Business & Digital alignment – how close is your firm?

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Over recent years we have seen the rise in prominence and status of technology with organisations. If we take the Gartner Hype Curve analogy, we spent much of the mid 1990’s through to mid 2000’s in “The Plateau of Productivity”, with technology being an integral underpinning necessity or enabler, but less frequently an innovator or driver of competitive advantage, outside of stability and speed of execution (although, some business leaders might point to a “Trough of Disillusionment”).

Todays world and, in particular, the relationship between business and technology is much changed with organisations introducing new governance structures and roles to more closely take advantage of digital innovation and their ability to disrupt business models. Indeed, we have seen the introduction of the Chief Innovation Officer and Chief Digital Officer with elevated positions in the corporate structure.

That said, from a company’s board perspective, how can they ensure that the business direction and technology are aligned effectively to capitalise on digital innovation. Below are some themes/questions which are useful as a test of capability:

How is our industry changing as a result of technology innovation?

It is important to understand how new innovations are breaking down the boundaries of business models and reducing the barriers of entry. This is not simply keeping abreast with the latest trends in mobile, cloud, data analytics etc… but how new technologies are being exploited by competition and new entrants which can potential erode business revenues. This is difficult, as often the it is not obvious where the challenges will come from. Some can be predicted, such as trading engines and decision support built from social media sentiment analysis, or the myriad of mobile payment solutions. Others, however, are more difficult to predict like the introduction of gamification techniques across industry or the introduction of big data analytics for operational efficiency/intelligence such as with applications like Splunk.

 

What is our structure and process for nurturing developing digital technologies?

A recent survey by McKinsey showed that organisations are still coming to terms with how to develop, nurture and commercialise ideas within the organisation. From 2240 respondents, 50% stated “We have pockets of successful innovation but it is rarely scaled” and only 36% thought “We have the right balance between good ideas and effective commercialisation”.

So, does your organisation have someone responsible for driving forwards digital advancement? (such as Chief Innovation Officer)…or, is there a way to garner ideas within the grass roots and ensure that they are given enough runway to develop, through incubation mechanisms?

 

Have we the correct governance structure and a defined technology roadmap?

Business and IT alignment is often talked about but not really executed upon. Having the CIO/CTO or IT Director in operational or strategy governance meetings does not provide an optimised solution as often the focus is on efficiency, budgets, risk etc… and very rarely on a close (bi-directional) coupling between business priorities and “technology possibility”.

We see new models emerging where business and technology are brought together under specific “Digital Units” on an equal footing, where the goal is to build a technology roadmap which is completely not only aligned, but in many cases, actually informs and drives business into new customer markets and revenue opportunities.

 

Have we aligned our business operating model and portfolio of change effectively to the underpinning technology investments?

A natural lead in from the previous question. By putting the correct governance in place and removing internal barriers, it is much easier to ensure that the business operating model is driving technology investment and vice versa. Too often, organisations still operate a model from which the business change portfolio is defined and the “handed” to the technology leadership to deliver. And when we talk about large/global IT programmes, how many of these turn into “Black Swans“?

CEO’s need to look at, and question, the cross functional aspects of their business and technology organisations. We often see technology departments “aligned” to business units, but how often are more permanent/product related horizontal structures created?…and do individuals move in both directions through their careers to strengthen and embed competitive business knowledge and drive innovation?

 

What are we doing to increase the commoditisation and agility of technology resources?

The agility objective has been largely “etched into” power-point presentations for many years as they’ve made their way into the board room. “We’ve outsourced and increased agility…”…”Our ratio of perm to contract resource has increased from X to Y allowing us to be more agile.”….(tick in the box then).

What CEO’s need to gauge is truly how fast their internal technology organisation can respond to changes in business services from all aspects be that functionality, new products or volumes? (and the important part of this is whether can they be scaled down or switched off?)

Whilst the move to a more commoditised service model needs to be evolutionary, particularly in terms of risk and compliance, what CEO’s should look for from their technology leadership is a committed multi year roadmap which lays out the resource model for infrastructure, applications and people, with associated metrics/budget. Without this, and with the pressure of day to day efficiency challenges, CIO’s cannot be blamed for maintaining previous models.

 

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Posted on : 28-06-2013 | By : john.vincent | In : General News

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