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5 questions for CIOs on the frontline of disruption and digital transformation

5 questions for CIOs on the frontline of disruption and digital transformation

Digital business leaders and strategists Bernard Seeto, and Kerry Topp crystallise their experiences of C-suites across sectors. They call on industry colleagues to contribute their experiences to the conversation.

A recent article by McKinsey on Five questions boards should ask about IT in a digital world, provides us with an useful framework to evaluate IT performance.

No doubt you have been asked these questions or may want to be prepared to answered these questions.  We believe these types of questions will be asked of the IT function more frequently in the digital world.

We have captured thoughts/concepts from across different industries to provide a “starter for 10” of best practices for an IT function.

 We drew on our experiences and reached out to our associates to test how they would answer these questions. We wanted to use this article to start a discussion across IT practitioners to share IP and to lift our contribution to our respective organisations.

 We have summarised our question responses using the Agile format – Epics.

 If you find them useful - or otherwise - let us know.

 What is our Challenge/Opportunity ?

For

Your organisation

who

has local and or global ambition in a disrupted industry

the

transformation of / exponentisation of  IT function

that

better responds to the accelerated pace of change

is an

increase in IT performance and leadership

unlike

previously where IT function has been generally pedestrian “least agile department

our hypothesis

is that IT function is now at the epicentre of business speed and stability, and will need to face this challenge

Scope

In Scope

Technology has been growing in importance for organisations over the last few years.  The advances in technology such as internet of things, machine learning, 3 D printing have helped to redefine many business models.  For example, Uber reshaping the taxi industry through digitally connecting people to anyone willing to provide transportation and Tesla using technology to help sell cars direct to consumers, thereby cutting out the “middle men”.  Technology in these situations has shown to be at the epicentre of change and the ripple on effects  will continue to impact / disrupt our businesses.  

So how do we know whether our IT function and our application of technologies are performing / providing competitive advantage in the this era of digital transformation ?

Mckinsey recently published an article Five questions boards should ask about IT in a digital world” that provides a framework to discuss the performance of technology in the digital world.   In this paper, we will look to draw on ours and our associates experiences to provide strawman answers / practices to these questions.

We will be answering these questions in the following sections:

  1. How well does technology enable the core business? 
  1. What value is the business getting from its most important IT projects?
  2. How long does it take the IT organisation to develop and deploy new features and functionality?
  3. How efficient is IT at rolling out technologies and achieving desired outcomes?
  4. How strong is our supply of next generation IT talent? 

We have provided a “starter for 10”, we challenge you to better these answers – over to you.   Are you up for it 


1. How well does technology enable core business ?

For

Your organisation

who

has local and or global ambition in a disrupted industry

the

transformation of / exponentisation of  IT function

that

better responds to the accelerated pace of change

is an

fundamental change in the relationship  (co-creation) with IT function

unlike

previously transactional relationship

our hypothesis

cross functional governance, prioritisation based on cost of delay and focus on core requirements will increase “fit” of technology to core business need

Scope

In Scope

There are many technology choices to enable core business needs.

The challenge is determining which is the “right” technology to select.

Unfortunately, most organisations will get limited second chances in selecting technology.

It will feel a bit like going to the casino and placing a bet on the roulette wheel.

You might hit the jackpot and find the technology choice is a close fit.  Alternatively you may get a modest return.  Worst case you may find there is minimal perceived value such as multi-channel integration for digital capability.

The first step is to determine what is the business need or core business to be enabled.

According to Standish Group, up to 20% of features are often used, 50% hardly or never used and 30% of features are sometimes used. Hmmm, so which are the “right” features / needs should the IT function focus on and, base technology selection on.  From experience, here are 3 approaches to increase / improve the fit of technology to core business need.

a)     Cross functional governance

b)     Cost of delay prioritisation

c)     Core / minimalist requirements

Target condition

Lead conditions

a)     Business involvement > 23% of total effort

b)     Collaboration intensity between stakeholders – ask the same question to three people and if the answer is the same then there is alignment – strong collaboration.

c)     Diversity of test and learning with customers and employees reduces defects up to 70%

Lag conditions

a)     Customer effort less than original baseline

b)     Employee effort less than original baseline

c)     Business performance greater than original baseline

  2. What value is the business getting from its most important IT-related projects?

For

Your organisation

who

has local and or global ambition in a disrupted industry

the

transformation of / exponentisation of  IT function

that

better responds to the accelerated pace of change

is an

emphasis on value driven measures

unlike

previously where success measures such as on time, on budget and on scope have been utilised

our hypothesis

Is that additional considerations like executive support and maturity, reviewing initiatives in the context of a broader ecosystem and approach to innovation are required to sustain ongoing value to organisations.

Scope

In Scope

Technology provides the foundation / engine for growth for some many industries.  Technology has the attributes of:

a) reducing transaction costs and therefore improving productivity;

b) provides immediate connectivity between parties increasing efficiency, transparency and accuracy;

c) more cost effective than physical travel;

d) access to geographical markets and demographics previously cost prohibitive.

Organisations invest millions and sometimes billions in technology, and receive no perceived value.  It difficult to compare initiatives because of their uniqueness of combination of technologies.  The most common type of value measures used for initiatives are success criteria such as on time, on budget and on scope.  These are however lagging indicators which do not give you early indication of the business value of initiatives. 

There are additional approaches / practices that will provide complementary insights on business value of initiatives:

a)     Executive Support and maturity

b)     Capability architecture

c)     Innovation approaches

Target condition

Lead conditions

a)     Increased frequency of how technology is used to uplift business capability vs technology only

b)     Increased frequency of experimentation and learnings

c)     Regular time set aside for innovation vs one-off

Lag conditions

a)     On time, on budget, on scope

b)     Business performance maintained such as net promoter score

c)     Benefits realisation in accordance with business case

d)     Revenue to IT cost

3. How long does it take the IT organisation to develop and deploy new features and functionality ?

For

Your organisation

who

has local and or global ambition in a disrupted industry

the

transformation of / exponentisation of  IT function

that

better responds to the accelerated pace of change

is a

different mindset of thinking big and acting small

unlike

large cumbersome programs leading to complexity (many moving parts) of teams and governance

our hypothesis

organisational agility through standardisation, acting small and flexible architectures.

Scope

In Scope

For organisations operating in the digital world, sustainable speed and agility are paramount.  Companies can deploy new features and functionality on their websites in seconds. For example, Amazon can deploy on average every 11.6 seconds into production environment.  The ability to act with sustainable and controlled speed provides companies with choice / agility to pivot / counter competitors moves.  So speed is an essential dna element of organisations with a desire to be digitally competitive. 

Previous approaches to achieving speed have been to develop big upfront designs through obtaining as many current and future requirements as possible.  A heavy focus on analysis so that execution can occur without disruption.  The challenge with this approach is that to verify needs requires a lot of governance due to the volume, variety and variation of needs.  In addition, significant effort is required to gain alignment to the analysis / needs throughout the organisation.  Meanwhile the marketplace is evolving and results in changes in organisations needs (yet to be executed), placing pressure on organisations to execute changes and leads to rushing / tactical approaches to implementing change.  Speed is achieved, however, typically future changes are delayed and more costly due to sometimes significant refactoring of previous changes.  Fundamentally speed without control.

A different approach is to:

a)     standardisation of practices

b)     smallest units of change executed

c)     designing flexible technical architectures

Target condition

Lead conditions

a)     % of  automation (vs manual) of deployment

b)     ability to transfer work to other teams due to standard practices being followed

c)     early visibility of change implemented

Lag conditions

a)     No. of releases per day

b)     Elapsed time to change direction

c)     Velocity trend is increasing for smallest possible change

 

4. How efficient is IT at rolling out technologies and achieving desired outcomes?

For

Your organisation

Who

has local and or global ambition in a disrupted industry

The

transformation of / exponentisation of  IT function

That

better responds to the accelerated pace of change

is a

“lean IT enterprise/organisation”

Unlike

Organisations that have unintentionally created bad complexity reducing efficiency

our hypothesis

IT efficiency is improved through removing bad complexity, applying lean principles and selective use of partners.

Scope

In Scope

IT organisations/divisions are expected to run, grow and transform organisations’ capabilities on a frequent basis to remain competitive in a digital environment.

Most IT divisions have been primarily designed to support running an organisations capabilities.  For example, operational support, disaster recovery and essentially keeping “lights on”.  The expectation is that changes are few and far between leading to high quality, predictability and productivity of IT changes. There is a premium placed on stability of systems and the minimal changes leads to reducing cost of IT and therefore high IT efficiency.

When IT divisions are expected to make frequent changes to help “grow or transform” organisations capabilities, and “run” organisation’s capabilities with high stability.  IT efficiency is low because:

a)     IT processes are not scalable to support increased demand volume and variety;

b)     Use of contractors increasing risk profile for organisations from an IP and accountability perspective;

c)     Number of moving parts (people, processes and technology) to be aligned to support changes – complexity.

For IT divisions / organisations to support run, grow and transformation of organisation capabilities with efficiency requires different practices, namely:

a)     Reduction / removal of bad” complexity in processes and mindset;

b)     Applying of lean practices to standard work practices;

c)     Selective use of partners to uplift IT skills at scale with accountability.

Target condition

Lead conditions

a)     Measuring “waste” – lean categories

b)     Reduction in number of systems (ie leveraging of systems)  / re-use

c)     Ability to run as much work in parallel

Lag conditions

a)     Productivity – cost per normalised story points per sprint is reducing / optimised

b)     Timeliness – predictability of deliverables

c)     Quality – no. of errors per release

 

5. How strong is our supply of next generation IT talent ?

For

Your organisation

Who

has local and or global ambition in a disrupted industry

The

transformation of / exponentisation of  IT function

That

better responds to the accelerated pace of change

is a

talent incubator organisation

Unlike

organisations that have treated technology as a secondary concern / back office function / talent

our hypothesis

IT talent is attracted, retained and grown through utilising a flexible operating model, focusing on trust and developing E-shaped skills

Scope

In Scope

Prior to the digital era, most organisations treated IT divisions as a back office capability.  The IT division was fundamentally a supplier to the organisation and that IT talent could be easily be replaced / obtained.  The master servant relationship and limited opportunity of advance for IT talent has lead a to a revolving door of talent. 

The ability to retain IT talent is further weakened, as most IT division organisation design is focused on people specialising in a particular technology.  IT talent becomes frustrated as they realise their marketability is diminishing and their fear drives them to develop new / contemporary skills in other organisations. 

A further complication is that most IT managers /leaders have been appointed primarily based on technical expertise and have minimal people leadership skills.  The limited ability to build the trust and engagement with IT talent becomes very difficult to achieve – let alone unlock discretionary effort from IT talent.   IT talent looks for leadership from other organisations.

In the digital era, where the “war for IT Talent” is being waged at a terrific pace.  Our approach to lead, retain and grow IT talent will require  a different path:

a)     Utilising a flexible IT operating model – using organisation design to support way of working (not the reverse);

b)     Building trust – active openness and transparency vis face to face communication;

c)     Developing E shaped skills – each person is given time to develop 3 skills.

Target condition

Lead conditions

a)     Increase in promotions from within

b)     Increase in discretionary effort by talent

c)     Increase in No. of skills of each person

d)     Creating technical career pathways for people within organisations

Lag conditions

a)     Time to take to change direction decreases

b)     Retention rate % pa increased

c)     Leadership scores for Leaders increases

 

About the authors:

Bernard Seeto (Bernard.Seeto@southerncross.co.nz) is strategy and architecture manager at Southern Cross Health Society. His roles have included head of solution delivery, head of architecture, strategy and planning, and an Agile coach. He has worked in financial services, general insurance, telecommunications and media industries. He has published/contributed articles in www.cio.co.nz and a case study in Gartner.

Kerry Topp (kerryt@datacom.co.nz) is GM transformation & innovation at Datacom. He was involved in TechWeek'16 and '17 as both participant and presenter. His role is to help businesses to take on new ways of working and uncover innovative opportunities for growth - areas such as AR/VR, AI and cognitive solutions. He is the chairman of the Wynyard & Manukau Innovation Neighbourhoods, a board member on the Auckland Innovation Advisory and a working group member of the Future Skills Advisory Board.

 

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