Digital Dynamics in the c-suite · abdicate responsibility to their CIO. This is a fatal mistake. yet, it does provide a unique opportunity for chief Information Officers (CIOs) to

Digital Dynamics in the c-suite:AccelerAting DigitisAtion with the right conversAtionsProfessor of management, Joe Peppard, european school of management and technology

Digital Dynamics in the c-suite: Accelerating Digitisation with the right conversations2

authOR biOgRaPhyProfessor Joe PePPArD, Professor of mAnAgement At the euroPeAn school of mAnAgement AnD technology

Joe is professor at esmt in Berlin. he is also Adjunct Professor at the university of south Australia, Australia. over the years he has held academic appointments at Cranfield School of Management, Loughborough University, Trinity College Dublin, Groningen University, and the university of sydney.

the focus of Professor Peppard’s research and teaching is in the area of information, information systems and technology. through his research he seeks to challenge dominant orthodoxies as he believes that these are contributing significantly to the problems that organisations have in leveraging information technologies, both operationally and strategically, and ultimately in optimising the value delivered to the business.

Digital Dynamics in the c-suite:AccelerAting DigitisAtion with the right conversAtions

For businesses and consumers technology has become ubiquitous. an organisation’s ability to effectively make use of digital technology is now a crucial component to its overall success.

Technology undoubtedly provides both opportunity and challenge to business leaders. Firms that have embraced digital platforms across retail, entertainment and marketing have leapt forward and shaped pioneering ways of conducting business.

Putting technological innovation at the heart of business strategies is vital for companies to thrive in the modern business environment. We have to move beyond our traditional perceptions of technology as an internal facilitator of everyday business practice. Leaders have to drive the effective operation of tools such as social media and positive data-use to increase commercial activity and also raise awareness of the good work that businesses do.

With increasingly lower and more competitive mobile and broadband charges, a strong foundation of high quality research and development, and a good understanding of the benefits of innovation, the UK has a strong base from which to think properly about how business can be on the front foot.

there are many ways to take advantage of this ever-expanding landscape of digital opportunity, and Sungard Availability Services highlights several of the most important of them.

In a world where our customers are ‘always on’, improving our digital capability will be one of the key enablers to future success. Learning ways to overcome obstacles and challenges, and seizing the opportunities presented by new technologies will boost growth and your organisation’s ability to compete in our super quick and ever-changing global workplace.

I would therefore urge firms of all sizes and from all sectors to take note of the steps outlined by Joe Peppard in this helpful piece of work.

John Cridland, Director-General, CBI

Digital Dynamics in the c-suite:AccelerAting DigitisAtion with the right conversAtions

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that said, whilst acknowledging the opportunities digitisation can bring, most Chief Executive Officers (CEOs) and their boards don’t quite know how to respond. And, because many see digitisation as a technology issue they, perhaps understandably, abdicate responsibility to their CIO. This is a fatal mistake.

yet, it does provide a unique opportunity for chief Information Officers (CIOs) to elevate their influence and position in their organisation and drive the digital agenda. however, they cannot do it alone, but require the active involvement and engagement of both the CEO and C-Suite colleagues. success with ict is a shared responsibility. Of course, many of those occupying positions in the c-suite don’t quite see it this way and this is where a key challenge lies.

ithout doubt, information and communication technology (ICT) is the biggest disruptive force confronting organisations and their leadership teams today. And it is

not just large organisations, but organisations of all sizes, including the public sector, that are being affected by the inexorable advances in technology. Most businesses today are – or, at least, are becoming – digital businesses. No industry, it seems, is immune to the realities where business processes, value proposition, customer experiences, products, services and management practices have been or are being transformed by the internet and other digital technologies. In particular, as legacy business models are destroyed and/or transformed and new businesses and business models are created, the leadership of organisations are taking an increasing interest in the potential of ict.

w

building an ‘always-on’ business is more critical nowFig. 1 – thinking back to three years ago compared to now, what was, and is the general attitude from the board and senior management team towards building an ‘always-on’ business to meet increasingly 24/7 customer and employee demands?

Combination grid combining the total of those who rated 4 and 5 - i.e. critical.

28% three years ago

49%At present

base: 500

If the board and executive leadership teams are determined to see digitisation as solely a technology issue, then the real benefits of digital technologies are unlikely be realised. It is not the deployment of technology that should be in focus but rather how it enables information to be leveraged for operational and strategic purposes. Some businesses have known this for a long time. Fred Smith, founder of FedEx, emphasised back in 1975 that “information about the package is as important as the package itself,” and this mantra has propelled his business to dominate its industry for 40 years. Information is not just the lifeblood of the organisation, it is becoming the key battleground. Early explorers of ‘big data’ can testify that the benefits are genuine and can be substantial.

At the same time, this renewed interest in ict and digitisation comes at a time when the cio role is facing a number of challenges. Firstly, some have found themselves being dropped from their seat at the top table, and instead reporting into the CFO. secondly, with the advent of cloud and ‘shadow’ it, more and more it spend is occurring outside the remit of the it function. this has led one analyst firm to predict that, by 2017, the CMO (chief marketing officer) will spend more on IT than the cio. And, there is some evidence where the newly-created role of Chief Digital Officer is supplanting the influence of the CIO.

The CIO and the broader C-level need, now more than ever, to be closely aligned. The CIO may be exercised by the complexities of technical change, the implications of legacy it investments and the quest for greater agility but, for the wider leadership team, the challenge is to figure out how to leverage information for both operational and competitive reasons. this is a daunting task and it is unsurprising that the annual society of information management survey of cios over the last thirty years has always placed the achievement of alignment between business and IT strategies as one of the top three issues.

Data from Sungard Availability Services research with Vanson Bourne, October 2013.

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the FunDamentals OF DigitisatiOn: it’s got to Be ABout the informAtion

There is no doubt that a great deal of attention is being given to digitisation and digital technologies today. One might be forgiven for thinking that we are at the beginning of a paradigm shift; in fact, this shift began many decades ago. Consider the digital camera. This technology has been with us since the mid-1990s and replaces the old analogue predecessors which had been around since the 18th century. In fact, how both work is somewhat similar; as with film, the diaphragm and shutter admit the correct amount of light to the imager, but the image pickup device is now electronic rather than chemical. The key difference is what we can now do with this digital or encoded image. This image can be stored, shared through apps and web-based services, and manipulated. With the ability to take photos built into smartphones, we can capture not just the time a photo was taken but also its precise location. All this has spawned new businesses such as Instagram, Picasa, and snapchat, new entrants such as sony and samsung, as well as the demise of one-time industry powerhouse Kodak.

of course it is so easy to get caught up in the hype of technology. There is no doubt that advances in technology over the last decades have indeed been impressive and these play a key role in the inexorable march towards digitisation. However, this has too often led executives to lose sight of where the real focus should lie: on information and how your organisation chooses to use it. As with the digital camera, it is not just about the image but how digitisation has expanded the opportunities to harness the encoded data, creating new business opportunities, as well as threats for incumbents who do not respond.

many years ago Bill gates, founder of technology powerhouse microsoft, captured the challenge executives face with ict very eloquently: “The best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage, and use information will determine whether you win or lose.”1

of course most organisations today are fundamentally dependent on their information technology systems and would quickly cease to function should the technology that underpins information flow and interactions grind to a halt. however, it is not the loss of the technology per se that would result in problems for the organisation, but the loss of the information and information handling capabilities facilitated by the technology. Technology provides the capability to handle information in many different ways. these include

enabling communication and collaboration (i.e. email, social media, desktop videoconferencing, instant messaging), data capture (i.e. point of sale systems, internet-based data entry, apps, customer portals, sensors), automated processing (i.e. of orders, invoicing, contract management, account management, decision making, workflow), storage (i.e. data centres and databases, etc.), access (i.e. ad hoc queries, report writing, search), analysis (i.e. analytics, business intelligence, modelling) and presentation with emerging visualisation tools. These information-handling capabilities are delivered via the organisation’s portfolio of applications that are implemented on its technology platform.

But this technology platform itself is evolving. the “cloud” has heralded a paradigm shift in how these information handling capabilities are delivered. Individual areas of a business can now procure services that they previously would have had to involve their cio and it organisation with. Intelligence is being built into everything from cars to building to roads to electricity grids, with sensors collecting data on the performance and location of physical things. Mobile devices, 4G networks and broadband mean that workers and customers are no longer shackled to fixed locations. It is this technology, in combination with business processes, customer value propositions, employee skills and knowledge, and other resources that together deliver this organisational capability.

base: 550

information is the new battlegroundFig. 2 – how important a role do you think the availability of resources and information is for supporting your organisation’s performance?

5% Our organisation doesn’t prioritise availability and always-on services and we have no plans to change this.

95%We prioritise availability and always-on services.

“information is not just the lifeblood of the organisation it is becoming the new battleground.”

But there is one further problem to be considered. While we may be able to ditch our old camera and replace it with a new digital one, organisations’ generally don’t have this luxury. some can have many decades worth of investments in their ict infrastructures, supporting existing processes, work practices and value propositions. changing this legacy of past investment decisions can be difficult. Often, some applications have been around since the 1960s and 70s (yes, that long in some financial institutions) and nobody is really quite sure how it all works or fits together. Organisations often decide to outsource this problem to vendors with the remit to “sort it out for them,” forgetting that this doesn’t change the logic and information of existing processes, work practices and how they support customer value propositions.

So today, we cannot talk about digitisation without referencing digital transformation (a transformation is digital because it is built on a foundation of technology). It is about change, both operational and strategic. it is altering how we work in our organisation, the processes we use, how we interact with customers and suppliers, how we use information. It can be about changing our business model and value proposition to accommodate new information. Accommodating all this change will not be easy and is perhaps best likened to trying to change a tyre while the car is still moving!

While the CIO will be exercised by the complexities of technical change, for the c-suite, the challenge is to figure out how to leverage information for both operational and competitive reasons. This has been a perennial problem for organisations of all kinds, with ‘achieving alignment’ consistently occupying the top three positions of the annual society of information management survey of cios over for the last 30 years.2


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the it stRategy is DeaD… long live the DigitAl strAtegy!

cios have long sought to align the organisation’s investment portfolio in ict with the strategy of the business. With the quest, the IT strategy has tended to be a function-based strategy (like, for example, marketing, supply chain and operations strategies, subservient to the overall business strategy).

in most organisations, the cio with his team work to translate objectives and requirements – what some cios refer to as “the wish list” – into a coherent strategy and then create a portfolio of potential projects and programmes from this.

This has never been satisfactory and CIOs, in particular, have always known this. yet, many have found it very difficult to get colleagues from the business side to engage with them in this process of building the ICT investment portfolio. In its absence, cios have taken it upon themselves to propose what they believed these requirements are. This has meant that in these organisations, opportunities for business innovation with ICT have been limited.

The concept of ICT and business strategy alignment suggests that there are two separate entities – the business strategy and ICT strategy –with one being subordinate to the other. More than ever, ICT today through digitisation needs to be integrated into the very fabric of the organisation, and this includes being part of the strategic management and thought processes of the organisation. in far too many, it is an afterthought. For example, once the business gets a project or idea to a certain point, for example a potential merger, they often think “Maybe we should consider about getting ITs input.” At this point, it is usually too late as key choices have already been made and the CIO and the IT organisation is playing catch-up.

today, the concept of “digital strategy” is emerging to supplant what was previously “the it strategy.” this is more than just the portfolio of it investments but representing a fusion of business and IT.3 in essence, the IT strategy and business strategy are one and the same. Digital is becoming the unifying concept, bringing together what were previously separate functional strategies from right across an organisation. Digital is now pervasive and it is unlikely that “the marketing strategy” or “the distribution strategy” will not have a digital element.

this new conceptualisation is more than creating a document or artifact. its concern is with achieving cognitive alignment; it is about sense making, learning, understanding, debate and consensus among the leadership team in respect of digitisation and digital opportunities and threats (see facing page for an illustration of how alignment thinking has evolved). rather than a physical document or a vision for ict, the notion of strategy in the digital world is a continuous and ongoing conversation. given the speed of change today, even having a one year strategy can be fruitless. Strategy emerges in response to environmental changes, threats and opportunities. it is the response to these that is the real strategy, but is unlikely to be able to be prescribed in advance4.

organisations need to develop a strong sense-and-response capability, embracing ambiguity and uncertainty, as this strategy emerges. At the same time, the installed technology base – the result of legacy ICT investments – can be a blockage. Achieving the apparent paradoxical objectives of agility and flexibility as well as tight control is the terrain that cio must navigate.

in the digital enterprise – and all organisations are digital today – harnessing ict requires having the right kind of conversations about information and technology. it is these conversations that reveal opportunities as well as threats. But how do you foster these? What kind of collaboration is needed to facilitate the right kinds of dialogue? this is where the CIO can win or lose the battle yet there are some crucial factors outside the control of the cio that can influence these conversations and whether or not they take place. two of these are the ambiguous nature of the CIO role and the low level of digital literacy in some c-suites. let us explore both of these before giving some pointers to CIOs to seed the right conversations.

the concept of ictFig. 3 – Do you believe that aligning your department’s initiatives with the it department’s capability (where technology is required) could yield a competitive advantage?

9% no, there is no competitive advantage, the IT department should be separate from senior management.

base: 550

91%Believe there is some form of competitive advantage from alignment of business strategy and IT capabilities.


evolution of business-ict alignment thinking.

how organisations seek to align their investments in ICT with the business strategy can be categorised in three ways.

1. The fi rst emphasises the intellectual dimension of alignment. here, the focus is on methodologies and the use of tools and techniques to help in translating business strategy into it requirements. this situation typically arises when the cio is left to his or her own devices to determine the it strategy. many organisations are still stuck here.

2. the second stressed the social aspect of achieving alignment and emphasises the importance of a strong relationship between business and IT executives. To achieve this, organisations implement strong governance around it to create the environment to foster these relationships.

3. the third, and most challenging, is cognitive alignment where the emphasis is on sense-making, co-learning, and co-creating a shared understanding and shared meaning between business and IT executives.

given the speed of change today, even having a one year strategy can be fruitless. strategy emerges in response to environmental changes, threats and opportunities. it is the response to these that is the real strategy, but is unlikely to be able to be prescribed in advance.

55% 54%

the cio and management roles collaborate well currently – there is no real need for change.

base: 550

changes need to be madeFig. 4 – Over the next fi ve years, as your organisation becomes increasingly digitally enabled, connected, mobile, and ‘always on’, how should the relationship between the senior management team and the ciO change?Combination grid combining the totals of those who rated 4 and 5 - i.e. agree.

the management team needs to work more openly with the cio to support changes.

63%

the senior management team needs to increase their awareness of technological capabilities and trends.

59%

senior management roles will need to take on more responsibility for technology initiatives.

56%

41%

the cio needs to play a more accessible role in supporting new ideas from the management team

The CIO/IT will need to play a leadership role in our strategy to meet customer and employee demands and compete against competitors.


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the ambiguOus ROle OF the it leaDeR Perhaps no c-level position has undergone as many changes in expectations, approaches, and philosophies during the past few decades as that of the cio. The turbulent forces shaping businesses in today’s always-on global marketplace promise to accelerate that on-going evolution.

What’s holding back the ciO?Fig. 5 – Which of the following are reasons for your role lacking the capability to provide the technology environment to drive business growth and enterprise availability?

55%

52% i lack the necessary resource.

my role is weighed down with everyday activities.

55%52%

base: 118

Despite these shifts, there continues to be considerable ambiguity around the CIO role10. in a recent survey i asked cios whether their understanding of the role corresponded with that of their colleagues in the c-suite, and the majority responded with a resounding no! Additionally, there are paradoxes that they have to navigate. for example, they are mandated to provide cost efficient and predictable IT services while at the same time it is expected that the company’s IT estate will be responsive and agile. the it function itself is often seen as a service provider yet increasingly expected to be innovative and a driver of business growth. while a steward of cost mitigation and cost containment, cios are also simultaneously expected to build new capabilities. Resolving these paradoxes is necessary to achieve control and risk objectives as well as providing agility in terms of responsiveness to unexpected changes and business opportunities.

this changing nature of the cio role is well rehearsed and has been reported by scholars, analysts and industry commentators over the last decade5. However, key to the makeover has been the emphasis on information: that was why the label shifted from a technology director to a company officer charged with managing and leveraging information6. Despite this, in many organisations, much of the job of CIOs continues to be taken up by technology issues. This is often by expectations and job design and not by choice7, a point that will be considered in the next section.

notwithstanding, the evolution of the role manifests around three key shifts:

From technology manager to business executive The CIO role as an IT leader is a business role rather than a technology one. this requires cios to take a new perspective that involves the seamless integration of both business and technology. it also requires cios to think, act and communicate differently than their counterparts of yesteryear.

From order taker to strategic shaperDespite their protestations, most cios have traditionally been “order takers”, that is, they take the business strategy and from this determine the investment portfolio for IT. Lamentably, most have not had the influence that they would have liked on either strategy or innovation. This has been changing as IT departments move from being cost-centres to business enablers and organisations increasingly recognise the role of ict and digitisation, with innovations enabled by IT now shaping strategic options for the c-suite.

From functional head to business leader successful cios must see themselves not as leaders of an IT function but as business leaders, albeit with a special responsibility for IT. In the same way, a CMO is also a business leader that has a special responsibility for marketing and, similarly, with the CFO for finance. in fact, cios generally require an understanding of all end-to-end processes in an organisation, akin to the role of a general manager. my evidence suggests that many struggle with the leadership dimensions of the role8. This might be a reason that only one CEO in the current ft350 companies previously served in a cio position9.

All data from Sungard Availability Services research with Vanson Bourne, October 2013.

Fig.6 – as a ciO/senior decision maker who do you report into?

base: 220

38% the ceo.

32% the coo.

27% The CFO/finance Director.

3% other.

Base: respondents whose organisation uses availability and always-on services.

53% increase in productivity.

52% increase in customer satisfaction.

46% Increase in agility and fl exibility.

45% increase in competitiveness.

43% increase in employee satisfaction.

36% Increase the ability to innovate (e.g. new processes and ways of working).

27% increasing growth.

26% increase in resilience.

26% Increase in business partner satisfaction.

17% Awareness of a technology driven business strategy.

2% None of the above.

Fig. 7 – if you already prioritise information and enterprise availability, which quantifi able benefi ts has your organisation already seen by prioritising availability?

To whom the CIO reports can also be a critical determinant of their effectiveness and it seems that the cost versus-value equation changes with reporting line11. those reporting to the ceo are typically encouraged to take the perspective of enterprise wide business value – how much IT spending delivers to the business. Those reporting to the CFO generally see a shift in emphasis of it to the cost agenda and closer scrutiny of the roi of individual investments.

Although cost management is a critical concern in an age when IT absorbs such a large portion of budgets, it’s not necessarily the way to get the most business value out of IT12.

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Perhaps the most difficult challenge that CIOs face in fostering conversations is the low level of digital literacy in the c-suite13.

Indeed, the ambiguity that exists around the CIO role is partly caused by this: essentially still seeing the issues through the lens of technology rather than the lens of information, what i have referred to as small “i” big “T” thinking. This level of literacy is also responsible for weak business engagement and involvement with it and it matters and achieving the necessary cognitive alignment alluded to above. Despite the overwhelming research suggesting otherwise, most executives just don’t see it as something that falls within their realm of responsibility14. through the lens of technology, it is inevitably the CIOs responsibility.

Perhaps the genesis of the problem is that executives are being asked to engage with something that is essentially intangible, i.e. information, using something that they feel they know nothing about, i.e. technology. There is also a lack of management frameworks and practices guiding action and decision-making with regard to information. the result in most organisations, not surprisingly, is less than optimal business decisions where ict is concerned. my research suggests that executives’ lack sufficient understanding of ict and how to manage it. this also involves a deeper appreciation for business opportunities and risks, as they pertain to ict. i have found that executives that class themselves as IT savvy often base their assessment on their own experiences with

consumer IT. Many use smartphones, tablets and office productivity tools, download apps and even set up their own home routers for broadband but this does not necessarily qualify them to understand how to manage it at an enterprise level. Decisions about technology are essentially business decisions.

At the same time, we have to acknowledge that even cios are hard pressed to keep up with the rapid flow of new technologies. Trying to balance the here and now (so-called “keeping the lights on”) with the future (innovation) is a constant challenge. Of course, senior business executives often feel very exposed when having any conversations to do with it as they consider themselves to be technologically illiterate. They can certainly be forgiven for being overwhelmed with the never ending stream of new technologies and buzz words that emanate from the IT industry: cloud, apps, big data, analytics, mobility, consumerisation, ByoD, social media, the internet of things, for example. the easiest response, and perhaps what might seem most logical, is to delegate – or more often, abdicate – responsibility for anything IT to the CIO. In my view, this is a big mistake. the c-suite must get on top of the digitisation agenda and not delegate this solely to the cio (see overleaf for some guidance for the c-suite)15.

Digital illiteRacy in the c-suite

some guidance for the c-suite.

1 Not knowing anything about ICT is no longer a badge of honor. And just because you are not a millennial is no excuse.

5 Keep abreast of the capabilities of new technologies; you can’t have meaningful conversations with the cio if you don’t. take time to learn about the capabilities (and not the technicalities) of technologies like the cloud, mobile, sensors and social media. The CIO can help you here and provide valuable coaching.

8 engage with your cio in an on-going and continuous conversation. technology can often inform what’s possible for the business – it can shape strategy.

2 Don’t see ict as something separate from your core business. Whether you like it or not, your business is a digital business where ict is integral to its success.

6 Don’t abdicate the digital agenda or the mandate for digital transformation to the cio. The CIO has a key role but so too does the whole c-suite. Partner with your cio to map out the digital transformation agenda. work together to identify tangible ways to further embed ICT in the business.

yet behind all the buzzwords, cxOs must recognise that there is a seismic shift in the role of technology in organisations. technology is more and more embedded in everything we do as we move into an increasingly hyper-connected world; a world in which technology is both shaping and enabling significant social, organisational and industry change. Decisions about it today have really little to do with technology.they are about competitive advantage, business growth, cost reductions, flexibility and responsiveness, margin increase, and productivity improvement.

9 Look to rethink the budgeting process. In most organisations there is a budget for IT, which includes capex and opex and typically falls within the remit of the cio. consequently, spending on ict is seen as the CIOs budget. Remember, the CIO spends money on behalf of the organisation for the achievement of benefits, so the budgeting process should reflect this.

10 Promote partnership with the line of business, overcome resistance to change, and drive digital literacy across the organisation.

3 Place ICT at the heart of your business agenda. recognise that ict is potent competitive weapon.

7 Recognise that while distribution channels and the interface with customers receive most attention from media reports, the greatest bottom line impacts may actually come from operational improvements.

4 Place the cio on the senior management team. They will be an invaluable allay.

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having the Right cOnveRsatiOns:co-evolving the DigitAl AgenDA together

Achieving collaborative working relationships between the CIO and the leadership team are necessary to harness digital opportunities and to optimise the value from ict investments. what these relationships do is facilitate dialogue between the CIO and business colleagues. These conversations must be two way if they are to spawn ideas, enabled and shaped by IT as well as help the CIO better understand the priorities of their colleagues. While it has been proposed that a direct predictor of alignment is the high level of communication between CIO and their C-level colleagues16, i would suggest that this is a surrogate measure and that it is the quality of conversations and the shared understanding, learning and sense-making that is crucial.

Yet, it would not be an exaggeration to say that the relationship between the IT organisation and the rest of the business has been a troubled one. Indeed, it has been likened to a troubled marriage in need of guidance17. These relationship problems stem from many of the issues raised above but the poor relationship also serves to reinforce many of them18. This vicious cycle is detrimental to the contribution of IT and setting the digital agenda, so it must be broken. The business side can initiate the required change, particularly when there is a perception that it is not delivering, it is too expensive, too inflexible and just not up to the job for today’s clock speed business. But this often results in bitterness; sometimes even outsourcing it to third parties and replacing the cio.

fostering the right conversations is where the cio has the opportunity to lead. But this isn’t going to be easy. Remember that many in the C-Suite may not see determining ict spend and the delivery of benefits for digitisation as a shared responsibility, but the CIO’s job! Indeed, the 2014 State of the cio survey indicated that half of the cios surveyed reported that the it organisation is seen as a service provider19.

There may also be entrenched views to breakdown. Years of resentment, often based on project failures attributed, rightly or wrongly, to IT, together with inaccurate negative perceptions, may have built up. Here is some guidance for CIOs:

act like a business leaderRemember that a CIO is first and foremost a business leader, albeit with a special responsibility for IT. As a business leader the CIO must act like one; so they have a view on what is happening in the business and wider industry and be prepared to contribute to discussions about strategy, innovation, marketing, finance, operations or whatever is being debated both in the boardroom and the corridor. The CIO shouldn’t limit him/herself to just IT issues. Moreover, they shouldn’t confuse the role with being the leader of an IT function, a subtle but frequent trap that CIOs fall into. They should be conscious that, as a leader, they get things done through the credibility and influence that you garner. they may even have to engage in some political manoeuvering20. Remember that politics is part and parcel of organisational life and, by seeking win-win situations, it need not necessarily be negative.

speak the language of the businessIt might seem somewhat contradictory to say, but conversations in the C-Suite about IT should never be about technology! Once the CIO begins talking about technology he or she have confirmed the stereotype and have lost any initiative they might be promoting. emphasise the “i” rather than the “t” of it, stressing the new capabilities that IT could bring. cios can’t have productive conversations if they are perceived to be speaking different languages. Executive colleagues will understand business impacts not bits and bytes. Emphasise, for example, the contribution to top line growth, margin improvement or cost reduction.

Wielding it as a Weapon for growthFig. 8 – Do you believe that aligning your department’s initiatives with the it department’s capability (where technology is required) could yield a competitive advantage?

9% no, there is no competitive advantage from this kind of alignment; the it department should be totally separate from the senior management team.

30% yes, there is a competitive advantage in this alignment; the it department and senior management team for my department should work very closely together.

20%yes, there is some competitive advantage in this alignment, though we’d only need to align ourselves with it if there was an issue.

41%yes, there is a competitive advantage in this alignment, though a distance between the two departments is healthy.

Base: 550

Get out of the office In order to get out there and find and test and present the best applications that meet business requirements, the cio is going to have to understand the business requirements and priorities first. CIOs are going to have to put themselves and their team in front of business executives and prepare them to have business conversations. they’re going to have to engage with users, managers, executives and sometimes even customers and suppliers. It might even be prudent to shadow business departments, go on a few sales calls, or listen in on some application development calls. CIOs have to be an agent of change, or face continuous conflict from the different lines of business. One challenge that CIOs are likely to face as they engage with business leaders is that they consistently overestimate the resources available to it staff. the cio needs a way to demonstrate and communicate that this not the case.

Promote it as an instrument of change and innovationLook to go beyond IT being an enabler of transformation, and be part of the transformation shaping the direction the organisation takes. Increasingly I am seeing digital initiatives being driven by executives outside of IT. For example, at one of the world’s largest insurers, the digital transformation remit has been given to the global CMO. This may not be a bad thing, but CIOs must ensure that ICT is a key part of any transformation, partnering with business colleagues. This is where digitisation, as opposed to ict, is perhaps a neutral and more appropriate word to seed a conversation. Don’t wait to be asked by business colleagues; be proactive.

use appropriate metrics to raise awareness of the value of itBy making a shift in the way that cios measure it value and impact, they have a common language to begin this new dialogue with their business partners. however, cios often use key performance indicators (KPis) that are not directly related to business priorities. Sometimes these are imposed upon them. i have found that when asked to list their most important KPis for it, many of the key metrics on the business leaders’ list were not even present on the cios’ list. A good opportunity is for the cio to bring this insight to the C-Suite and have a conversation that starts with, “we are not aligned on many of our metrics.”

these disconnects create an opportunity for cios to become better connected to the bottom line of a business. But CIOs are often ill equipped to do so. research highlights that cios communicate primarily in terms of operational- and transactional-level outcomes, while business leaders want to measure technology’s impact on the company’s strategic business objectives, such as business growth, agility, customer satisfaction and overall contribution to business outcomes. CIOs can use frameworks such as the balanced scorecard (which is generally familiar to executives) to report it’s

What’s holding back the ciO, the view From the boardroom…Fig. 9 – Which of the following are reasons for the ciO lacking the capability to provide the technology environment to drive business growth and enterprise availability?

Fig. 10 – Why do you work closely with the ciO and his/her team?

48% the cio is weighed down with everyday activities.

44% the cio lacks the necessary resource.

38% the cio is reluctant to take on new projects.

56% The CIO and his/her team are helpful in realising my department’s ideas.

54% The CIO and his/her team are an integral part of my team

48%44%

38%

56%54%

contribution while some produce annual IT reports detailing specific instances of how IT has enabled business initiatives.21

coach the leadership team on the opportunities and treats of itcios should spearhead the effort to coach – i don’t like the word educate – the leadership team on digital issues. This can include briefings, frequent updates about IT initiatives, and the use of new IT tools. Some CIOs write regular blogs detailing how IT might be used by the business.

All data from Sungard Availability Services research with Vanson Bourne, October 2013.

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start chasing innovationIt’s no longer good enough to just be there enabling innovative ideas; what’s imperative is working together side-by-side with C-level colleagues to co-create value as the business digitises. Be proactive. one cio uses the term “manufactured serendipity” to refer to the orchestrated series of events, presentations and workshops he initiates in order to spark ideas from within the executive ranks. he muses that the ideas they come up with are “manufactured” as a result of all these initiatives, which bring together both IT and business staffs. Another CIO has established an innovation unit to actively seek out potential technologies that may impact the more than 100 businesses that make up the group. This unit also works closely with the heads of these business units in order to be aware of the issues and challenges they face so that when they are in what they call “the eco-system” searching for new technologies they have a deep awareness of problems and issues across the group so can match with potential solutions.

Recognise that shadow it may not necessarily be a bad thingin some organisations, so called shadow or “rogue” it has emerged in response to the perceived inability of IT to deliver. With developments like “the cloud,” it is also much easier today to bypass the it organisation when procuring additional it capability. Traditionally, this has been seen as a bad thing and risky because it doesn’t have the same security or resilience that traditional it does. it also is potentially wasteful because it can duplicate work being done by IT or smaller tteams that that are buying hardware at a better rate if centrally purchased. And it often has inexperienced people dealing with vendors who get more out of them. CIOs need to distinguish between good and bad shadow it.

while the idea of ‘shadow spending’ has in the past been seen as a risk or threat, on the contrary it is often a sign of healthy innovation and presents a valuable opportunity for IT to work more closely with business partners to develop new capabilities. However, while users are becoming more comfortable and confident with technology, they aren’t always good at creating value with it.

having the Right cOnveRsatiOns:co-evolving the DigitAl AgenDA together (continued)

start having the right conversationsone ceo, formerly a cio that i interviewed as part of a research project some years ago revealed that he had found it much more difficult being a CIO than a CEO. It’s not that the technical aspects of the job are difficult, but it is unique amongst the C-Suite roles in requiring a cognitive alignment in order to optimise the value generated from it. it is the collaborative relationships that create the environment for the conversations that ensure that ICT and the business co-evolve on the digitisation journey.

Developing the digital strategy demands thinking about the exploration and exploitation of information. in the digital enterprise – and all organisations are digital today – achieving this requires having the right kind of conversations about information and technology opportunities. Achieving alignment is ultimately about having a shared understanding and commitment and a shared cognition between business and IT executives. For all in the C-Suite, it is about sense making, learning, understanding, and debate in respect of digitisation and digital opportunities and threats. rather than a document, the notion of strategy in the digital world is a continuous conversation about the future direction of the organisation.

cios should recognise that independent it projects can be driven by creative people – often out of frustration – in a company looking to push the business forward by harnessing new IT because they see interesting or exciting opportunities to improve the business. They want to experiment with technology. Departments like marketing want to move fast. they want to try things and see what works, but they don’t want to run a big IT shop.

With the amount of technology choice that business leaders have, the speed of change and the ease of using cloud applications, it sometimes makes sense for departments to develop their own capabilities. this is a healthy sign and cios should look for ways to harness the potential of this and put in place policies that both support the users and protect the organisation.

the cio needs to show where risks outweigh the benefit. When the IT organisation is close to the business it can feel confident to allow experimentation to happen, but they can also step in and transition it as it grows.An effective way for CIOs and business executives to evaluate technology projects outside the control of the cio would look at what the business side wants to do, such as understanding customers better. Then the cio needs to look which of the company’s systems now support those capabilities, and what is the risk and benefit of changing those capabilities.

so if it sees people experimenting where the risk of change is high and benefits are low it says to slow down and vice versa.

Don’t be the Department of noin some companies, the it organisation has a reputation for saying no to everything. indeed, in one company that i have worked with the cio was even known as the “CI-No” ! There may be valid reasons why the cio holds a particular position, but from the business perspective it is IT, yet again, constraining the business. The result is tension between the CIO who thinks technology needs to be controlled and the business side saying they want more of a role in the decisions, and pushing back at IT control efforts. Of course, getting involved early in initiatives can reduce such instances arising.

when involved, the cio can shape the direction of conversations. Additionally, IT also has to become more flexible in taking tech projects where they are. It could be a germ of an idea, an app half-built or fully-built, but IT has to be less picky on how it gets involved as CIOs become more flexible.

“With the amount of technology choice that business leaders have, the speed of change and the ease of using cloud applications, it sometimes makes sense for departments to develop their own capabilities.”

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1 Business at the speed of thought: Succeeding in the Digital Economy, Penguin Books limited, 2000.

2 J. luftman, h. Zadeh, B. Derksen, m. santana, e.h. rigoni and Z. huang, `Key information technology and management issues 2011-2012: an international study‘, Journal of Information Technology, Vol. 27, 2012, pp. 198-212.

3 see A. Bharadwaj, o.A. el sawy, P. Pavlou and N. Venkatraman, ‘Digital business strategy: toward a next generation of insights’, MIS Quarterly, Vol. 37, No. 2, 2013, pp. 471-482.

4 For a seminal study see H. Mintzberg, ‘Patterns in strategy formation’, Management Science, Vol. 24, No. 9, 1978, pp. 934-948.

5 illustrative studies include B. ives and m. olson, ‘manager or technician? the nature of the information systems job’, MIS Quarterly, vo. 5, No. 4, 1981, pp. 49-63; R.I Benjamin, C. Dickson and J. rockart, ‘changing role of the corporate information systems officer, MIS Quarterly, Vol. 9, No 3, 1985, pp. 177-188; C. Stephens, W. Ledbetter, A. Mitra and F. Ford, ‘Executive or functional manager? The nature of the CIOs job’, MIS Quarterly, vol. 16, no. 4, 1992, pp. 449-467; m. chun and J. mooney, ‘cio roles and responsibilities: Twenty-five years of evolution and change,’ Information & Management, vol. 46, 2009, pp. 323-334.

6 william synott is generally credited with coining the label “chief information officer” in a speech at the 1980 Information Management Exposition and conference. synott predicted that “the manager of information systems in the 1980s has to be Superhuman—retaining his technology cape, but doffing the technical suit for a business suit and becoming one of the chief executives of the firm. The job of chief information officer (CIO)—equal in rank to chief executive and chief financial officer—does not exist today, but the cio will identify, collect and manage information as a resource, set corporate information policy and affect all office and distributed systems.” In 1986, Business Week ran a story announcing the arrival of the cio; see Bock, g., carpenter, K. and Davis, J. e “management’s newest star: meet the chief information officer,” Business Week, 2968, October, 1986, pp. 160-172.

7 see J. Peppard, ‘unlocking the performance of the Chief Information Officer (CIO)’, California Management Review, vol. 52, 2010, pp. 73-99.

8 see D. marchand and J. Peppard. ‘leadership mindsets for it success’, The European Business Review, March/April, 2014 and J. Peppard, Why Chief Information Officers (CIOs) can Struggle in a Leadership Role, working Paper, european school of management and technology, Berlin, 2014.

9 A. ngugen, ‘only one former cio and 14 women are ftse 350 ceos,’ cio.com, Accessed 30th Dec 2013.

enDnOtes

10 J. Peppard, C. Edwards and R. Lambert, ‘Clarifying the ambiguous role of the chief information officer’, MIS Quarterly Executive, vol. 10, 2011, pp. 197-201.

11 r. Banker, n. hu, P. Pavlou and J. luftman, ‘cio reporting structure, strategic positioning, and firm performance’, MIS Quarterly, vol. 35, no. 2, 2011, pp. 487-504.

12 see J. ward, J. Peppard and e. Daniels, ‘Building a Better Business case for it investments’, MIS Quarterly Executive, Vol. 7, No. 1, 2008, pp. 1-14; and J. Peppard, J. ward and e. Daniels, ‘Managing for the realization of business benefits from it investment’, MIS Quarterly Executive, vol. 6, no. 1, 2007, pp. 1-11.

13 J. Peppard, ‘unlocking the performance of the Chief Information Officer (CIO)’, California Management Review, vol. 52, 2010, pp. 73-99.

14 J. Peppard and J. thorp, ‘what every ceo should know and do about IT,’ under review at Harvard Business Review

15 for an interesting study, see Memo to the CEO: Are you Getting the Best Out of Your CIO? Booz & company, 2013

16 See B. H. Reich and I. Benbasat, ‘Factors that Influence the social dimension of alignment between business and information technology objectives’, MIS Quarterly, vol. 24, no. 1, 2000, pp. 81-113.

17 J. Ward and J. Peppard, ‘Reconciling the IT/business relationship: a troubled marriage in need of guidance,’ The Journal of Strategic Information Systems, vol. 5, no. 1, 1996, pp. 37-65.

18 the 2014 state of the cio study reported that the ability to build relationships is what distinguishes between game-changer CIO and the also rans. see K.s. nash, State of the CIO 2014: the great schism, cio.com, January 1, 2014.

19 K.s. nash, State of the CIO 2014: The Great Schism, cio.com, January 1, 2014. what is revealing is that these figures were self-reported by the CIOs themselves.

20 for an excellent treaties on politics for cios, see K. Patching and r. chatham, corporate Politics for it managers: How to Get Streetwise, Butterworth-heinemann, oxford, 2001.

21 for an enlightened article on reporting it value, see S. Mitra, V. Sambamurthy and G. westerman, ‘measuring it performance and communicating value’, MIS Quarterly Executive, vol. 10, no. 1, pp. 47-59.

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© Professor of management, Joe Peppard, european school of management and technology

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Digital Dynamics in the c-suite · abdicate responsibility to their CIO. This is a fatal mistake. yet, it does provide a unique opportunity for chief Information Officers (CIOs) to