By Chris Pick, CMO, Apptio
The importance of IT – and thus the CIO profile – is rising significantly, as has been over the last several years. The rallying cry of “every business is now a technology business” means the maintenance and implementation of technology becomes the lifeblood of modern businesses, necessitating a strong C-level voice to represent IT’s interests.
Coupled with this is the increasing demand for digital innovation, motivated by the continued and shifting process of how products and services are communicated, both internally between teams and business units, and externally to the customer. While it may seem this increased focus on digital is squarely in the CIO’s domain, many calls for innovation are coming from outside the IT department, as customer demands drive pressure on other parts of the business.
Research from Altimeter reveals that CMOs are the leaders of driving digital transformation in 34 percent of cases, compared to 19 percent of initiatives driven by the CIO/CTO. So how can CIOs overcome the disparity between their responsibility to manage more technology and a lack of influence in digital transformation? In my role as CMO of Apptioand President of the TBM Council, I work with more than 4,000 companies in all different stages of digital transformation every day. I hear the struggles and talk about the solutions with CIOs worldwide. Here is a culmination of my key learnings from those conversations on how to become a leader of innovation within your organisation.
Cosying up to customers
Consumer demands are driving digital innovation as businesses look to provide effective apps and multi-channel communications to avoid losing customers to competitors who provide these and other modern benefits. However, when there is not an agreed-upon goal throughout the organisation of digital innovation, IT has the potential to simply manage various business units’ disparate requirements for new technologies instead of driving cohesive and impactful change across the business. This slows down the speed at which IT can function behind the pace of business, and turns IT organisations into an even bigger black hole.
This causes problems when dealing with complex technologies such as the cloud. The ease of use and agility cloud provides makes it a valuable tool for assisting in innovation, but these very advantages mean that cloud costs can quickly spiral out of control. Business units, when not supported by expert knowledge from the CIO, can set up cloud and SaaS instances without being able to monitor their true cost or effectiveness.
To manage these initiatives more intelligently, CIOs need to move closer to other members of the business, and ultimately, the customer. Through closer cooperation and collaboration with businesses units, IT can gain a better understanding of consumer-driven motivations, and use this to align business objectives across departments and create a cooperative relationship to develop digital transformation and add value to the customer experience.
Gathering data to drive transparent conversations
To achieve this somewhat drastic cultural shift, the CIO must enter conversations with other business leaders armed with the correct information to help them embrace digital transformation. This requires a transparent, holistic view of IT spend, something easier said than done due to the rise of complex systems such as cloud and the sheer size of IT budgets in modern businesses. With cloud comes the rise in hybrid IT and the amalgamation of on-premises, colocation, public cloud services, managed contracts, hardware, Software-as-a-Service, and more. IT is more complex than ever before. Sales has CRM and finance has ERP, yet IT has continued with spreadsheets well past their sell-by date. The rapid pace of digitalisation means it is no longer practical to trawl through spreadsheets and manage version control issues constantly when trying to communicate the cost of IT to those outside of the department.
Understanding the true cost of cloud systems is also a challenge for CIOs. Many businesses do not have master service agreements in place with cloud computing and storage providers, which leads to constant fluctuations in cost. With macro-economic changes taking place at the speed of microeconomics, CIOs need to have as near to a real-time overview of spend as possible.
Many have turned to Technology Business Management (TBM), as a solution for this problem. Rather than treating IT as a list of costs, the TBM framework helps CIOs to gain a granular view of their overall IT spend, including complex costs such as cloud, end-user compute and security, and associated staffing to run such technology. This allows CIOs to see an accurate picture of total cost of ownership, and turn these costs into business intelligence to drive digital innovation.
Becoming a partner to the line of business
Equipped with this knowledge, CIOs can provide effective leadership in digital innovation, entering into productive conversations and becoming a partner to the line of business. Rather than resulting in a battle of the budgets, these conversations can lead to a better understanding of business objectives as CIOs are able to paint a clear picture of their company’s IT ecosystem through its spend and services. In turn, this allows the CIO to truly sit at the heart of the business and understand customer-driven motivations, further improving any efforts at digital innovation.
With the CIO acting as the leader of digital innovation and partner to business units, the culture can improve the overall effectiveness of IT across the organisation. Concepts such as the shared accountability of costs, where business units can accurately understand their own IT consumption and costs, and service catalogues, to align IT use across the business, help to foster this change, which is vital for any business hoping to head out on a digital transformation project.