Monday, September 09, 2013

Nonlinear impact of IT

In recent times we have been talking about business projects and not IT projects that are evaluated on business criteria and require business owners to sign-off the impact it has. The funding for such projects is done by respective business owners and part of their P&L and budget. This has also led to higher ownership and thereby improved success. The enablement and partnering by stakeholders has changed the way IT has traditionally acted in the role of creator of solutions now focusing more on business outcomes.

Many CIOs that I talk to now are creating significant impact with business partnership extending to the customers of their internal customers. The outward focus has created many new opportunities for making a difference to the company. The resulting rise in credibility puts the business savvy CIO in a position of advantage which they are willingly capitalizing. On the flip size it is creating pressure for the IT teams to manage expectations and the pipeline of new projects; an interesting problem to solve.

Not too long ago I was at a conference where the speaker raised the question on how does IT impact the business – process, efficiency and effectiveness. He spoke about looking beyond the obvious KPIs and metrics used by business and IT teams, challenging CIOs to go higher to view the impact technology is creating. A supply chain or customer engagement initiative has larger impact than the immediate efficiency or new capability it creates. The new capability can be a game changer for enterprises competing in a low margin hyper-competitive world.

A company implemented a supply chain project to bring visibility and transparency downstream and upstream. Connecting vendors and suppliers linked to a demand forecast or sell-through resulted in improving the order fulfillment resulting in increased revenue as well as bringing down the holding cost of raw material and inventory. This led to improved customer satisfaction which in turn got them incremental business. Thus the impact was not just visibility; it also created new opportunities with existing customers.

The initial project when it was drawn up had modest expectations of visibility impacting supply and consistency of execution. The result it delivered was however beyond the defined outcomes. The limits were based on known direct impact not factoring in the derived benefits which it actually delivered. It took some time for the stakeholders to connect back these to the small project taken up by IT for the supply chain team. The acknowledgement of the nonlinear impact took a while and raised the team morale.

This case study had every CIO thinking about the nonlinear impact their initiatives had created which they had failed to capture in the post implementation reviews, management debriefs or meetings. Almost everyone had a set of projects that had delivered the ripple effect of positivity which they shared with each other. The speaker urged them to change their thinking beyond the immediately visible to a holistic view of how every project can potentially provide a higher ground for discussion. He also cautioned that It may not be obvious to begin with.

We are all conditioned to believe that large high value multi-functional long duration projects are the ones that create new capability for our companies. I am not discounting this belief; smaller projects too can have a cascading effect that creates a competitive differentiator at least in the short-term. They are rarely captured as baseline benchmarks in the initial stages. The post implementation review (PIR) rigor which is quite weak culturally (except when things go wrong) needs to change to bring forth the benefits.

CIOs move their teams from project to project with a sense of urgency to fulfill the pipeline of new initiatives and keep the business happy. It is imperative for the CIO to enforce PIR for all projects not limited to the traditional post go-live capture of learning, but also review the same again in three months, six months and a year after the solution has been institutionalized. PIR is not about what went wrong and what worked or for that matter whether the stated business benefit was delivered. It can be about the nonlinear impact.

Go ahead and make a beginning and you will be surprised !

1 comment:

  1. Outside-In approach has been discussed for quite some time now and you pointed it out rightly that it is the need of the hour. At the bottom of "NonLinear impact of IT" is a crucial point of CIO's belief in his Leadership Legacy for the organization when he makes transition from Chief Information Officer to Chief Innovation Officer. Recently I have been in discussions with a few CIOs on this topic and no where RoI, TCO or technology came into the picture. What surfaced were:
    1. Have a broad business understanding
    2. Become fluent in the vernaculars of various business groups
    3. Act as an expert networker and negotiator to share ideas across work groups
    4. Anticipate new customer needs
    5. Translate ideas into new products

    All in all to develop a culture of risk taking without weakening the organization's business model. "Are you OK to fail while trying new approaches?" was the question one of the CIO asked "because thats what will make you lead your people from the front office to the back office". Simple way to measure the success on this front is to measure Value Creation to Value Sustenance ratio.