IT: Cost Center or Strategic Enabler?

Cross posted from the Salesforce blog

As I talk and write about business transformation generally, and IT transformation in particular, I often meet technologists who sit within traditional businesses, frustrated at the lack of progressive attitude towards IT that CIOs often harbour. The reaction to my somewhat revolutionary talk of business agility is an understandable “that’d never happen here”. Indeed it’s very hard to talk about revolution when you work inside an environment that is focused 100% on the mechanics of IT. Vacuums aren’t the easiest thing in the world to innovate within. One only needs to look at parallels in a different world to see that change can happen in the most dire of circumstances – the Arab Spring in Tunisia, Egypt and other Middle Eastern countries are a good analogy for grass roots led innovation.

The innovation paradox (the fact that those who need to innovate are often the very organizations whose structures make innovation difficult) comes up time and again. Recently I was a little frankly gobsmacked at an article I saw in a local publication which compared and contrasted the opinions of a couple of large Australian banking organizations with regards to how critical IT is in helping deliver growth. I’m doing a bit of work for an Aussie bank, and it’s been fascinating to see how banks, one of the last bastions of large protected industries, have differing levels of understanding about how economic and technological changes are introducing new threats to their comfortable status quo.

The CEO of a major financial services  company took an incredibly dismissive perspective saying that IT was unlikely to create ‘genuine competitive advantage’ for banks:

How many sources of genuine competitive advantage from technology have you seen any big bank create in the last 20 years? I can’t think of many – I don’t think that’s a coincidence.

Bear in mind that this bank, according to the article, has moved IT down the reporting chain and done little to discourage a string of senior IT departures. It highlights the fact that business transformation is something that can’t happen unless the organization understands where it is today and, more importantly, what it needs to do to get to where it wants to be in the future. When business transformation relies on IT to deliver its own transformation (and more often than not, IT transformation is at least a part of business transformation) the CIO is a pivotal figure in articulating a culture and tone that sets transformation firmly at the forefront.

As a contrast, compare this to the Commonwealth Bank of Australia. CIO of CommBank Michael Harte reports directly to the CEO. That tight coupling of IT and overall strategy has led to a reported $1B core banking upgrade over the past five years. Add to this the fact that CommBank CEO calls IT the first of four key pillars that will drive commercial success for the bank and you have a stark contrast to the “no competitive advantage.”

While it would be easy to look at this situation as something purely relating to banking, I suspect (and my experience would indicate) that this dichotomy exists across other traditional industries – name a legacy vertical – manufacturing, mining, telcos or airline and we see examples of progressive organizations using IT transformation to deliver real competitive differentiation. Sadly we also see organization that consider IT to be simply about “keeping the lights on”.

So what is a large organization to do? And what can IT leaders within an organization do to give themselves the best chance of being granted a mandate to do more than just “keep the lights on”? Here’s a list of actions that can be taken to ensure agility from within, and give the best shot of gaining outside buy-in for innovation:

• Understand the core strategy of the business and foster conversations how IT can directly deliver upon that strategy
• While compliance is always important, foster conversations with other business leaders that focus on enabling rather their agility rather than locking them down through compliance
• Consider building a “black ops” team tasked with delivering agile “quick win” technology solutions for the business – empower this team to use the tools they need to get the job done regardless of corporate technology norms
• Embrace systems that facilitate collaboration – both across the IT team but also across different business units
• Look to ways to offer the business self-service and higher degrees of technology autonomy

We need to be realistic here and acknowledge that change won’t happen overnight and won’t be quite as broad as the more revolutionary among us would like. But just as the actions of a few individuals created a ground swell that led to the Arab Spring, so to can a handful of IT practitioners within the most conservative of organizations create an avenue for change.