The following is an article I help cowrite for CIO Connect magazine (along with Richard Webb).
Transform your IT, then the Business
The CIO has long been positioned as a senior executive on the cusp of becoming a truly strategic partner to the business. However, a recent survey by Ernst & Young, shows that in the real world, very few CIOs have so far managed to achieve this goal. According to our survey, less than one in five of the CIOs polled have risen to become a full member of their company’s executive management team. Additionally, when asked about the degree to which they participate in strategic decision-making, responses were lukewarm, with just 43% rating this as something that they are highly engaged in.
One of the possible reasons for the CIO not being able to gain a seat at the top table could be because the IT Department is burdened with a track record of unsuccessful delivery of business needs. This results in the CIO being perceived as someone who does not understand the business and whose sole purpose is there to keep the lights on. In this article, I offer four ways through which a CIO can bridge the credibility gap and, once achieved, how they can move IT away from being seen as a support function toward gaining a stronger role as an innovative, transformative and integral part of the business.
Deliver on the basics.
The first area involves executing the basics and making sure the IT function is a well-oiled machine that supports the business both from an operational perspective (ensuring the infrastructure is secure, resilient and performing) as well as a delivery perspective (delivery of existing projects, stopping projects that no longer justify the business case and ring-fencing those that will deliver real business value). Achieving this can place a large demand on the CIOs time and may reduce their ability to focus on how IT can serve to meet the strategic needs of the business. It is therefore recommended that the CIO should have a key delegate who can handle the operational side of IT on their behalf.
Keep the team motivated
As the saying goes, ‘If you want to fast, go alone. If you want to go far, get a team’; to build a credible IT function, it is imperative that the IT workforce is high performing and cohesive unit. Keeping such a team motivated, requires the clever use of financial and non-financial levers. As a CIO, this requires a skill-set not typically associated with a person who has a background in IT and requires you to consider such areas as; ensuring you have the right people in the right roles, communicating and listening to your workforce, rewarding merit and demonstrating that remuneration is linked to performance.
Demonstrating cost leadership
Establishing oneself as a cost leader is perhaps the area in which a CIO can make the biggest impact to their credibility. CIOs need to understand how IT spend decisions affects the net present value of the business and consider IT costs in terms of balance sheet and P&L impacts. However, few CIOs bring this financial literacy to their role. A cost leader CIO should;
- Instil a culture of cost awareness in the IT Department. An example of where this would be of benefit is with respect to the IT Department’s sourcing arrangements which typically make up to between 60%-90% of spend. The IT Department, and hence the CIO often receive criticism for not understanding the implications of contractual arrangements they have entered into.
- Demonstrating efficiency in IT spend e.g. implementing a streamlined organisational structure with less layers and having an IT Operations Lead and IT Delivery Lead which allows you to focus on more strategic needs of the business
- Understanding IT cost and reflecting this in your use of language while communicating to the business. Often, CIO’s are guilty of explaining things in terms of gigabytes and terahertz which may result in the loss of business audience.
However, achieving cost leadership can often be the most difficult learning curve as it involves an appreciation of finance which again may not come naturally to a CIO who has an IT background.
Expand your relationships
The nature of a C-suite role requires a far greater emphasis on relationship building and fostering better links with a wider range of stakeholders both within and outside the business. As a CIO, trusted relationships are built through an IT department that is seen to delivering on its promises and engaging with the wider business. Roman Dudzik, the CIO of Polish utility Energa, talks of “making a bridge” with the rest of the business, which in turn helps IT professionals get invited to the meetings from which they were previously excluded. But he adds that this is “not something you can do from one day to another. You need to build these relationships over time,” he says.
CIOs must also reach out beyond their own walls to others in the sector, the regulatory community, analysts, customers and the media. Laurent Ferrari of EDF notes how a personal network of external contacts he has built up over time has been invaluable in giving him an edge in his role. “The CIO has to be part of a lot of different networks,” he notes.
By building a lean, motivated, cost aware IT Department with a track record for successful delivery, the CIO will earn the right to sit at the top table as a business partner. Once there, the CIO can start to increase his sphere of influence with an unprecedented opportunity to drive the business agenda.