It may seem a strange question in the digital age, but do organisations need an IT strategy anymore? At a time when technology is playing such a key role in the transformation of every industry, disrupting established markets, driving innovation in products and services, and enabling completely new ways of working, surely having an IT strategy is more important than ever?
The traditional approach to developing IT strategy is to wait for the business strategy to be defined and to then work out where IT can be used to support or enable the initiatives required to execute that business strategy. It is very much a sequential process that reflected technology’s role as an enabler, and the IT department’s role as a support function. It also explains why so many organisations do not include their CIO in the high level discussions about the overall direction and goals of the business.
The fact that IT has its own strategy contributes to the feeling of separation that often exists between IT departments and the rest of the business. IT is viewed (and often presents itself) as a special case. This is reinforced through the existence of IT steering groups – a special body that oversees the execution of the IT strategy, reviews and approves IT investments, and sets overall priorities for IT. No other function has or needs its own steering group.
It has to be said, however, that the need for an IT steering group is not always driven solely by IT or the fact that there is a separate IT strategy. CEOs and other members of the C-suite often prefer to keep IT at arms length – as something that they do not need to understand or get involved with. So the IT steering group is sometimes used to avoid having to discuss IT investments and priorities during board meetings. Instead one (unlucky?) member of the senior team, often the CFO, is given the task of chairing the IT steering group and therefore keeping control of what IT is doing without the rest of the board needing to get involved. This arms length approach to IT has no doubt been a factor in many failed business projects for which IT is often blamed (see CIO: could you be the next Linwood?).
But businesses now operate in a digital world. Digital business models are only possible because of technology. It is no longer a case of defining the business model first and then working out what technology is required to enable that model. It is about using technology to create a new business model. And the same applies to an organisation’s strategy in the digital world.
In the digital age every business is based on technology so every business strategy should be based on technology. For some companies the business strategy may even start with technology but for most, IT will at least be an integral part of the strategy definition process. And so should the CIO; with technology being one of the key drivers of business strategy, the organisation’s technology leader should be a key player in the definition of that strategy.
So, with technology being an integral part of the organisation’s business strategy, there is no need for a separate IT strategy. And neither, as a result, is there a need for an IT steering group. Given its importance to the digital business, technology, and specifically, how it can be used to meet customer needs, enable new ways of working and create new offerings, should be on the agenda of every board meeting. And every member of the board should be capable of discussing their company’s IT investments, strategy and opportunities under the guidance and leadership of the CIO, who by definition should be a member of that team. In the digital age, the rest of the C-suite cannot afford to keep IT at arms length; they have to engage with technology and be willing and able to discuss it in the same way as they would the organisation’s accounts.
This new approach to defining business strategy presents a challenge to CEOs and CIOs. For CEOs they need to include their CIO in the organisation’s strategic discussions and be prepared to have these discussion prompted or driven by technology. They, and the rest of the C-suite, also need to get up-to-speed with technology so that they can contribute to discussions about IT as a driver of strategy and also as they will need to consider and review technology driven business initiatives on an ongoing basis in board meetings.
CIOs have a different challenge. They first have to convince their CEO and other members of the C-suite that they can contribute to such discussions and then they have to develop the knowledge, awareness and skills to play their part. This is where the first three principles of my book, Disrupt IT, can help.
In Disrupt IT, I define a new model for IT that meets the needs of the digital business. The model is both radical and disruptive. I also identify seven principles that can be used to guide the transformation of the CIO role and the IT function to establish this new model. The first three principles cover the CIO role and describe how CIOs can make the transition from technology leaders to technology and business leaders. CIOs who successfully make this transition will become key players in their organisations, helping to shape the business strategy and leading its execution. Those who cannot make this change will find that someone else is invited to contribute to board-level discussions about strategy and the role that technology can play. For these CIOs the question may not just be whether their organisation needs an IT strategy, it may also be whether it needs a CIO.
If you are a CIO that wants to play a leading role in the development of your organisation’s business strategy, or if you want to create an IT function that can support a digital business then please contact me or visit my website, axin.co.uk.