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
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.
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Subrato Basu, Vice President APJ for Gartner's |
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.
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.
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:
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:
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Marketing strategy
-
Sales strategy
-
Offering (product) strategy
-
Business model
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Vertical/industry strategy
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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.
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
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Financials of the enterprise and key business units
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Quality of the workforce
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Agility and responsiveness to change
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Marketing and sales execution
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Brand value and reputation
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Quality of the customer base
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Operational excellence
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Innovativeness
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Information technology
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.