Jointly Drive Strategy
"The Best IT Strategy is a Business Strategy."
Nearly true. As the pace, scale, and impact of technological innovation and disruption have exponentially escalated, technology has become a primary influence on business strategy, strategic choices, and value-creation models. Consequently, a modern IT strategy is tightly integrated with business strategy, sometimes to the point that it is simply a continuation of business strategy.
However, in a survey by McKinsey on business technology, few business executives said their IT leaders were closely involved in helping shape the strategic agenda, and confidence in IT’s ability to support growth and other business goals was waning. Many IT departments and strategies continue to exist and operate in a vacuum, disjoint from other functions, cloaked in opaque activities that provide little visibility to the people funding them.
"There isn’t a single strategy in any business that isn’t enabled by technology. Technology is the common denominator in every single key strategic imperative in every company." Sheila Jordan, SVP and CIO of Symantec.
Today, most companies develop their IT Strategy independently of the organisation’s Business Strategy. The IT Strategy is neither derived from nor informs the Business Strategy. The results can be devastating:
- IT and Business Executives disagree strongly on the function’s overall priorities.
- Business executives, who are budget holders, do not feel in control of what’s happening with technology.
- There is little awareness of or agreement on how IT can meaningfully shape a business’s future.
- Business doesn’t trust IT - overall, executives’ current perceptions of IT performance are decidedly negative.
- Beyond providing basic services and managing infrastructure, just one-third or less of business executives say their IT functions are effective.
- Business executives think companies like AWS, Salesforce and Microsoft make better IT partners than their internal IT functions.
"The C-suite faces relentless pressure from shareholders to pick up the pace of product rollouts, pivot to adapt to ever shifting market changes and expand globally. Business and IT leaders must sync their strategies to achieve the speed and agility required to meet these expectations and at the same time remain focused on the cost effectiveness of IT initiatives." PwC
Xirocco’s IT Strategy Framework expresses and links the top-level Business and IT Strategies within the organisation, empowering both Business and IT leadership teams to jointly drive organisational growth & performance through more joined-up & complete strategies. With Xirocco, the Business and IT jointly drive organisational agenda and priorities.
When Business and IT jointly agree and drive the strategy, great things happen:
- CIOs are very or extremely involved in shaping enterprise-wide strategy, with the Business reporting much higher IT effectiveness than peers.
- The Business is likelier to say IT facilitates business activities, including new-market entry and the creation of new products.
- CIOs have better understanding of their businesses’ near- and longer-term technology needs. They are also more effective at driving partnerships and shared accountability with the business side.
Make Better Technology Decisions
Technology is a strategic imperative in nearly every organization, regardless of industry, sector, or geography. Few companies are immune to the influence of technology-driven disruption, innovation, or value creation. However, a prevalent lack of awareness about what exactly constitutes an IT Strategy causes unintentional friction with the Board and budget holders.
Often, a simple list of server OS upgrades, hardware replacements, database migrations or even loose collections of “fix it” task lists are presented as IT Strategy, causing significant Board disillusionment and distrust of IT. Also, IT Strategies tend to vary widely and wildly from company to company or even from Business Unit to Business Unit within the same company, making it hard for enterprise-wide, apples-to-apples comparison of Business Unit directions, choices and intentions.
Xirocco’s IT Strategy Framework ensures IT Strategies are more complete and built upon standards extracted from leading frameworks including TOGAF, ITIL, PRINCE2, COBIT, P3M3 etc. With Xirocco, all organisational entities (Group, Corporate, Lines of Business/Divisions/Business Units, regions, and acquisitions etc.) can be brought to a minimum standard and completeness of IT Strategy that allows organisation-wide views and cross-BU comparisons on intentions, priorities, and plans.
Improve Group-BU Alignment
Organic growth is an intrinsic part of every organisation’s strategy for overall growth, with other types of growth happening through M&A etc. With time-to-market speed and efficiency nearly always taking priority over good governance of standards, policies and principles, over time almost every organisation becomes a smorgasbord of technology solutions and capabilities that inevitably
cause significant functional duplication (e.g. two or more ERP systems, multiple Cloud platforms, multiple hardware models etc.) and a proliferation of standards. Just some of the suboptimal outcomes for uncontrolled, divergent growth are:
- Lost opportunities to leverage scale to secure better commercial terms with suppliers. Many of the best IT suppliers have internal limits on deal sizes, with values below a certain limit deemed “too small to pursue”. An organisation releasing five tenders of ten million each will get less attention from suppliers than an organisation releasing one tender of fifty million.
- Wasted IT budget managing multiple systems with same functionality, with further wastage in manual effort to extract and collate data of varying formats and standards for reporting.
- Burden on support services to learn and manage large portfolios of systems.
- More complex and onerous security processes to keep a large, complex IT estate patched and up to date.
With Xirocco, easily identify areas where Business Units and regions are diverging or duplicating from Group/Corporate IT Strategy, address these gaps through creation of Common and Unique IT Strategy components to increase alignment and drive out waste. In organisations where Group or Corporate is a provider of common IT services (e.g. IT Infrastructure, ERP etc), such common technology themes can be created centrally in Group or Corporate and “pushed” into the individual IT Strategies of Business Units and regions.
Deploy Capital More Effectively
"Only 18 percent of the technology budget is spent on developing new business capabilities; the remainder is spent on business operations and incremental business change." Deloitte Global CIO Survey
To sustain growth and stay ahead of competition, the Management Board and executive leadership will need insights and confidence to make big bets on technology-enabled business capabilities. Almost half of business and technology leaders say emerging technologies will significantly impact their business in the next three years. However, business leaders often consider technology investments to be a “black box” they know
how much is being spent on technology but do not have deeper understanding of the linkage between technology projects and business outcomes.
In many organisations, business leaders delegate priorities for IT investment to the CIO, resulting in misalignment of expectations and priorities, and a lack of business effectively engaging with IT to govern the portfolio of change. It is not uncommon to witness Board bewilderment when presented with the full IT Portfolio of planned and inflight projects.
Xirocco links technology initiatives to business aspirations in a radically innovative way that arms the Investment Board or Capital Committee with deep if-then-else insights to make well-informed, big bet IT investment decisions. With Xirocco, Business and IT leaders can collaborate and jointly agree on the right spending priorities and make joint Business + IT funding requests by outcomes, value and impact, not by who shouts loudest.
Monitor & Course-Correct
"Rapid changes in competition, demand, technology, and regulations have made it critical for organisations to respond and adapt quickly, mandating quarterly strategy reviews with real-time refinements and sprints to respond to triggering events." Recent McKinsey Global Survey
But organisational agility (defined by McKinsey as “the ability to quickly reconfigure strategy, structure, processes, people, and technology toward opportunities”) continues to challenge many organisations who are still practicing traditional methods of setting strategy, manually linking its various components and repeating 80-90% of the effort when strategy needs to be refreshed/underlying data evolves.
This Victorian legacy process is so laborious and error-prone that once agreed and approved, strategy goes away to live in the bottom drawer of a filing cabinet where it eventually deteriorates into irrelevancy. It is not given the mandate to govern, set delivery priority or dictate the strategic agenda and is taken over by daily grind, business-as-usual with its steady stream of ad hoc, point-in-time initiatives that tie-up resources without furthering organisation’s objectives.
In such legacy environments, it’s hard to execute against agreed set of strategic objectives let alone course-correct when intentions change. Real-time intervention is an even further removed dream for most organisations. Yet the rewards are rich for those that surmount this challenge - agile organisations outperform peers 1.5X financially, and 1.7X non-financially. They are also able to pivot within days, hours or even minutes as new threats and opportunities emerge.
Xirocco puts your approved strategy on the front panel above the steering wheel – visible every day for every employee so when intentions/conditions change, strategy can be easily updated in real-time with immediate insight into affected IT assets, initiatives, and resources. Organisations using Xirocco tend to practice Continuous Strategy where pivoting, changing direction and real-time intervention are the norm and not an episodic event triggered by a Board request.
Visualise the Impact of IT
Because technology is a crucial part of business strategy, boards and CIOs need to elevate their engagement and collaboration with each other. Now more than any time in our collective memory, it is imperative for Board members to truly comprehend how IT enables the business today and what disruptive technology changes are anticipated. They must engage IT in conversations (however uncomfortable) beyond hygiene matters and ultimately fund and vest authority in
the CIO to leverage technology to sustain the right to play and simultaneously grow the business by unlocking new revenue opportunities.
A significant challenge faced by CIOs in Board engagement is presenting all the information on how Business interacts with IT across multiple dimensions (assets, capabilities, resources, suppliers, money etc.) in Board-friendly, richly visual, and layered format. Most CIOs get 45 mins with the Board every quarter, and the rigid format of PowerPoint means these CIOs will likely never to have all the information handy in the Boardroom in the requisite format. The result? The proverbial can gets kicked to the next Board meeting three months from now and the CIO misses a crucial opportunity to make an impact, influence the Board and secure vital funds.
Xirocco is Board ready out-of-the-box (Board-orientation is in our DNA; we will never create anything that is not Board-orientated by default). No need to take outputs from a plethora of tools and recreate them in PowerPoint to make them look pleasant and presentable to a Board that is used to viewing fabulous consultancy-level slides. With its powerful linking engine, connect all elements of strategy in Board-ready visuals, navigate across multiple dimensions and drill into deeper levels of detail to keep with pace and direction of Board interrogation. Xirocco is the tool that CIOs power up in front of the Board to present their IT Strategy.
Identify IT Gaps & Weaknesses
Some questions often pondered by CIOs at some stage of their employment:
- How do I show the Board, in a meaningful way, that IT has been neglected and needs significant investment to up its game and be future-ready?
- How do I show the Board that we are not setup to respond to digital disruption taking place in our industry?
- How do I show the Business the impact and risk of age and complexity in our existing IT estate?
- How do I tell the Board that it’s hard to innovate when almost all our IT budget is used up to keep existing systems running?
The accelerating pace of change being driven by innovation in IT and its impact on business models is dominating the strategy dialogue in Boardrooms across every industry. Against such a backdrop, a struggling IT function can feel like a ball and chain around the ankle, inhibiting an organisation’s ability to adapt to changes and respond to opportunities. As technology becomes more integrated into the fabric of the business, technology risks also rapidly increase, threatening the
successful achievement of an organisation’s aspirations and derailing the journey to a desired target state. Communicating traditional “Impact vs. Likelihood” 4-blockers to the Board does not often present the real threat as this traditional method treats each risk as a stand-alone item that is managed in isolation by individual owners who don’t necessarily work together.
Xirocco lets CIOs communicate cumulative IT health and risks meaningfully to Board through cause-and-effect linkage to business aspirations and outcomes. Xirocco collates risks across multiple IT dimensions and links them coherently to issues that matter to the Board along with costs to negate such risks, effectively enabling the Board to understand the real, cumulative threat of risks and the funding required to address them.
Understand IT Costs
In a Gartner webinar, the presenter was asked how to best justify IT costs to the Board. The opening line of the response was relevant then and even more so now – “Don’t talk about IT as a cost, talk about it as an investment.” However, most CFOs and Boards persist in their view of IT as an opaque "black-box" of spending that needs to be continuously minimised.
They have little or no understanding of the main cost drivers, how the costs relate to business outcomes or the need to invest in areas that don't directly enable the business right now but in the longer term help IT lower costs and enable business agility. In such cases, IT must show the Board how each cost reduction will impact services and where meaningful savings are possible, and plough such savings back into the forward-looking IT Strategy that delivers new capabilities.
"IT costs can be reduced by up to 30 percent by taking a “bare minimum” approach that allows IT to continue operating at planned volumes but not more." McKinsey
Xirocco helps organisations understand the big IT cost categories that drive most of the IT spend through a Board-friendly, interactive IT cost dashboard. It helps deploy capital effectively and reinvest saving in forward-looking IT Strategy.
- Understand major IT cost categories and how much they each contribute to overall costs.
- Help communicate to the Board where IT spend is occurring and why.
- Develop a holistic view on possible savings prioritised on size, feasibility, speed of capture, and their impact on the business and its future readiness.
- Identify and flag IT spend that does not align to any validated strategic objective.
Collaborate & Cocreate Strategy
"With technology driving transformation, long-term sustainable value will only be created by unifying business and technology strategies to cocreate exponential value for companies." Deloitte
Historically, Management Boards have treated IT as an "enabler function" like Finance, HR, Legal, Facilities etc. The Business would develop its strategy first and read it out aloud to the CIO to go away and make the IT part of it possible, at the lowest cost. Today, IT is an intrinsic part of any business strategy as technology is becoming the catalyst for business change and transformation. With lines between business and technology blurring and
expectations of IT shifting, organisations that are digital leaders are performing business strategy and IT strategy in the same continuum and not as separate, sequential activities. Business leaders and CIOs are exploring new ways for their respective functions to more effectively collaborate, innovate, and cocreate new sources of value. Just some of the benefits of unifying business and IT objectives:
- Increase shareholder value.
- Remain relevant and competitive.
- Extract optimal value from investments in new IT capabilities.
- Achieve organisational agility.
- Predict and respond in real-time market triggers.
"Business and IT strategy are closely related. You must involve your CIO in business strategy and planning." Deloitte
Xirocco provides a new approach for Business and IT functions to partner and cocreate a Business-linked IT Strategy in real-time across departments, geographies, and external partners. With Xirocco, CIOs can collaborate with Business leaders to create roadmaps for achieving each business opportunity, fully aligned with technology capabilities, assets, resources, suppliers, and investments.