Making IT a Business Differentiator: From Cost Center to Value Driver

The Problem

IT organizations are most often viewed as a cost center that requires substantial investment each year without offering much significant value. They are viewed as a business necessity as opposed to a business differentiator. CIOs have the opportunity to change this mindset and position IT as the primary driver to transform the business.

The First Step — Changing IT's Mindset

So how can CIOs change the mindset of business executives and transition IT from being a cost center to a business differentiator? The first step is to take a proactive approach and leverage technology to transform the business. IT has the opportunity to take the lead and identify game changing opportunities to advance the company.

Identify Opportunities

The next step is to create a plan and roadmap that will define the initiatives to implement. There are four areas of focus that CIOs can pursue to identify opportunities:

• Review the business's strategic plan
• Look at internal business processes
• Look at the customer experience
• Look at your technology landscape

Gathering information from these 4 areas will help CIOs produce the plan and roadmap that can then be reviewed with business leaders and executives.

Review The Business's Strategic Plan

Companies should have a strategic plan which outlines the company's goals, directions, roadmap, challenges and initiatives over the next 3 to 5 years. This plan should also outline the strategy for each respective business unit. If the business units are large, they may have their own strategic plan.

Often times, IT is not invited to participate in the definition of the business strategy, which is another issue the CIO should address. IT needs to participate in the setting of strategy in order to provide technical guidance and insight as to where technology is heading. In any event, reviewing the business strategy is a great place to start and identify opportunities where IT can contribute significant business value.

Look At Internal Business Processes

Take a look at current processes by collaborating with key business leaders to understand the challenges they face in the market. They understand the strengths and weaknesses of your competitors and also understand the challenges or deficiencies your company faces delivering solutions or products in the marketplace. Have the team dive deep to gain an understanding of the current processes, inefficiencies, challenges, and opportunities to overcome those challenges.

With older organizations, there are usually a number of processes that are extremely inefficient. The reason? People are resistant to change and often times just do what they are told. Rather than asking questions, they just do what they are told even though what they may be doing is very inefficient or even unnecessary. When you ask why do we do things that way? The typical answer is "we've always done it this way."

Another area of challenge is collaboration. Often times business areas function in silos with little communication or collaboration. In addition, they are not totally aligned on the overall process, making it inefficient.

I recall a situation in which a customer was placing a significant order with our company. The order consisted of a number of products which needed to be procured, received and put into the manufacturing process in order to deliver the final products. This required collaboration between the materials management, procurement, supply chain, IT and ecommerce teams. Since all these teams were used to doing their own thing, the executives and sales leaders got a firsthand glimpse of how inefficient and inflexible their teams were.

Taking a look at your business processes will yield a number of potential opportunities for IT to create significant business value.

Look at the Customer Experience

Customer experience is another area of opportunity to identify differentiation opportunities. How do customers interact with your company? What are the various touch points? What information is shared? How do they engage with your team members and your systems? Are you providing timely updates and information to your customers? How do your biggest competitors engage with customers? Answers to these questions should yield a number of opportunities to better serve your customer.

Companies that are inefficient often force their inefficient processes onto their customers. This severely hinders the customer experience and often times creates more work, both for the customer and internal team members.

Amazon has set the gold standard in terms of customer experience, communication and product delivery. Companies strive to achieve the standard that they have set. If your customers find that they don't get what they need from your company, they will find another company that provides what they need.

Evaluating your customer experience should provide an opportunity to streamline processes and inject new functionality to better serve your customers or decrease employee workload.

Look at Your Technology Landscape

Look at your technology landscape to identify outdated applications, which if upgraded or replaced by new products may provide opportunities to enhance the business. Since IT has been viewed as a cost center in the past, the tools, technologies and platforms are probably not the most current or robust.

One company I worked for had not invested in technology for over 14 years! IT was viewed as a cost center and therefore costs were kept to a bare minimum. The result? The entire IT software and infrastructure was out of support. Software platforms did not provide the latest features which hindered internal processes and interactions with the customer. It also increased the cost of delivering solutions and slowed down the delivery of customer facing solutions.

One quick win for the CIO may be to leverage internally used technologies and solutions for customers. For example, as part of one IT modernization and digital transformation program, we implemented a new project collaboration platform. Because of our B2B business model, we were able to leverage our technology platforms for potential customers — sharing information, digital assets, project status reports, and more. We also created white label B2B ecommerce sites for our potential customers, providing great value and becoming a true business differentiator.

Technology is a key component in helping any company transform and become more competitive. Evaluate new technologies such as AI or machine learning to see if they can provide any opportunities.

Define the Roadmap and Execution Plan

Looking at your business processes, customer experience and technology landscape should yield a number of opportunities for IT to help transform how the company delivers products and services. Evaluate each of the opportunities to determine the impact and investment required. There will most likely be some low hanging fruit that require minimal investment but offer great business value.

A roadmap and execution plan need to be assembled and reviewed by business leaders and executives. The roadmap should contain all of the high business value opportunities. For each opportunity, define the current state, future state, gaps, cost to achieve and potential savings — all of which are part of a business case. If possible, try to define baseline metrics for each initiative in order to track progress and impact once the initiative is implemented.

Execute

The final step is execution. Assemble the business and IT teams to deliver each initiative. Collaborate with business leaders to monitor and track the results of each initiative once it is launched. Having key metrics and KPIs will provide a true indicator of the success or failure of the initiative.

Conclusion

IT leaders can change the mindset of IT being a cost center offering limited value. IT leaders need to take a proactive approach to leveraging technology. They cannot do this alone and need business leaders to provide their insight on how to better serve customers and gain competitive advantage.