Does your IT department have a strong involvement in developing overall business strategy?
What role does your company’s IT department play within your enterprise? Although this is specifically about the chief information officer (CIO), smaller companies can think about their IT departments as a whole. Your choices are:
1. Operational (keeping the IT processing running while watching costs closely, also called “keeping the lights on”)
2. Business services manager (enabling an agile portfolio of business services)
3. Chief Innovation Officer (helping the company develop an overall business strategy)
Depending on when the question was asked, the “correct” answer could have been any one of the above. As companies made the changeover from manual to automated processes decades ago, operational best described the role of the IT function. Back then, the title of Chief Information Officer may not have even existed. More recently, the role of IT morphed again into more of a business services manager role, with IT being responsible for an increasingly number of internal and customer-facing applications and their related hardware.
In 2016, however, it’s time that IT be thought of as a driver of business strategy, according to a recent IDC study on the changing role of IT leadership. The study included a survey of 150 CIOs, one-quarter of whom consider their role as chief innovation officer. Interestingly, 41% of CIOs still see their role as operational (i.e., keeping the lights on).
For all companies, it’s either keep up or risk being overtaken by the market. Consider the taxi industry, your basic point-to-point transportation in cities large and small. Getting a lift started with hailing a taxi on the street corner, then calling into a dispatcher and later using an app. Taxi companies now have centralized dispatch, real-time monitoring of their fleet and the ability for drivers to accept credit cards and PayPal.
But despite these innovations over many years, the industry never truly understood the potential impact of technology companies Uber and Lyft and their ability to turn the industry on its ear. In Boston, the cost of a taxi medallion, which gives a taxi driver the right to operation in a city, has plummeted from $670,000 in 2012 to under $200,000 today. In the Big Apple, the drop in medallion prices was “only” 50%, from $1 million to $500,000.
Could you imagine having half of your company’s value wiped out in a few years, as the result of technological changes? I’m not singling out the taxi industry, but is should serve as a stark reminder of what can happen to an industry that’s not proactive in its thinking. The changeover occurred quickly and caught nearly all companies off guard. Not only are Uber and Lyft less expensive, in many cases they are more responsive to customer needs and deliver better overall experience.
They key is to not be caught off guard. An IT department should be in operational mode to keep costs down and the lights on. It also should serve as the business services manager for the company. But the IT departments of companies that hope to be around for decades longer cannot take their eyes off the bigger picture, serving as the chief innovation officer.
Trying and failing is OK. But not trying is never OK in today’s rapidly changing economy. Your customers are demanding more, and so are your employees. Innovative companies are learning lessons from their industry and other industries to make themselves stronger, more effective and more attuned to meeting customer needs.
It’s one more ball for your IT department to keep up in their air.