The CIO’s opportunity to be a pioneer enabling business change

Profile picture for user cebess By Charlie Bess March 30, 2015
CIOs have experience that is directly applicable to organizations that can enable greater business value and profitability, but only if they recognize it within the context of the business.

via Gapingvoid

Last week. I took the opportunity to listen in on an HFS Sourcing Savants session - recording and slides can be found here. The session covered the following areas:

  • What are the business changes driving enterprises to make changes to their IT and Operations infrastructures (e.g. digital, robotics, AI)?
  • Is traditional outsourcing dying?
  • Is our talent keeping up this As-a-Service? What should organizations do??

from a number of the panel member’s perspectives.

This session filled the entire hour with dynamic discussion, so there was no time for audience questions. I submitted quite a few to the panel and since they couldn’t be addressed, I thought I’d share them here and attempt to answer them from my understanding. If you have a different perspective, I’m interested in your comments:

Q: What do the business and IT organizations need to do to address the move to platforms from the traditional product approach and its effect on the business model?

I actually tried to answer this question in a previous blog post on diginomica: Will all businesses shift to product platforms, enabled by IoT?

Q: Is the strategic element of the relationship with the C-suite really about human capital or about the shifting business and technology trends and the need for innovative approaches?

In the old model of outsourcing and services, the primary focus of the service provider relationship (and even the IT organization in many cases) was functional elements, treating them as a commodity (e.g., uptime and personnel utilization). I doubt that the underlying service processes and capabilities for these areas will be viewed as a commodity in the future. The labor arbitrage that has dominated outsourcing for the last 20 years has run its course as a disruptor and the ‘no-shore’ model will dominate the future. The automation processes that the service provider delivers and the people who understand and maximize impact are definitely not commodities.

The relationship with the C-suite needs to shift to focus on the business elements that keep them ‘up at night’ and the leaders and stakeholder’s goals for the future. It needs to change to doing even more with more using the abundance of capabilities available, instead of the business as usual approach that consumes most organization’s technology budget. This means the IT organization may need to do more portfolio management and stop those elements that are not owned or proven to generate value. This will be disruptive for both the business and the service providers, so organizational change management techniques will become even more critical.

Q: What role does the CIO have to make changes in the business when automation starts to remove the middle management/knowledge workers for the corporation?

The CIO has an important role to play, since they should have already experienced the adoption of automation, cloud, IoT and other as-a-service options within their own organizations. They need to take that experience and express it in the context of the rest of the business. This kind of re-engineering of the enterprise will continue and expand. The CIO can significantly reduce the risk and increase the confidence in the inevitable changes for the entire business.

Q:  It seems that the 'no shore' model of automation will force off-shore organization to move up-market -- do you see this happening and how?

I definitely see this as an inescapable shift. The greatest concern for the off-shore organizations will be addressing the communication latency and fluency needed for interactions with the business. Anything that increases inertia in collaboration will be a significant detriment to a relationship. The interactions will be driven to tightening ties, relationships and depth of value impact or enter of commodity-based death spiral. Too often these relationships are structured based on technology or other elements that are core to the service provider and not to the business – that foundation for interaction will not be tolerated in the near future.

Q: What functions in the organization are up to the task of this system integration opportunity -- or is that just another business process to be provided as a service?

Without a doubt, third party management will be a core competency of the CxO (not just the CIO). As more organizations move to as-a-Service relationships for a larger percentage of their business functions and understanding, the drivers and governance of the entire service space will be critical.

I firmly believe and have said so for over a decade that there will be organization who offer these third party management functions as an outsourced business process. It will not be right for every organization but there are cases when it will be necessary, to allow a business to focus on other concerns, much like third-party intermediaries have tried to perform this role in the outsourcing market.

Q: Most of the discussion by this panel has been on non-core business processes, what do you see as the IT organization’s role in driving attention engineering and automation into core business processes?

This whole concept of cloud and ‘as-a-Service’ have at their foundation automation techniques --automating the normal, well-understood events of the day and focusing the people on the anomalies, turning them into opportunities. This has been a driving force in the IT processes for quite a few years or longer for really effective organizations. The IT organization needs to expand that experience base out into the rest of the business processes, enabling the CxOs to internalize the implications and make the changes from a footing based on experience. This is an opportunity that should not be overlooked.

Endnote: I really enjoy panel discussions like this since the diversity of perspective can usually enable you to think about concepts that are totally outside your normal, working context. What say you?