Advertisment

Getting the Right IT: Navigating Growth

author-image
PCQ Bureau
New Update

Business growth strategies depend largely on the viability of the

enterprise's overall strategy and its ability to execute. To best support

business growth, CIOs must understand the enterprise growth strategy and adapt

technology, people and management practices accordingly

Advertisment

With a growing number of economic signals indicating a return to business

growth, CIOs face their next great challenge: ensuring that IT can support this

growth. Executive confidence is building, but a high degree of economic

uncertainty lingers across the globe.

Concerns of CEOs and Executives



One of the most difficult tasks of an executive management team is to sort

out the many different signals that, in some manner, indicate either good times

or tough times ahead. As we look to the future, we see that there are

tantalizing pointers toward a recovery that would require investments on the

part of business to capture the revenue from that wave.

The first and most important task CEOs face is to get the business out of the

nosedive and back to level flight. This takes precedence over everything else.

This is followed by rebuilding trust. Restoring it is an early repair action for

a chief executive. Trade cannot recover without it.

Advertisment

Subrato Basu, Vice President APJ for Gartner's

Business Unit —The Research Board

2010 will require CEOs to create business strategies in order to demonstrate

to the board and to the employee population that there is a plan and that

following it is worth staying around for. The stakes are high in this round for

many more companies than in the past decade.

CEOs expect to set sail on a new strategic journey of long-term growth.

However, being entrepreneurs and inherent optimists, they will be thinking about

ideas and plans for that journey, even now.

Advertisment

Enterprises require the right IT



Executive expectations for IT have evolved from technology services to

business contribution. CEOs now want IT to contribute to strategic

differentiation and growth. They are increasingly asking their CIOs: Do I have

the right IT? And how do I know? A better way for CIOs to answer these questions

is to connect their IT capabilities with the unique perspectives of their

business model.

The business model sits between strategy and operations, offering an

integrated and simplified, higher-level view of how the business delivers and

harvests value. It helps members of the executive team make strategic choices

about how the business and IT should be configured without having to dive into

the operational and process details. That means investments inthe following:

Understanding customer intent. The critical question for every business is

what are customers doing now? What is their new behavior. How are they switching

products, or the timing of their purchase behavior. What are their primary

reasons when canceling service. What are their new price sensitivity thresholds?

The capture and analysis of detailed customer activity information has never

been more important.

Advertisment

Predicting the impact of business conditions: The volatility of many key

factors is at a decade high - labor rates, sales order lead times, interest

rates, bank lending covenants, inflation, energy prices, currency exchanges

rates and many others. Your business executives need to analyze the impact of

these factors. They need the capability to do sensitivity analysis in order to

test out their potential tactical responses and to frequently and rapidly

re-forecast financial outcomes as input factors change.

Connecting strategy to outcomes: You have been collecting operational

performance data in large warehouses for any years. Now is the time to mine it

for meaning. Brainstorm hypotheses of the possible connections between factors

and then do the math. Analyze the data for patterns and correlations. Seek out

the leading indicators that act as new headlamp beams as your leadership tries

to find its way through the fog of recession. This is an opportune time for CIOs

to become more proactive in preparing for growth by gaining a better

understanding of the enterprise's growth strategy. On a backdrop of IT cost

optimization even enterprises aggressively preparing for a return to growth

often expect no increase in IT funding in the near future. CIOs find that the

long-term initiative of improving the operational efficiency of both IT and the

business is here to stay. Start by a framework for describing growth strategies.

Then, formulate a return-to-growth plan.

Framework to support business growth



Fundamentally a framework is to determine an enterprise's most likely

approach to growth. According to the framework, there are two key determinants

of an enterprise's growth strategy:

Advertisment

Viability of strategy: Viability of strategy measures how well suited the

enterprise's overall business strategy is to current economic and market

conditions. It consists of seven indicators:

  • Marketing strategy

  • Sales strategy

  • Offering (product) strategy

  • Business model

  • Vertical/industry strategy

  • Geographic strategy

  • Entrepreneurial vision

Not all CIOs are directly involved in enterprise planning

for a return to growth. Therefore, some may be reluctant to make changes until

they get clear notice that business recovery is under way. It is suggested that

CIOs use the framework's “Ability to execute” as a lever to formulate IT plans

that will support return-to-growth strategies and be shared with other

enterprise leaders.

Advertisment

Ability to execute: Ability to execute is a measure

of readiness for growth. The 10 ability-to-execute indicators reveal how ready

an enterprise's products, services, processes and people are to execute the

strategy and respond to change:

Competitiveness of products/services

  • Financials of the enterprise and key business units

  • Quality of the workforce

  • Agility and responsiveness to change

  • Marketing and sales execution

  • Brand value and reputation

  • Quality of the customer base

  • Operational excellence

  • Innovativeness

  • Information technology

Advertisment

Discover the right IT



As discussed earlier, the right IT is the IT that is consistent with all

perspectives of the enterprise's business growth model. If the business model is

well designed, this is also the IT that delivers maximum value to the enterprise

and its customers. CIOs can follow certain planning steps. Begin with the

following checklist for tracking progress:

  • Start IT planning for growth now-before real growth

    returns.

  • Monitor the status of your industry's expected rate of

    growth in 2010.

  • Ask for your enterprise's growth targets and find out

    when they must be met. Come up with ideas for how IT can support and drive

    growth.

  • Identify shortcomings in pre-recession forecasts and why

    they occurred. To improve forecasting, recommend new forecast sources and

    analytics.

  • Continue cost optimization efforts in IT, aiming to

    reduce run costs immediately if they are a high percentage of your IT budget.

  • Run stress tests and a capacity analysis, planning for

    enough growth but not more than projected.

  • Ask to participate in the enterprise's growth strategy

    planning, then recommend idea management as a means for employees and partners

    to contribute ideas.

  • Get approval to participate formally in product and

    service development, then establish an IT innovation process to match

    solutions to product and service ideas.

Right IT's Focus - contributing to business growth model



Four areas to revisit in 2010 and finding new ways to maximize its

effectiveness with the backdrop of using business models to understand the

inherent strengths and challenges:

Technology: Reduce the complexity of IT,

particularly the number of applications; build rapid integration capabilities;

increase capabilities in information management and analytics; increase use of

pay-as-you consume IT; prepare to scale up and down quickly; invest in CRM,

business intelligence and other systems that help the enterprise sense market

shifts; innovate to build stronger relationships with core customers and improve

marketing outcomes

People and organization: Defend against talent

poaching; consider identify and prioritize needs for new IT roles, such as

reinvigorated relationship management; recognize that demand must return before

head count rises; outsourcing functions to lower short-term IT costs quickly

Process: Develop an innovation program; focus on

process design to achieve differentiation and/or to implement a Lean

organization; use IT to drive down the total cost of processes.

Management: Balance increasing demand for IT with

little or no increase in IT budget; consider use cost allocation/ charge back to

ensure that demand for IT justifies expenditures; continue pushing for

standardization and for application portfolio rationalization with all key IT

assets; refocus IT and business initiatives away from siloed objectives and

toward a true enterprise strategy; Focus on business process management;

institute strategic vendor management; And finally, CIOs should always be

fine-tuning their IT approach by using business growth models systematically to

understand the inherent strengths and challenges in its way of doing business to

drive the enterprise's growth. Navigating the recovery is not a one-time

activity.

Advertisment