6 business concepts IT leaders should master

February 18, 2021

Originally published on CIO.

CIOs must master critical business concepts when speaking to their leadership peers. Here are some essential terms.

Communicating technology’s value is critical for any CIO seeking to curry favor for their digital business initiatives. Legions of former CIOs can attest that engaging C-suite colleagues and the board of directors in buzzword bingo may doom even the best laid tech plans.

When it comes to articulating the business value of technology, IT leaders must think and speak like their business peers, says Art Langer, academic director of Columbia University’s executive masters of science in technology management program. That means toning down the tech talk rhetoric in favor of more palatable, business-friendly themes.

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“Nobody is interested in talking about technology,” says Langer, who helps IT leaders learn how to communicate to board members.

With the pandemic shaking up businesses worldwide, CIOs must be conversant in concepts that help them articulate the value of delivering both high-quality employee experiences (EX) and customer experiences (CX), using digital technologies.

Here CIO.com leans on the wisdom of CIOs, consultants and analysts to define key business constructs with which IT leaders should become familiar.

Anywhere operations

Mobile devices, peripherals and software have proliferated in the enterprise for years, but the pandemic accelerated that trend and spurred new collaboration scenarios. In 2020, CIOs ramped up investments in video conferencing, virtual whiteboarding and other tools that help facilitate remote work. But this work-from-anywhere paradigm challenges CIOs’ ability to manage their assets.

“Employees are more dispersed than ever before, and that has made CIOs have to rethink things like security and productivity,” say McAfee CIO Scott Howitt, who is grappling with such tasks at the security software maker.

But the upside of perfecting such “anywhere operations” is great, according to Gartner research released in December. “A digital-first, remote-first operating model enables greater operational efficiency, improves worker productivity and democratizes access to a diverse and geographically distributed workforce. And it will eventually lead to ‘combinatorial innovation,’ drawing on different technologies and services to create new forms of innovation,” the research firm says.

The constructs of “anywhere operations” vary by company. Atlassian’s Team Anywhere strategy ensures that teams are empowered to do their work and remain connected, engaged and healthy, says CIO Archana Rao. Digital technologies work well enough; the challenge lies in managing remote teams that are struggling to find work-life balance and stave off burnout. Harder to master is cultivating the “feeling of belonging and the relationship building,” Rao adds.

Business resiliency

That anywhere operations you’ve constructed? It must work. All. The. Time. Sure, CIOs are handcuffed to their cloud vendors, and a Zoom or Amazon Web Services outage is out of their control, but a resilient organization builds in backup and redundancy plans in case the primary solutions fail.

“CIOs need to understand how they can use technology to support business resiliency and ensure their organization is able to deal with the challenges that are sure to come,” Howitt says.

Moreover, IT leaders must prove to the board of directors that they are using technology to not only make the business more resilient but transform it, Howitt says.

State of IT

Every year, CIOs must convey to their CFOs the organization’s “state of IT.” The state of IT weighs things such as budget planning and execution alongside strategic business imperatives, according to Mark Schwartz, an enterprise strategist at Amazon Web Services who previously served as the CIO of the US Citizenship and Immigration Service.

“The state of IT also determines how effectively new investments can be deployed,” Schwartz writes in an AWS blog post. “And it’s the current state that determines what risks the company faces. All of these are critical pieces of information for the CFO and the rest of the C-suite.”

The description of the current-state should include a “balance sheet” view or snapshot of IT, rather than a cash flow view in the budget plan, and it should count people, systems and functions, tech gaps and deltas, as well as cybersecurity posture and other risk factors, such as costs of delay. “Just as the assets on a company’s balance sheet are used to generate future profits, IT assets can be used in the same way,” Schwartz says.

The pandemic underscores the importance of this meeting.

Digital business model

Digital business models — think Goldman Sachs’ Marcus consumer banking service —create digital twins of existing businesses in search of new growth. For most organizations, such endeavors remain aspirational.

They needn’t be, given the proper planning. Consider a retail pharmacy, which sits in the middle of a sprawling pharmaceutical ecosystem that includes medication makers, insurance firms, doctors and patients, says Ari Libarikian, global leader of Leap, McKinsey’s business-building unit. A retailer could create a digital pharmacy that would enable patients to order their medication via a website or mobile application in just a few clicks and have it shipped the same day. No trips to physical branches required.

Streamlining such a labyrinthian process is a daunting challenge to solve, but one that would be highly lucrative for IT leaders, Libarikian says. Organizations pursuing digital business models must operate like startups, embracing iterative testing cycles to improve products, and hew closely to customer journey maps, which track consumers’ paths to products from acquisition to consumption.

Digital business KPIs

As companies create digital business models, it behooves IT organizations to track digital business KPIs, which come in two types, according to research published by Gartner analysts James Anderson and Paul Proctor in April 2019.

The first set assesses the progress in digitalizing the current business model, spanning sales, marketing operations, supply chain, products and services, and customer service. A second set of KPIs assesses the progress and opportunity of net-new revenue sources created by pursuing new digital business models and are clearly differentiated from nondigital sources.

It’s one thing to create KPIs, but another to discuss them. CIOs must be able to explain to their C-suite peers and boards what these digital KPIs measure and why they matter to the business.

Business OKRs

Digital KPIs are often incorporated in a broader strategic framework known as business objective and key results (OKRs), which use metrics to track achievement of a specific goal.

For instance, Atlassian’s OKRs track revenue growth, customer count and productivty, among other data points, says Rao, who uses analytics to track such critical metrics, as well as to decide what technologies to invest in and to gauge their performance.

This highlights the importance for CIOs of leveraging data in how they run IT, Rao adds. Of course, the data inputs and outputs are constantly changing.

“The world is changing so fast,” Rao says. “There is so much we can learn and evolve to do better for our company.”

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