IT Focus Area: strategy
December 30, 2014
How Can CIOs Earn a Strategic Seat in the Corporate Boardroom?
In an ideal world, a CIO is a true partner with everyone in the C-suite. They would be leading the charge to harness new solutions that transform the business and increase value. They would be delivering innovations that boost revenue, attract customers, improve loyalty, and utilize emerging technologies such as mobile and social.
Unfortunately, the reality for CIOs is usually much different.
Most CIOs are under enormous pressure to support non-strategic tasks that are essential functions such as keeping systems of record up and running, managing trouble spots, and demonstrating value by meeting milestones and keeping within their budget. Yet, despite all the work it takes to keep the business up and running, they don’t get as much credit as they deserve for supporting the organization. And their role may even exclude them from strategic, board-level responsibilities.
Rather than looking to the CIO for innovation, the C-suite creates roles such as chief digital officer, chief social officer or chief innovation officer. As a result, CIOs can lose control of IT spend to other departments. For example, the marketing department may hire their own software developers or social media consultants. With less budget and stake in business decisions, CIOs have little time and resources to fundamentally and effectively drive business strategy.
In today’s always-connected business world, every part of an organization relies on IT. However, leaders on the business side often don’t have a full appreciation for how IT helps the company.
It is time to find a common language between business and IT.
If you can simplify the way the C-suite looks at critical business, CIOs can begin to emerge from the background to secure a key strategic role in the corporate boardroom and elevate the IT organization.
A New Vocabulary
The traditional approach to optimizing IT tackles it from the pocketbook—finance looks at the budget and asks the CIO to reduce costs by X percent. This is effective if you want to cut cost without adding strategic benefits, but then you are not truly optimizing IT.
What if you want to increase the value of your IT portfolio while reducing your spend on irrelevant assets?
A thorough, rationalized visibility into the application portfolio helps the CIO strategically recommend how to save resources in terms that translate across the C-suite.
To cross the divide, classify applications in a vocabulary that any business person would understand. Much like an investment advisor labels stocks buy, hold or sell, you can categorize your asset portfolio within the same framework:
Buy apps that help the business run more strategically
Hold apps that keep the lights on but don’t require additional investment
Sell apps that drain resources without adding value
The idea of buy-hold-sell can change the conversation for CIOs.
By providing the C-suite with a simplified view of risk and opportunity, everyone can spend less time dissecting what the critical information is. This enables quicker decision-making. When everyone can understand the information from their own point of view, the company’s IT portfolio can be optimized.
Making Way for Innovation
When the conversation changes into these terms, it becomes more apparent to the C-suite where they need to invest in IT to maximize the business value. The CIO can then gain visibility into shadow IT, reclaim control over IT spending, and reduce the amount of time their team devotes to keeping the lights on. This frees up the IT team to have more resources for innovation. Now the CIO has more resources for innovation, providing the opportunity to prove their strategic business value, once and for all.
Most IT teams spend 70 to 80 percent of their time on maintenance—supporting applications and managing infrastructure. When they apply the buy-hold-sell framework to their application portfolio, they can remove apps that are high in cost of management and low in return value. In an instant, an IT team can shrink the time spent on maintenance and support, exponentially increasing the resources they can devote to innovation that actually moves the business forward.
Now, the IT yield curve becomes steeper. Applications deliver a much higher value relative to their cost and business outcomes are achieved quicker.
Embracing Calculated Risks
Business leaders are used to taking risks, but people with a career in IT usually are not—and it’s beginning to hold them back.
Most CIOs have devoted their careers to bolstering security, maintaining availability and ensuring that risk doesn’t affect the company. They’ve proven their worth with predictability, reliability and precision. These are all essential milestones for a CIO, but embracing risk as a strategic plan is also an essential step to securing a place in the boardroom.
When the rest of the C-suite takes risks, they’re calculated risks based on projected revenues, budgets and other metrics. It’s time for CIOs to think more like the rest of the C-suite by focusing on areas of business opportunity and value creation.
Common Language Is Key to Success
With the help of the buy-hold-sell rationale, CIOs have a toolkit to calculate risk strategically. By shifting their focus to growth opportunities, they can insert themselves into the same strategic role as the rest of the C-suite and start leading the business in new and innovative ways.
The role of the CIO is at a crossroads. By embracing a common language with the C-suite, a CIO can better influence his or her peers and secure a critical seat in the boardroom.
An earlier version of this article appeared on wired.com.