By Markus Heinen, EMEIA SAP Leader, EY.
When we talk about the need for agility and the related role of the CIO, people often see a paradox. After all, CIOs are used to planning 5- and 10-year strategies for designing and implementing major IT programs. For more than a decade, CIOs and their teams have been supporting businesses by standardizing, streamlining and harmonizing systems and processes – delivering greater operational efficiencies on time and on quality, but within stagnant or declining budgets.
In many respects, CIOs have been among the unsung heroes who have made businesses more competitive. Their methods for delivery have been deliberate and methodically driven. Yet this kind of approach takes time that, due to speed of change and increased complexity, they no longer have.
Today, digital disruption, the sharing economy and the unending quest for innovation, in an environment of phenomenal change, has businesses demanding that the IT function delivers outcomes on programs in 12-month time frames, or faster. And instead of planning 5 or 10 years down the road, strategies need to be thought of in 3-year spans, or shorter, with a tangible business outcome within 1 year.
CIOs are also facing a perception issue. Thinking that they are unable to adapt to the changing times, CEOs and other business executives are considering adding the role of chief digital officer (CDO) at the C-suite level to give the business the innovation spark they are looking for. This puts CIOs in a tough spot. Even in an era where agility and flexibility are the keys to survival, CIOs cannot abandon their traditional mandate — organizations still need standardized processes and harmonized IT systems. Yet, they need to serve as an innovative and agile partner to the business rather than a barrier.
The balancing act between execution and innovation
The trick for the smart CIO is to find the right balance between execution and innovation — or, in IT parlance, between ‟waterfall” and ‟agile”. A two-speed approach enables IT to support and maintain the slower-paced stability of core IT systems, while simultaneously developing an innovation layer that can deliver outcome-based results in the time frame the business needs.
Through this innovation layer, CIOs need to be thinking about using agility to address the business’s unmet needs. These aren’t always articulated. Sometimes, it may be something the business hasn’t thought of before. For example, if Henry Ford had asked prospective customers what they wanted in a mode of transportation, they would have said faster horses. Instead, he conjured up the automobile, addressing consumers’ unmet needs. Within the IT world, businesses may come to the CIO demanding a shared service center without knowing that there may be a new better option, such as robotics, that would make a shared service center setup different, and also affect supporting technology.
Addressing unmet needs often means a culture shift
To address unmet needs, CIOs must gain a better understanding of the issues — not what they want or think they need, but the challenges that are hampering their ability to compete. The CIO and their IT departments then need to be able to take the issues and innovate solutions. CIOs need to think beyond how to enable the business. They need to be able to chart new courses for the business to follow.
This, of course, is a tall order for an IT function that has been used to performing its tasks in a certain way. Being able to pivot from stability to agility often requires a strong cultural shift across the function — and sometimes across the enterprise. Unfortunately, not everyone may be able to make the shift. It’s therefore imperative that CIOs take stock of the resources they have, identify what they need, and then set about filling the gap and adjusting talents where required.
The importance of measuring transformational change
In making these kinds of transformational changes, CIOs will need a means to measure their progress. They’ll need to determine the right operating model based on the level of maturity of the IT function and the organization. The operating model will determine how the IT function can maintain the core while innovating new strategies, and who they will need to do it. CIOs may find that they’ll want to set up a protected space within the function to drive alignment in a way that IT hasn’t done in the past. In some cases, depending on the level of maturity, this protected space may need to be a separate department, and even a separate environment in which to operate.
Ultimately, CIOs need to form an environment that creates an experience by being a part of, and questioning, the “why” journey — the organization’s purpose — and defining the “what” by executing the “how,” or value, the organization can deliver in fulfilling its purpose. In this way, by facilitating conversations and becoming an integral part of the organization’s innovation engine, the CIO and the IT function can play a pivotal, if indirect, role in changing the organization’s culture and engaging its workforce to ignite passion for what is being created. In many ways, it’s about adopting a start-up philosophy, even if your organization is a multinational conglomerate.
It’s innovate or die
In today’s climate of disruption and change, innovation is a prerequisite for survival. CIOs need to make sure they are part of their organization’s innovation journey. Otherwise, the business will move around them and then forward, leaving CIOs to consider their fate as relics rather than the prophets they once were. In conclusion, CIOs need to become ambassadors and role models for innovation, powered by digital.
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