Mitch Kenfield, KPMG LLP Managing Director, CIO Advisory
For years, those of us who are leaders in information technology have carried forth the mantra, “run IT as a business.” But, for most of us, that really meant run IT as a cost center—manage your P&L, respond to requests, and keep the engine running. In the past, we used terms like “factory,” or “service,” or “utility” to describe the IT function. That was then. This is now.
Today, the business of IT truly means business, and that means much more than just keeping up with the needs of the business while avoiding major budget issues. Today, business executives expect IT to provide greater value and to do so with more agility. They expect the “IT Business” to enable their business by providing the right products at the right time and cost. Their expectations for capabilities, speed, and value are increasing. Their options for alternative solutions are expanding.
IT organizations must go beyond as a back-office function. This requires a change in how the organization sees and positions itself, how it interacts with the business, and how it operates, and importantly, it requires the CIO to serve as the chief executive officer of the IT business.
The “CIO agenda”
Our experience has shown that leading CIOs consider five major strategies as part of their CIO Agenda:
- Create business value: lead the business in using technology to enable innovation and advance business agenda
- Navigate business change: help the business implement and achieve the desired benefits of major change (e.g., M&S, new market entry, outsourcing)
- Optimize IT investments: align the IT investment portfolio with business priorities and maximize return on investments
- Transform IT capabilities: continually optimize the IT delivery model to meet evolving expectations for performance, quality, and cost
- Deliver IT with confidence: understand and proactively manage risks to protect the business and reduce impact of disruptions
With these strategies in mind, forward-thinking IT executives seek to pave a path ahead of their business stakeholders without waiting to be told what is needed. They proactively think about customers’ changing needs and how to best serve them. They consider how they can assemble and integrate responsive solutions and how they will build the competencies and culture to appropriately deliver needed business capabilities, growth, and profitability. They constantly evaluate and work to increase the value they provide.
The journey to running IT as a business can start from different places and take multiple paths. Priorities for any given organization depend on their specific business needs and the industry environment within which they operate. The CIO must consider both the current state of IT and the future needs of the business to define an appropriate path that balances pace with achievability. Some organizations must mature across a number of technology business capabilities in parallel. This process can include improving service quality through IT service management (ITSM), understanding the true cost of service through IT financial management (ITFM), and gathering initial IT metrics to build a baseline and to illustrate results. Other organizations have made significant progress in individual areas and are ready to take the next step toward proactive and empowered decision-making for IT. This comes through the integration of processes, data, information, and capabilities from multiple areas to help manage the business of IT through “IT Intelligence.” KPMG’s experience working with clients who have been successful delivering clear and demonstrable benefits has shown that there is no single, “right” path, yet an early and continual stream of progress has been essential to garner business support and value.
At KPMG LLP, we are working with clients to understand the ways their IT organizations can increase value by moving from a traditional service delivery organization to one that demonstrates mature business disciplines and values. We are calling it “Technology Business Enablement”—it’s intelligence for the IT organization.
There is a lot to discuss on this topic and a lot to learn. In future blogs, we will talk about the critical actions a typical organization can take to step up to the challenge of connecting all the pieces and providing measurable business value.