Consultant, IBM Center for Applied Insights
At the IBM Center for Applied Insights, we’re always searching for new best practices to share with IBM, our clients, and the rest of the world. Which is why, at a recent team meeting, we gathered to discuss a new article from McKinsey. In “The do-or-die questions boards should ask about technology”, McKinsey outlines nine questions all boards should be posing to their company management in order to be “technology winners”. You’ll probably notice that few of these questions focus on the technology – they focus on how to get business value from the technology. These nine questions fit so well with what we try to accomplish at the Center, I thought it would be a good exercise to pull key insights from some of our studies to see how we are helping to address them:
1. How will IT change the basis of competition in our industry?
As we’ve seen in many industries, technology is radically changing the competitive landscape, allowing new companies to gain significant market share from established players. In our 2012 Tech Trends report, we segmented over 1200 respondents into 3 groups based on their organizational stance on emerging IT. What we discovered was that the leaders (Pacesetters) were ahead of their competitors in the mobile, analytics, cloud, and social business spaces. These Pacesetters believe emerging technologies are critical to their business success and are using them to enable new operating and business models to improve their competitive position.
2. What will it take to exceed our customers’ expectations in a digital world?
Customer expectations are as high as they’ve ever been - customers demand an experience that is convenient, immediate and hyper-personalized. In “Why leading marketers outperform”, we found that leading marketers deliver targeted, personalized messages to customers in real-time through channels such as social media and mobile. These marketers encourage innovation, measure every customer interaction and touch point, and collaborate regularly with IT. Compared to traditional marketers, these leaders have a three year CAGR that is more than 40 percent higher.
3. Do our business plans reflect the full potential of technology to improve our performance?
Investing in technology is expensive, but it can yield incredible returns and boost performance. We asked over 1500 IT decision-makers about their attitudes in the Platform-as-a-Service space in “Exploring the frontiers of cloud computing.” We found that the leaders, or “Pioneers”, were adopting PaaS as a way to drive innovation and improve application lifecycle across the enterprise. For these pioneers, benefits included increased resiliency, efficiency, data management integration, and optimization. According to one respondent, a VP of IT, utilizing PaaS can make a company “more nimble and cost-effective, with consistent performance and faster roll outs.” Sounds like a pretty good payoff to me.
4. Is our portfolio of technology investments aligned with opportunities and threats?
A technology portfolio must clearly reflect current opportunities and threats, change regularly, and balance short and long-term technology investments. In our Sourcing study, we looked at CEMEX, one of the world’s leading suppliers of cements, as an example of company that leveraged opportunity and minimized risks with its long-term sourcing strategy. CEMEX realized it needed to accelerate its transformation and become more agile to respond rapidly to new opportunities and threats. It engaged with a strategic sourcing provider to cut costs, improve productivity, and deliver transformative innovation. CEMEX built innovation into its sourcing contract by requiring the provider to invest annually in innovative projects that helped CEMEX achieve desired business outcomes.
5. How will IT improve our operational and strategic agility?
Across industries, customers expect new customized products and services, faster than ever before. In order to decrease time to market, companies can leverage IT to improve operational and strategic agility. We studied operations strategy decision makers from financial markets firms in “Beating market mandates: How winners are re-engineering financial markets operations” to better understand the characteristics of leading companies. The leaders in the study excel at meeting both regulatory and marketplace requirements, and typically introduce new products and services in 3 months or less. These leaders are extremely agile - focusing on improving access to analytics and reducing complexity.
6. Do we have the capabilities required to deliver value from IT?
At the Center for Applied Insights, many of our studies are about identifying and understanding the groups that get the most value from IT. Whether it’s Chief Information Security Officers who have a mature security strategy, CMOs who act as Marketing Scientists and deeply understand their customers through analytics, or CFOs who accelerate performance through analysis and prescriptive insight, we want to understand the capabilities necessary to get the best possible value from IT.
7. Who is accountable for IT and how do we hold them to account?
Who “owns” IT is becoming increasingly difficult to determine. Leading organizations have clear operating models that determine accountability for IT activities - it’s not just the CIO who is accountable anymore. In “Accelerating performance: The evolving role of the CFO”, we discuss how the CFO must contribute to the company’s IT strategy as well. This study looks back at the 2010 IBM Global CFO study, to see how the 2010 leaders are performing today. The outperformers excelled in finance efficiency and business insight, and continue to outperform financially today. However, in order for these leading CFOs to accelerate the performance of their organizations, they must now expand their influence beyond financial decisions to broader, strategic choices about business and operating models.
8. Are we comfortable with our level of IT risk?
With explosive growth in connectivity and collaboration, information technology is becoming increasingly complex and difficult to manage - managing risk from IT must be an enterprise-wide priority. In our article series “Security Essentials for CIOs”, we define an approach to manage all forms of IT risk, whether it is cybersecurity risk, IT compliance, risk to the supply chain or technology impacts to business transformation efforts.
9. Are we making the most of our technology story?
The McKinsey article could not have ended on a better question. We aim to bring stories to life - to show how leaders are building and advancing their businesses with IT. We use data to identify best practices, and communicate an IT story that addresses competition, strategy, value, performance, and risk.
Time and again, we’ve identified leaders in our studies and determined that these leaders are asking and getting answers to the nine questions above. If “digital technologies are disrupting industries,” then to be a technology winner in any industry, companies need to ask the right questions about IT strategy, and, more importantly, act on the answers they receive.