to the chief executive officer (CEO). The chief technology officer (CTO) is responsible for the tactical or operational side of technology, and typically reports to the chief financial officer (CFO) or chief operating officer (COO). Some organizations don’t have a CIO or CTO and some utilize a blended role. However, companies must understand the two distinct disciplines and areas of overall technology delivery, and how they support overall business objectives.
To take full advantage of technology capabilities within the organization, the business strategy and IT must be in full alignment. However, that skill is not very prevalent within many organizations. Technology leaders normally do not have that exposure, typically focusing on operational and tactical goals rather than greater business strategy. Companies need to develop a framework to get technology out in front of the business.
All companies should strive to implement a mature IT governance model. A typical model includes four key areas that meet on a regular basis:
Advisory council: The council drives business strategy alignment with IT through bi-annual meetings with key personnel including the CIO, external committee members, industry experts and thought leaders. The goal of the advisory council is to discuss industry trends and best practices, spark innovation ideas and validate potential plans.
IT steering committee: This committee should have bi-monthly meetings involving the CIO, CFO, CEO, president and vice presidents. The objective for this group is for the business to inform IT of what is important and for IT to update the organization on the state of technology and upcoming projects.
IT leadership: The organization’s technology leadership should meet on a bi-weekly or monthly basis, with the CIO, director of infrastructure and director of business applications in attendance. This group updates the CIO on the status of upcoming projects and potential issues and risks.
IT staff meeting: This larger group, preferably meeting weekly, involves all IT directors and team members. The goal of this group is to provide updates of team member projects, schedules, help desk statistics and any emerging risks.
Organizations must take a close look at their technology environment to help enable optimal alignment with strategic goals. Many organizations can benefit from an assessment of their IT function and processes, evaluating business goals and what risks keep executives up at night. Everything must be considered to fully leverage the potential of technology resources.
Moving forward, organizations must be able to adapt and take steps to find a common language for IT and executives, increase transparency, define technology’s role and create an alignment strategy. No business is the same, but these key guidelines can help organizations keep up with the changing role of IT and how it can drive increased business value.
Note: This article was based on a presentation from RSM’s popular 2014 TechReset series. Future issues of Technology Bulletin will explore other discussion topics from the events, designed to help businesses take advantage of emerging technology solutions and strategies. Continue reading Technology Bulletin and visit RSM.com/events for more information on 2015 TechReset topics and events across the country.