As regular readers of my blog will know, I’ve been talking about moving beyond alignment for a number of years now. The fact is, too many CIOs have been able to get by on the basis of managing the technology black box — and CEOs and CFOs have been complicit in allowing these same CIOs the freedom to do what they want within tightly controlled budgets, not wanting to sully their hands with “all that technology stuff.” But those days are rapidly coming to an end. The technology genie is out of the bottle; today’s business-unit leaders are more dependent on technology than ever before, and they are also much more tech-savvy. CIOs can no longer hide behind the technology black box — it’s time to change the IT game forever. It’s time for IT to drive business results and connect all technology investments to business outcomes.
Today’s new CEOs are looking to CIOs and IT to make a direct impact on business goals from investments in technology. While every business must make technology investments to sustain operations, IT must move beyond simply keeping the lights on and connect the dots between effective growth strategies and new technology investments. This requires a different set of technology and business skills: different people, process, and technology in the IT organization. In fact, the organization is so different we now call it the business technology organization, or BT. The distinction between IT and BT is subtle but important. BT represents the fusion of the IT organization into the rest of the business. In a BT organization, the lines between IT and business units are blurred. What is important is a focus on the roles needed for effective business technology strategy execution. What’s not important are reporting lines.
Yes, that’s right — I’m suggesting CIOs should stop working on IT strategy. The days of developing a technology strategy that aligns to business strategy need to be behind us. Today’s CIOs must focus on business strategy.
Let’s face it: Does sound business strategy even exist today without technology? Most CEOs would likely agree that, unless you are running a lemonade stand, any successful business strategy must have solid technology at its core. The challenge for today’s CEOs is that, while planning business strategy in isolation from technology is sub-optimal, it remains the most common way business leaders develop strategy. And while there have been many great books about strategy, the specific challenges facing the CIO are largely absent.
That’s why Forrester has researched the ways in which companies develop technology strategy and also why we have developed the Business Technology Strategic Planning (BTSP) Framework. Our new BTSP framework distills Forrester’s current research into an easy-to-follow guide that has at its heart the understanding that there should be no IT strategy, just business strategy with a technology component, or BT strategy.
Now you might think we’re crazy — after all, many firms, including Forrester, earn substantial revenue from advising CIOs on IT strategy. But as I see it, IT strategic plans belong in a museum.
Corporate CIOs should not ignore the network-centric nature of cloud-based solutions when developing their cloud strategies and choosing their cloud providers. And end users should understand what role(s) telcos are likely to play in the evolution of the wider cloud marketplace.
Like many IT suppliers, telcos view cloud computing as a big opportunity to grow their business. Cloud computing will dramatically affect telcos — but not by generating significant additional revenues. Instead, cloud computing will alter the role of telcos in the value chain irreversibly, putting their control over usage metering and billing at risk. Alarm bells should ring for telcos as Google, Amazon, et al. put their own billing and payment relationships with customers in place.
Telcos must defend their revenue collection role at all costs; failure to do so will accelerate their decline to invisible utility status. At the same time, cloud computing offers telcos a chance to become more than bitpipe providers. Cloud solutions will increasingly be delivered by ecosystems of providers that include telcos, software, hardware, network equipment vendors, and OTT providers.
Telcos have a chance to leverage their network and financial assets to grow into the role of ecosystem manager. To start on this path, telcos will provide cloud-based solutions that are adjacent to communication services they already provide (like home area networking and machine-to-machine solutions), such as connected healthcare and smart grid solutions. Expanding from this beachhead into a broader role in cloud solutions markets is a tricky path that only some telcos will successfully navigate.
We are analyzing the potential role of telcos in cloud computing markets in the research report Telcos as Cloud Rainmakers.
It's time to re-think the report card used by CIOs to report on BT performance – tomorrow’s BT CIOs must look beyond the traditional IT Balanced Scorecard (BSC).
I realize this is sacred ground for many people in IT (and some of my colleagues here at Forrester), so let me explain myself before I receive a barrage of complaints. The philosophy behind Business Technology (BT) recognizes technology as integral to every facet of every organization – as such, IT is very much an integral part of the business; we can no longer talk about “business” and “IT” as if referring to two distinct things. I’m suggesting that in the age of BT, we need a new scorecard that better reflects the impact of BT on the business.
Consider the following scenario: It’s a hot summer day and a prospective customer walks into your store to buy an air conditioner. He evaluates several models and then buys one — but not from you. It turns out your competitor located two miles away is offering the same model at a 20% discount. How did he know this? He scanned the product's bar code using the RedLaser app on his iPhone, which displayed several local retailers with lower prices than yours. If he had been willing to wait three days for shipping, he could have purchased the exact same model while standing in your store from an online retailer at a 30% discount.
This type of technology-fueled disruption is affecting all industries, not just retailers. Since the early 1900s, businesses relied on competitive barriers such as manufacturing strength, distribution power, and information mastery. But this is all changing in the age of the customer, where empowered buyers have information at their fingertips to check a price, read a product review, or ask for advice from a friend right from the screen of their smartphone.
To compete in the age of the customer, your business must become customer-obsessed. As Forrester’s Josh Bernoff (@jbernoff), SVP of Idea Development and author of Groundswelland Empowered, advocates in his latest research: “The only source of competitive advantage is the one that can survive technology-fueled disruption — an obsession with understanding, delighting, connecting with, and serving customers.”