For the past eight years of my career as a CIO, all of my decisions have been guided by my vision of IT for competitive advantage. From vendors, to toolsets, partners, staffing, organizational structure, relationships, and recruiting, my choices have been anchored by my belief that IT can fuel differentiated business capability.
The majority of CIOs I speak with don't really think of IT as a component of competitive advantage. Instead, they wait to be given a “seat at the table” when they will instantly be perceived as C-Level peers and, only then, will be given the resources and respect to drive competitive advantage with technology. But, until this happens, most subscribe to the ideology of what I call “Commodity IT” - the understanding of IT as strictly an overhead function, with a focus on efficiency and the main priority on keeping costs as low as possible.
Typically, these Commodity IT shops are led by a CIO who reports to the CFO. They hire leadership who specialize in relationships and procurement and outsource thought-leadership and technical expertise through contracts with consulting firms. Big projects are usually structured in a phase-gated, waterfall fashion, which is intended to align the delivery process with contractual success criteria.
On the other hand, a “Competitive IT” shop is led by a CIO who reports directly to the COO or CEO who is deeply engaged in transforming the business. They invest in people and technologies that truly differentiate the business and outsource the rest. Competitive IT continually experiments in a virtuous cycle of learning, and the knowledge gained is kept in-house. Competitive IT drives the operational effort involved with non-differentiating services toward zero in favor of staffing for innovation.
Get Out of the Datacenter Business
The primary way to free up resources for innovation–budget and headcount–is by moving to the cloud. All non-differentiating workloads should be moved to best-of-breed Software as a Service (SaaS) and workloads that truly differentiate the business should be custom applications deployed on the public cloud like Azure or Amazon Web Services (AWS).
One challenge with moving to SaaS is that many companies don't have robust service offerings and rely on partners to perform delivery. An IT shop without software competency can find itself forced to use traditional full service vendors. Relationships with these vendors often sour as a result of unmet expectations and commensurate problems which result from a lack of business understanding. A strong in-house team has the advantage of a technology perspective which is informed by accumulated business knowledge.
Through heavy integration into the mechanics of the business, engineers in a Competitive IT shop will likely find that the technology components that may make a material difference must be built, not bought. The best way to do this is through cloud infrastructure, which uses modern continuous delivery methods that ensure speed, quality, and business alignment.
Staffing for Innovation
Competitive IT requires different skill sets than Commodity IT. The most important thing a CIO can do is hire great people. Competitive IT competes with premium consumer technology brands like Apple, Google, Facebook, and Twitter for talent, and therefore, typically pays more than its Commodity IT counterparts. Staffing for competitive advantage requires hiring people who are as well-versed in consumer technology as they are in enterprise technology, because most of the innovation is happening in consumer web-scale space.
“A ‘Competitive IT’ shop is led by a CIO who reports directly to the COO or CEO who is deeply engaged in transforming the business”
Competitive IT is centered on the core belief that IT can affect the bottom line. To do so, the IT department must help the company sell more of itsproducts or services, increase margins, or help create new products or services.
Business Technologists represent a relatively new role in the IT organization. Through a rare combination of people skills, technical skills, and business acumen, they understand how technology can be applied to what the business is already doing to amplify or improve outcomes. They are part technologist, part ethnographer, part anthropologist and part businessperson. To be effective, they must be perceived as part of the business and organically earn the right to spend time with business leaders.
Product Managers are the Business Technologists of software development in that they must have the same people skills, technical skills, and business acumen. The days of getting “user requirements” are gone. Instead, Product Managers embed themselves within business units to see how business is being done in order to apply technology to drive differentiation.
The vast majority of the differentiated business value will be delivered via in-house developed applications so it is critical to hire excellent developers. Competitive IT uses DevOps approach for software development and deployment so the developers need to be philosophically-aligned with the concepts of continuous delivery, continuous integration, and web-scale consumer product development. A Competitive IT organization is deeply-engaged in open source software. This eliminates any need for dependency on vendor-product teams and empowers the IT team to build what they need when they need.
In today’s post-perimeter world, where the corporate network and the internet blend into one and IT no longer has control over the devices users use to access data, Competitive IT takes a different approach to security. Progressive CISO’s realize that securing the enterprise has shifted from a “keep the bad guys out” approach to a “rapid detection and response” approach. In this reality, nothing is trusted and security is enforced with robust user-behavior analytics and system-behavior analytics. They need to embrace a people-centric approach to security that acknowledges everything is “live on the internet” and identity becomes the new control plane.
A Competitive IT shop has data analysts and data scientists who are known and trusted by salespeople, department heads, and company management because of their continuous proactive outreach and business impact. In order to move past the BI analytics of the past, data scientists must be comfortable with cloud-based data stores, cloud-based machine learning services, and other technologies for data ingestion and transformation. They experiment with algorithms, visualizations, and data driven narratives to directly support sales, business unit strategy, and management decision-making.
IT Practices must Change
Competitive IT looks outside the traditional “IT-Industrial Complex” perspective for emerging technology and trends that can be applied to drive competitive advantage. The majority of the innovation and disruption is not coming from the established IT suppliers, but rather from Silicon Valley startups, incubators, tech founders, universities, open source software, and web-scale companies that are born digital.
In Competitive IT shops, governance is not accomplished via the traditional PMO. Instead, project progress and health are communicated via a combination of weekly lightweight status reporting and demonstrations of work-in-progress rather than project managers giving green/yellow/red status on projects. If a picture is worth a thousand words, a demo is worth a million. The power of prototypes is unparalleled for motivating and aligning teams. Competitive IT must have the ability to build software and integrate best-of-breed SaaS solutions. They look to the consumer internet for integration patterns that support innovation and agility most notably loosely coupled, RESTFul APIs.
Few businesses are immune from the disruption that new technology causes. It behooves most to weave technology capability and differentiation into the DNA of their operation. Great CIOs will recognize this as a moment of unique opportunity where they can elevate their organization from utility operational support to become a first class contributor to their company’s success. To do so, they must possess clarity of mission and be deliberate in choosing the right strategic footing. They should not confuse their responsibility to keep the lights on with the aspiration to positively impact the bottom line through which they will earn their seat at the table.