The main reason for having a CIO and IT department is to lead the corporation in its strategy for Information Technologies (IT). At a detailed level, those strategies are constantly changing but, overall, there are four generations of strategy.
Each generation reflects a major shift in the worldwide IT market, with the latest being the consumerization of IT. CIOs and their teams need to know the end game ‐ the final generation of strategy ‐ to be the most valued and influential leaders in the Boardroom and around the business. This article summarizes the four generations of corporate strategy for IT, and the ultimate destiny of IT leadership.
We know where corporate strategies for IT began, and how they will end. The end game looks nothing like the beginning, but we shouldn't be surprised. This is a long‐term strategic journey, with much evolution along the way. From time‐to‐time, at intervals of about a decade, that evolution includes a major inflection.
The central focus of the strategy changes, a new generation of strategic conversations begin, and executives look at the value of their IT leaders in a whole new light. When that happens, it does not mean simply a change in direction or running faster along the same road. It means taking a different position in the strategic landscape, and continuing to lead the journey from there.
Major developments in the worldwide IT market drive new generations of strategy. As participants in that market, we're all on the same journey together. For a CIO or IT professional, to sustain and grow your value means keeping pace with the market, and having a clear sense of where it is evidently heading. Right now, the market is demanding third‐generation corporate strategies for IT, focused on the value that consumers and others create from technology.
The previous generation of strategy was focused on efficient IT delivery, so it's a game‐changing inflection. It is also the opening to the fourth and final generation. To establish where we currently are, and why, and explore how the journey ends, let's start with how it all began.
Generation One: Technology
There was a time when corporate strategies for IT were about technology. Back then, IT departments designed and created all the applications the enterprise used, and operated hands-on all the IT hardware. The only users of a company's IT were its employees. Customers interacted with the enterprise in person, by mail and telephone. There were little, if any, IT‐based interactions between companies. An enterprise could think about, plan, and invest in IT in isolation of anybody else except its IT suppliers.
That was the era of the first‐generation strategy for IT - the 'IT Strategy'. It was typically expressed as a 'roadmap' - usually with only one road - of the company's plans for changing IT. We often took weeks or months to formulate the strategy, then documented it in a detailed report. That kind of timescale and level of detail were feasible then, since IT was yet to become deeply integral to fast‐changing markets and communities, and to customers' own lives and experiences.
And, although it now seems hard to believe, company executives weren't yet concerned about how much IT was costing.
Generation Two: Efficient IT Delivery
The emergence of packaged software and outsourcing changed the Boardroom perception of IT. It became licenses and services bought from other companies, represented by costs on spreadsheets and diagrams in presentations. Executives had to increasingly take it on trust that the IT the company paid for actually existed, and was worth what they were being asked to spend.
IT departments also added to the perception that IT was now about managing costs. The growing popularity of IT meant they were faced with more work than the time available. To help prioritize their time, they started 'pricing' their work as services, much like an external supplier, a tactic that other hard‐pressed business departments have rarely copied.
This had two unhelpful by‐products: companies started treating their IT managers as if they were suppliers, rather than business leaders; and IT people became seen as the bottleneck for changes that other people wanted to invest in.
The 'IT‐as‐cost' perception in the Boardroom was further underlined by the combination, in quick succession, of Y2K and the initial e‐Business 'bubble'. All‐in‐all, executives became concerned about how much they were now spending on IT, with no credible evidence of the value they were getting in return. The reaction of Boards was to constrain IT costs, press for efficiencies, and ask for evidence of the value that IT produced. That behavior became, de facto, the second generation of corporate strategy for IT. Usually, it was not formulated and documented with the same level of rigor as first‐generation strategies - or consciously formulated at all.
As people have tried to relate IT spending to the value Boards are looking for, a fundamental truth has emerged. IT costs and IT people cannot, on their own, deliver that value. It comes from business operations and business changes. Driving efficiencies in IT spending can ensure the enterprise destroys less value, but produces no new value. To achieve the latter means focusing on what people do, productively, with the assets and services that the spending on IT delivers.
To Be Continued...
This blog is reposted with permission from Chris Potts. To read his blogs, you can visit: http://www.dominicbarrow.com/home.html
