Building and Leveraging Advanced Business/IT Relationships
As with earlier ‘disruptive’ technologies such as the telephone and the automobile, it has taken some 50 years for information technology to establish itself as a major force of societal change. From healthcare to manufacturing, from financial services to airlines, and increasingly from education to entertainment, there are few cultural activities that are not significantly affected by IT. Technology has not only transformed the economics of buying and selling, it has spawned new types of businesses and enabled the creation of powerful new modes of social interaction. By providing unprecedented access to information and consumer opinions about goods and services, it has empowered customers and undermined the traditional dominance of suppliers.
As information technology becomes ever more vital for business success, why is Enterprise IT often left out in the cold?
The effects of this technological revolution have not all been benign, as the recent turmoil in the world’s financial markets has demonstrated. Business executives and government regulators have found themselves lamentably ill-equipped to assess and deal with the risks of deploying technology in markets where deals can be transacted in milliseconds, often without human intervention.
These opportunities and challenges should create ideal conditions for the traditional custodians of technology – the CIO and senior IT staff – to take on a wider leadership role. At a top management level, our research shows that this appears to be occurring, as central IT’s relationship with CXO-level management is both tightening and improving. But our research into the relationship between CIOs and boards of directors shows that these parties are as far apart today as they were in the 1980s.1 Faced with IT-related business challenges, the top governing body of an enterprise is more likely to bring in outside specialists than to turn to its own internal IT team.
Our research revealed problems on both sides: typically, board members lack the necessary IT experience or acumen, and CIOs are unable to explain the opportunities and risks in ways that senior business executives can understand. It might seem that this disconnect could be remedied by educating board members and improving the CIOs’ communication skills. But such measures do not address the root cause of the paradox: the subordinate position of the enterprise IT function in most firms.
Enterprise IT has traditionally been subservient to the business: providing systems and services in response to explicit business demands. This is still how most senior business executives today regard the IT function. But now that IT pervades and influences so many aspects of our business and personal life, this conventional IT Services Provider role is no longer sufficient, and a wider range of business/IT relationship models is required.
Our research has surfaced two further relationship models, both of which involve a more proactive style: the Technology Promoter (educator/evangelist) and the Business Partner (agent of change). In order to meet the needs of the business, CIOs need to get to grips with and invest in all three of these models, while recognizing that some of their characteristics and success criteria are mutually incompatible.
There is also a further role, less commonly found: the Executive Peer. This occurs when senior IT people are invited to advise business management on the impact of IT at a strategic level. As we will see later, this role can be a high-level manifestation of any of the three other roles, though it is qualitatively different.
The ‘4Ps’ of business /IT relationships
There are four distinct roles that Enterprise IT must address. Each has an analogy with the external and supplier sides of the IT marketplace:
- Provider – supplying professional IT systems and services in response to explicit business requests, much as IT outsourcing firms do for many firms today
- Promoter – exploring and introducing new technologies relevant to the business, staying aligned with new hardware, software and internet service vendor offerings
- Partner – acting as agent of change within the business, in conjunction with or as an alternative to external management consultants
- Peer – advising and guiding business executives on the strategic impact of IT, much like an outside board-level director
To support all of these ‘4P’ roles, Enterprise IT will have to overcome some major challenges. These include becoming more willing to embrace new technologies; supporting a business community that is increasingly capable of deploying IT and using it to innovate the business; and ensuring that the IT function is organized, equipped and motivated to respond to differentiated business needs. Enterprise IT must also pay more attention to its relationships with external IT services suppliers, because they can help or hinder it in fulfilling the various roles. But perhaps the greatest challenge is that all business-facing IT executives must become ‘Business Relationship Managers’ – able to turn their hand to any of the ‘4P’ roles, to meet the needs of the business at the time.
Drawing on case examples and our ongoing research, this report will explain how each of the ‘4Ps’ has evolved and where they should be applied in today’s rapidly evolving IT environment. It will also describe the education courses that the Leading Edge Forum (LEF) has developed in order to help clients address the organizational and human demands of business/IT relationship management – demands that must be met if IT executives are to provide stronger leadership within their firms and earn their place at the top executive table.
1. Amir Hartman et al, The CIO and the Board, LEF, October 2009.