No longer is the IT department in full control of the technology supply, prescribing what each business unit should have while the rest of the business broadly accepts their recommendations.
Business units are now much more proactive when it comes to their IT needs, and as a result the CIO must be prepared to speak to the business in terms they understand.
To manage this change in the IT ecosystem, CIOs have the opportunity to act as a facilitator of information. While supply is not always under IT’s full control, a CIO can still understand the total costs associated with all IT needs.
In turn, the CIO can then use this information to manage demand and optimise investments, assisting business units in making the correct choices for their needs.
CIOs who are able to provide a clear breakdown of costs per service can drive the cross-functional alignment and get the buy-in needed for IT to be a vital change agent for the business. They have the facts needed to support real-time critical trade-off decisions, as well as real-time “what if” scenario analysis.
Some CIOs are going a step further and acting as an ‘IT Service Broker’ in their businesses. Addressing the IT supply and demand issue mentioned above even more aggressively, they run IT as a business within the business, shifting IT away from a cost centre and towards being a driver of business innovation and efficiency. This means that effective CIOs are increasingly acting as a service provider and trusted partner to the line of business.
Through close cooperation and collaboration, both sides can better understand each other’s business objectives. In doing so, businesses can work towards delivering the most competitive and effective service, which ultimately impacts top line growth. This allows IT to avoid the never-ending battle with departments of balancing the budget versus delivering new products and services.
In the rapidly moving age of digital innovation, it is vital that these insights are provided as quickly as possible, and as part of a clear, two-way dialogue, in a way that the business can understand.
When both IT and the business are able to clearly communicate with one another, the transparency allows them to collectively drive seven important business outcomes:
1. Proactively manage IT spend to budget: Manage variance in major IT spend areas such as software, hardware and labour costs to eliminate overspend surprises and underspend clawbacks.
2. Make informed staffing decisions: Understand staffing costs across geographies and roles to more effectively manage internal — and external — labour.
3. Understand infrastructure cost and trends: Gain visibility into infrastructure costs across all assets to be more informed about what drives spikes and appropriately prioritise reduction efforts.
4. Prioritise public cloud decisions: View public cloud costs across providers to monitor spend and trends and understand which departments are causing resource constraints.
5. Align project resources to business priorities: Explain where project costs are being allocated across the business to quantify how much IT spend is going toward run costs versus growth investment.
6. Manage application costs and resourcing: Quantify real value of applications by tying cost to business drivers such as cost per web visitor, and consistently manage development, test and production instances.
7. Drive shared accountability of IT costs with the business units: Find opportunities within IT budgets to focus on innovation by explaining what the business can get for its IT spend and how that impacts bottom line costs.
These IT Service Brokers are entering the same competitive marketplace that external providers reside in, implementing agreements with individual business units and setting quarterly reviews.
In this way, much like with external providers, they are ensuring that they are always aligned with the business unit’s goals and providing the most efficient service. Many CIOs today offer business units a service catalogue, presenting differing IT options in an unbiased manner.
The ongoing change in the IT ecosystem affected by the demand for digital innovation means that in order to remain effective, CIOs must be able to act as a partner to the line of business.
To make this relationship work, CIOs must use tools to be able to offer business units a transparent and accessible picture of current IT spend and services, as well as suggestions on what the most effective approaches will be. Only then through this collaboration can CIOs ensure that they that remain at the heart of the business.
In an ideal world, IT can be leveraged to drive business goals such as security, customer satisfaction, competitive differentiation and new user acquisition.
Sourced by Chris Pick, chief marketing officer at Apptio