By Peter High, President, Metis Strategy
Value happens at the intersection between IT and the business. This means that for IT to seize opportunities, the CIO must initiate the right conversations, at the right time, with various business leaders. For the CIO, these discussions lead to clear view into corporate strategy across the organization.
The reward for doing this? IT can innovate across the enterprise, because the CIO has a full view of each division and business unit, eliminating redundant or contradictory investments. This equates to driving substantially more value within the enterprise in the process.
In this excerpt from my book, Implementing World Class IT Strategy, I give an overview of how Jo-ann Olsovsky, vice president of technology services and CIO, BNSF Railway, has managed this:
When Jo-ann Olsovsky stepped in as CIO in June of 2008, the company’s demand for IT was increasing, as many of its strategic projects and projects mandated by the government were being brought to life through technology.
BNSF Railway has long been one of the strongest companies in the world from an operational perspective. At its core it is a major logistics operation. For instance, identifying cargo that enters a seaport in Los Angeles, loading it onto a rail car from a ship, hauling it across the country, and oftentimes engaging a vast array of trucking partners to take the cargo over the “last mile” of delivery direct to a customer. This logistical and operational strength is at the core of BNSF’s success.
The company’s track record had been enviable, and as the company continued to grow, demand for IT’s systems and services continued apace. When Olsovsky stepped in, IT’s resources and budget had not grown to the same extent.
In the face of this limitation, she knew it was important to get greater clarity from the rest of the organization so that she could ensure that the top priorities were addressed first. Also, increasingly important was a need to create a linkage between the strategic plans from the divisions of the company and IT itself. The paramount need was an enterprise-wide, multiyear view of technology. What IT stood to gain from such linkage was a clearer perspective on its conundrum of demand outpacing IT’s supply of resources.
Olsovsky and her team engaged the leaders of each of the divisions and embarked on an exercise to more fully understand the plans of each as well as to understand the current business processes and systems as they interconnect.
Under Olsovsky’s watch as part of the annual planning cycle, the technology team works to understand the business direction, current challenges, and risks from both the business and the technology points of view.
Business objectives are documented and are then translated to technology objectives. This means writing technology plans in simple language so that people outside of IT can understand the direction and suggest enhancements to them.
Also, by engaging with the various divisions Olsovsky’s IT team was in a position to read across the divisions, and began to uncover themes across the company.
Immature IT departments treat the relationship with each business unit as an independent set of conversations and planning exercises. They don’t look at the commonalities and differences among the plans.
Yet IT is one of the few parts of an organization that should identify commonalities, teasing out the needs of each division, with all the leaders present. This ensures that each hears the objectives of the others and can suggest additions or subtractions from the plans.
Once commonalities are brought to attention, IT can identify a single solution that will address similar needs of the divisions.
Olsovsky removed the denseness of IT’s plans and made them more transparent. After all, the clarity IT is after is not just for itself but for the divisional leaders as well.
Along these lines, the total cost of ownership of each IT investment must be evaluated. Business cases should always include the total cost of ownership as a key financial metric, and therefore a key decision-making criterion.
IT departments should lead the way in spotting technology trends and how those trends might serve new partnerships between various divisions of the organization. How can a CIO recognize cues from conversations and interactions with peer leaders to understand where IT might be helpful? It begins with regular, informal interactions with executives from across the company to complement more formal interactions that the strategic planning process might entail. It also means remaining abreast of trends to push the thinking of these leaders, or to more readily identify where a need or an opportunity articulated by another leader might be met with an investment in the areas defined by the trends.
In recent years, some of the key trends and opportunities that IT departments and their companies more generally have focused on a great deal have included
- Social and mobile network interactions
- Consumerization of IT
- Advanced data analytics
- Virtualization and cloud computing
By identifying and discussing trends like these with other divisions, IT can further promote coordination overall.
Peter High is the author of Implementing World Class IT Strategy and founded Metis Strategy in 2001.