But to provide all this, they would have to fill a series of critical gaps within the function. These included strengthening the skills of the category manager, collecting better information about demand, tracking vendor performance for services, setting up software connections between packages (such as Power Advocate and Oracle), building an automated contract management workflow, developing a more consistent product hierarchy (to solve an ongoing problem with miscoding), and storing profile and performance information as part of the vendor master records. These priorities did not match the wish lists of the company’s business leaders, whose individual demands focused on far less strategic measures: the procurement of services, contract management systems, and a new electronic sourcing initiative. In the end, by having a capability-centric road map in place, the IT department could delay or defer less-relevant requests.
4. What Support Do You Need?
If asked whether they have a technology road map for the whole company — a developmental path for making IT more strategic — many CIOs would say they do. But in practice, most of those blueprints are developed with very little input from other business leaders. Answering a few diagnostic questions can help CIOs better demonstrate their ability to create value. (See Exhibit 2.)
Exhibit 2: Diagnostic Questions for Chief Information Officers
1. Do we understand how the business creates value in the marketplace?
2. Do we know what the business needs from IT to accomplish this?
3. Can we show how every dollar we spend in IT creates value for the business?
4. Are we contributing to the capabilities that really matter for our company’s strategy?
5. Have we identified the biggest gaps between the current state of our IT and the value creation system that we’re building?
6. Are we developing our investment road map jointly between business leaders and IT?
7. Do we use this road map to determine capital and resource allocations?
8. Do we have the governance mechanisms in place that we need to follow our road map?
9. Do we understand how the evolution of technology may enable improvements in our distinctive capabilities?
10. Do we consistently refresh the road map, update our IT architecture, and retire outdated systems as needed?
Source: Booz & Company
One key success factor is full support from the CEO, and from other primary leaders throughout the organization. This road map will determine which IT investment decisions are approved and how rapidly they are implemented. Business leaders must take the road map into account when considering new technology requests and investment opportunities. Prioritizing investments must be a joint business and IT effort; if IT is left alone to decide on priorities, the road map will not achieve the buy-in required to successfully deliver results. IT leaders, for their part, will need to maintain a high level of judgment: revising the road map when appropriate, distinguishing full-enterprise from business unit priorities, measuring output as well as compliance, holding to the priorities that are set (recognizing that even the largest companies can’t do everything at once), and keeping the core function thin, flexible, and pragmatically close to the work.
The Leader’s Advantage
If you are a CEO, a CFO, or a business leader, you should insist that the IT function develop a complementary road map for its investments. Your business and IT leaders should develop this road map collaboratively. Conversely, if you are a chief information officer seeking to adopt this sort of road map, you may find yourself alone at first. You will need to influence the culture and governance systems of the larger company. You might, for example, seek to include the IT road map process in annual strategic planning exercises, set up joint business–IT governance councils, or establish new metrics for the performance and relevance of IT projects. You will need to insist on broad business participation in high-level IT decisions. Finally, you might seek IT oversight policies such as those imposed at Royal Dutch Shell PLC, where 80 percent of IT spending was dedicated to the 200 most strategically important applications.