The Role of IT in the Modern Corporate Enterprise
By Perry Rotella
Over the past ten years, information technology has become pervasive throughout our society. We live in a networked world with Internet access from our offices, at coffee shops, at home, and on our mobile devices, such as BlackBerries, iPhones, Nooks, and Kindles. This rapid advancement has elevated the importance of the IT function. Information technology in the modern enterprise has evolved from a back-office component to a core operational constituent that can improve business performance and increase shareholder value.
Information technology now is as important to the enterprise as finance, marketing, and sales. In fact, IT is central to an organization's success in that it provides critical day-to-day operational support and enables enterprisewide change. Yet some still view IT only as an internal service bureau available to the business areas to review and execute their requirements as best as possible. That approach may help to create a good company, but not a great one.
The CIO who leads merely from a technology perspective is relegated to the secondary role of the "IT guy." But the CIO who leads from a broader business perspective earns respect and trust from C-suite peers and from the CEO. Just as the firm's CFO uses financial expertise to drive enterprise strategy, the CIO can leverage technical expertise. Today's CIO has an opportunity to demonstrate a truly executive-level leadership role in defining the enterprise.
How does a CIO lead from a business perspective and gain credibility in the C-suite? The CIO must understand the business — and demonstrate the ability to make difficult business decisions — as well as anyone else in the organization. This means the CIO must know the company's products and services, profit drivers, competition, and organizational dynamics.
The CIO's level of influence in the C-suite can be elevated by transforming the culture of IT. The CIO needs to develop a technology vision based on the company's business objectives. Technology should become a key component of the business strategy, achieving a unique breadth of power and influence in the organization.
Managing IT as a business provides several benefits: It fosters an entrepreneurial environment for the IT staff, creating more business awareness for tomorrow's leaders. It enables benchmarking of costs. And it positions the CIO as a true operational leader. A comprehensive IT framework establishes the CIO as a proven executive who can extend influence across other areas, such as administration, operations, and management of business services.
Business and IT management should act as a team, participating jointly in key business-unit activities, such as research and development, customer involvement, competitive assessment, and strategic planning. Companies should reward CIOs based more on how well IT initiatives drive profits and less on completing assigned projects. The CIO should be proactive, not passive. Information technology should help a company set strategic business goals, not simply work on tactical objectives.
Enablers and Inhibitors in Aligning IT and Business Strategy
IT can either be a limited in-house resource or a powerful partner to a company's business areas. What inhibits or enables IT in achieving its potential as a business partner? Here are some factors to consider in assessing the current state of IT at your company:
Inhibitors: Low level of IT/business area integration
Enablers: High level of IT/business area integration
There are two approaches to aligning IT with business strategy, and both are important. The first is primarily internal in nature and concerns a company's ability to continually improve its own technological capabilities. More specifically, IT has a responsibility to create efficiencies throughout the company, better leverage a company's investments in technology and business assets, and improve profitability by reducing costs. The CIO needs to create a working environment — and a working attitude — that encourages all employees to make good business decisions around IT investments.
The second, more outwardly focused approach to aligning IT with business strategy is geared toward products and customers. This can be achieved by establishing relationships with business partners and key customer IT departments and by developing an understanding of customers' automation strategies and plans.
The success or failure and the ultimate profitability of a company often depend on the role the CIO plays in the creation and implementation of products and services. A company's ability to change the way its customers do business is heavily influenced by how well its ideas are transformed into solutions that can be properly integrated into their business systems. The technical infrastructure that IT management recommends and maintains internally defines the way products and services are developed. Many new business ideas are exciting — the technology that makes them viable is crucial.
In today's complex and rapidly changing business environment, the CIO is in a unique position to assume a leadership role in the enterprise. A CIO who takes a business-first approach, drives strategy, and manages flawless execution will achieve recognition as an executive leader by peers and senior management alike.
Perry Rotella is chief information officer at Verisk Analytics.
It's Your Move: How to Enhance the Value of the IT Professional
Just for the moment, think of business as a chess game. Of course it isn't a game — it's business — but the analogy offers parallels that may be helpful.
Both business and chess require solid knowledge of the rules, identification of potential obstacles, evaluation of options, a strategy, and decisive execution. In chess it's crucial to know how the pieces move and how they can be used in forming a strategy. You need to understand how your opponent might react and predict defensive moves. You need to think fast about alternatives too.
Instead of a chessboard and knights, castles, and kings, a company deals with colleagues, partners, competitors, customers, and regulators. The goal is to grow and prosper by meeting customer needs and deflecting advances by competitors. Your competitors should be constantly reacting to you: scrambling to address your new initiatives, second-guessing their own strategies, faltering in their execution of business plans. To accomplish this, you need a realistic assessment of challenges, clear objectives, a cohesive, comprehensive agenda, and a commitment to follow through. This is how to stay in control of the situation and prevent others from denying you success — checkmate.
Savvy businesses nurture and develop their assets. They recognize that the IT professional's knowledge and capabilities can address and enhance the company's strategies. Knowledge of customers' needs and systems environments, competitors' strengths and shortcomings, and the company's business objectives in large part determines the IT professional's ability to contribute to growth and profitability. Expertise in information technology and computer science is unquestionably valuable, but much less so without complementary knowledge of the overall enterprise.
A systems professional with an in-depth understanding of the business context in which the company operates is truly an indispensable expert — like a chess master who deftly assesses the big picture and responds with skill and confidence.