In recent years many CIOs have rapidly adjusted their operational focus. They have switched from tried and tested IT asset management, operational excellence, and risk elimination projects, and they are now realigning their strategies to reach objectives that mirror and help to achieve organisational goals.
This shift has happened for a number of reasons, none more important than the introduction of mobile technology and the expansive options opened-up by the internet for both B2C and B2B customers.
But why is it more beneficial for a CIO to focus on business outcomes rather than operational processes?
- Improved relationships with key stakeholders: CIO Water Cooler has suggested that CIOs have traditionally gravitated “toward business partners that understand them within the context of their organisation”. Infact some CIOs are only able to identify with stakeholders that understand their function within the company. The CIOs that make a genuine effort to understand all departmental and company leaders’ objectives, and account for them in their strategies, are more likely to achieve company-wide buy-in for their ideas.
- Optimising efficiency and company value: The IT department can have a huge impact on an organisation’s cost-to-revenue ratio especially if the CIO prioritises the management of crucial cost-saving operations and those that support the most profitable revenue streams. McKinsey & Company highlighted that this value can be “translated into a competitive edge in terms of investment or acquisition capacity. (Since 80-90% of all synergies from banking mergers involve reducing the cost of operations, IT is indeed a key enabling factor during an acquisition.) The indicators that are tracked will be mainly financial, such as the ratio of IT spending to revenue, and will then be compared with the operating ratio—for example, operating costs over revenue”.
- Building better governance: The most successful companies embed their IT governance within the broader governance practices. To achieve this, IT representatives must participate in decision-making forums that have traditionally been exclusive to business unit leaders. Certain core business processes, such as managing the business project portfolio or determining the allocation of resources, dovetail with IT processes. Conversely, the notion of an integrated business–IT governance model can also be applied the other way around: Some companies use IT as a strategic planning platform for broader tactical planning by establishing mixed business–IT forums.
- Notoriety: If you’re a CIO that works to achieve business objectives you will create a good reputation for yourself inside your organisation and within your industry. You will also be able to pinpoint your successes in every section of your companies financial reporting, which is extremely useful when negotiating future budgets, pitching new ideas, or with an interview with a potential employer. Ultimately, this approach to IT is good for your career.