In the prior post “Six Keys to Succeeding in the Changing Role of Enterprise CIO (Trends and Insights),” we summarized observations and experiences from a group of Microsoft Enterprise Architects about what differentiates successful CIOs from those that don’t do so well.
Here we’ll present brief examples of CIOs attempting to manage their organizations and rebuild the relationship between IT and the business, while:
- Making tough decisions and driving changes through the organization.
- Consolidating, rationalizing, and streamlining.
- Becoming a business partner.
Thanks to the following people for providing information and feedback for this article: Peter Deane, Larry Hanthorn, Johan Klut, Paul Lidbetter, Brian Loomis, Stephen Kell, Robbi Laurenson, Mary Lynn Pontier, Blessing Sibanyoni, and Sree Sundaram.
Making Tough Decisions and Driving Changes through the Organization
To make tough decisions, change IT organizations, and make those changes stick, a CIO must have a clear vision of how the IT organization should work, be able to articulate the strategy for the IT organization and for the business units it supports, and must lead an effective team.
In the past, CIO’s in one market were characterized by their autocratic approach to managing their organizations, and those organizations were frequently disrupted by competitive internal politicking between silos.
More recently, new CIOs have tended to take a more collaborative approach. They realize that the IT organizations need to work with networks of dependencies both internally and with vendors and suppliers. As the changes at the top level begin to ripple through the organizations, they begin to become more collaborative and effective.
A bank in this market has now had the same CIO now for five or six years. This CIO is continuing to do well and is making major savings in the company's IT budget by making clear strategies and plans, and communicating them widely.
To start establishing a vision for the IT organization and its role in the company, the CIO instilled a set of shared values among the team leads. The team leads committed to these in written values statements and leadership commitments.
The team leads and the CIO then traveled to the different company sites to engage the rest of the IT personnel and get them on board with this vision. The IT personnel also signed leadership commitments.
In order to keep IT personnel engaged in the organization and its goals, the CIO pays considerable attention to acquiring and managing talent, focusing on team building, and providing excellent collaborative experiences to employees.
Consolidating, Rationalizing, and Streamlining
Some CIOs have improved their IT operations by consolidating data centers and reducing the data center resources that their companies need. This process includes eliminating redundancies and rationalizing applications, workflows, and processes. These CIOs have also ensured that the processes are standardized, transferable, and leverage known best practices.
During such transformation, the CIO must help develop and communicate a clear set of governing principles. Without such principles, businesses seeking to improve IT operations will encounter many difficulties.
“Running 100 miles per hour with scissors”
One manufacturer recently replaced its CIO. This new CIO is making some leading edge changes, while dealing with an IT organization heavily burdened with legacy systems and processes.
The new approach, combined with new plans that the CEO recently announced, mark a dramatic change in approach for the IT organization. In the past, this company outsourced several services, but still managed to spend a very large amount of money on IT. The pace of change in IT processes and technology was relatively slow.
The new, but still problematic approach has two main components:
- Insourcing. The company is ending its past outsourcing contracts, and plans to run all services out of its own data centers. One impact of this change is that the IT organization needs to re-learn to manage these services.
- Consolidation. The company plans to consolidate its many data centers into only two. This process will include a great deal of rationalization, and will involve some technologies and approaches specific to modern data centers. This project is still in a very early planning stage.
There is also an important piece missing from this CIOs approach: a clear set of governing principles. As a result, one stakeholder described the company's actions as "running 100 miles per hour with scissors." This IT organization may be particularly vulnerable to issues arising from unclear governing principles because the majority of the IT workforce consists of new hires. Some of these new employees have been hired from IT organizations in other companies, and are accustomed to doing things in certain ways.
Many other new employees have been recruited from colleges, and are new to working in corporate IT as well as working in teams. With these new hires, team development and skill transfer have become crucial to the IT organization.
The CIO wants to focus on the business, and be able to measure how the IT organization contributes or gives back to the business. One of the main challenges is a workforce that is too new to understand the business well enough to carry this out. The organization is improving ways to understand and communicate business priorities, standards, and policies to create effective teams and meet business needs.
Becoming a Business Partner
The most successful CIOs are involved in the business planning process, rather than "aligning" the IT organization with the business. These CIOs can express the value of IT to the business – how the IT organization can add more value to the business by acting as a partner, not simply acting in a support function.
The Microsoft Architects have observed that if the business units believe that the CIO understands their business needs, they are more likely to come to the CIO if they want a service change or new service (such as external cloud-based services). The CIO can take on the role of advisor and coordinator for the business unit.
IT as a Business Partner
One CIO has actively coordinated team-building efforts while overhauling the role of IT within the company. This CIO spends 50% of his time on the IT organization, and 50% on business-related projects.
During his work, the CIO talks with business unit heads and other business stakeholders. He also sits on the company board. He has direct access to the business unit heads, and is almost on an equal footing with them. In turn, they view him as a partner in the business.
The CIO has molded the rest of the IT organization to focus on partnering with the business. Previously, the IT organization focused on monitoring systems and reporting measurements and other statistics. Now, the IT organization focuses on outputs that are useful to the business.
The CIO has stated "It's not about effort, it's about outcome." The IT organization maintains cheap, agile test environments where personnel can experiment with new ideas and solutions. These are sandboxes where mistakes, considered inevitable in this type of work, cannot cause harm.
As a result of this strategy, in this company IT is not a cost center. It is a peer organization that contributes to the strategy and bottom line of the business. The IT organization comes up with business-transforming ideas and new products and services.
Recently, the CEO announced plans for substantial new investments in the company, with the majority allocated to IT projects. In addition to services, better communication, and faster processing, these investments will go toward analytics, digitization, and customer relationship management. The CIO has successfully expanded the role of the IT organization to become an invaluable business partner.
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