The final destination along the IT Value Journey is the Transform state, where IT is driving new business opportunities and industry disruption through strategic innovation. This last article in our five-part series explores how to sustain the Transform state and avoid the pitfalls that many IT leaders experience.
You earned the opportunity to drive transformation by excelling in customer service, infrastructure management, and software development, which freed up the resources needed to keep up with the technology enhancements the business needs. During that journey, you took baseline measures of key IT metrics and drove continuous improvement. These enabled you to measure the value that IT creates and earned your team the trust, credibility, and respect of the business community. These collective achievements elevated the stature of IT and put you in a position to transform the business through technology.
Congratulations! You reached the pinnacle of the IT Value Journey. So how do you stay there? What are the pitfalls the IT leaders before you have encountered, and how do you avoid them?
This article explores how to measure IT innovation and explains the importance of continuous improvement.
Staying in the Transform state requires ongoing innovation with clearly measured top- and bottom-line impact. Now that IT is truly a strategic partner with the rest of the business, IT leaders must maintain a deliberate focus on how to support busines objectives with innovative technology. But they should also look beyond current objectives and advise business leaders on potential new, disruptive business models that technology can enable. That’s a very proactive role for IT and a far cry from the reactive role in the Maintain and Enhance states of the IT Value Journey.
Challenge IT and business leaders to deliver solutions that contribute one million, ten million, a hundred million or a billion dollars of new revenue or incremental earnings, depending on the size of your company. Define one new business model that clearly differentiates your business by leveraging technology in ways the competition can’t.
We frequently coach our clients to think about the value of their data. Every business in your industry collects and stores similar data. But you probably structure and link your data differently from the competition. Can you look across systems to create a total view of the customer? Can you link systems to offer the customer a seamless experience?
We once applied predictive analytics for a company to identify the sales leads that would most likely become customers. The model proved to be greater than 97% accurate and saved the company approximately $50 million a year by discontinuing numerous activities with low scoring leads. How can you leverage data to drive better informed business decisions, greater customer service, or to dramatically reduce costs?
An important practice in the Transform state is to review innovative technologies with business leaders on a quarterly basis. Remember, business executives don’t need to understand technology but it’s up to the IT leaders to explain the value that technology can create.
By time you reach the Transform state, you should have a well-documented enterprise architecture. Periodically review that architecture to ensure that it remains aligned with the business strategy.
Finally, allocate resources to prototype one to three new technologies each year that align with the business vision and strategy. Brainstorm with business leaders on how these technologies can drive differentiation and competitive advantages.
Our previous articles frequently mention continuous improvement. The journey from Maintain to Enhance required process improvements and new metrics. Those processes went into continuous improvement mode while we navigated the Enhance state and the path to Transform. Why is that critically important?
Speaking with and observing dozens if not hundreds of IT leaders, it became clear that IT can lose trust, credibility, and respect quickly if they lose focus on the fundamentals. In the Maintain state you may have seem customer satisfaction starting at a low number. You implemented the processes that we described and raised satisfaction to 60%, 70%, 80% and higher.
Every quarter and every year, you must challenge IT to incrementally improve. Whether it’s customer service, infrastructure management, or software development, you continue to publish your strategic metrics as described in previous articles and demonstrate the improvement.
As soon as IT slips backward, the trust, credibility, and respect diminish. And IT loses the opportunity to participate in business transformation.
Sure, you may see a periodic setback. That tells you more focus and, perhaps, resources need to be placed on whatever process is slipping. Sirens should be blaring, and bells should be ringing. Don’t take slippage lightly. The rest of the business expects, and has grown accustomed to, IT improvement. You must continue to deliver.
We’ve seen several IT leaders fall off the Transform pedestal by not paying attention to the fundamentals that got them there in the first place. Never lose sight of continuous improvement. Follow our guidance from the articles in this series and IT will remain a strategic asset for the business.
Efficiency and Effectiveness
The IT Value Journey introduced many processes and strategic metrics. On closer inspection, we saw the IT focus transform from efficiency to a combination of efficiency and effectiveness.
The journey from Maintain to Enhance required IT to become more efficient by applying several best practices. You started measuring customer satisfaction, infrastructure and operations, and software development against cost. You strove for better service at a lower cost. You were driving efficiency, freeing up resources to focus on enhancements that the business needs.
In the Enhance state, you were able to measure the value that IT creates. You could demonstrate the impact of IT on revenue and costs. And in the Transform state you are driving new business opportunities. The top- and bottom-line impact is a measure of effectiveness.
Continuous improvement combined with innovation require us to focus on efficiency and effectiveness simultaneously. That combination is key to a sustained journey in the Transform state where IT drives shareholder value.
How Are You Doing?
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Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management and Digital Transformation. Larry has served as CEO, COO, CIO, chief digital officer, and management consultant for public, private, international and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues.