Is there a language barrier in your business?

The days when IT was just another utility – as important, yet as taken for granted, as the electricity supply – are gone. Today, with customer demand for tech-enabled products and services soaring, technology is – and has to be – shaping entire strategies and business models.

Yet as a recent McKinsey article highlighted, there’s still a language barrier in many businesses when it comes to IT. To better understand both the right areas for investment, and how their IT capabilities stack up against those of competitors, directors need to shift their focus from costs and outcomes to capabilities and value. They need to be fluent in themes such as speed to market, agile product development, platform-based delivery models, the benefits and challenges of the various sources and forms of corporate data, and more. And on the tech side, CIOs and IT leaders have to be ready to evaluate their performance and approach in a way that makes commercial sense.

The starting point McKinsey recommended was five critical performance questions that board directors need to be asking. We’ve summarised them below – or, you can go into more depth by reading the full article here.

  1. How well does technology enable the core business? The fundamental function of IT is to enable and improve enable end-to-end business processes. Boards therefore need to ensure that the right metrics are in place to evaluate IT performance in each key area – from finance to HR – and crucially to understand how that works as an end-to-end, cross-functional process.
  2. What value is the business getting from its most important IT projects? Want to reduce the risk of project failure by 10%? Then routinely measure the tangible benefits they’re bringing. It focuses the project team on what matters most and enables you to assess the value of IT projects – whether they’re delivering the promised outcomes – rather than just the costs.
  3. How long does it take the organisation to develop and deploy new features and functionality? When online organisations like Amazon can release code every ten seconds, update 10,000 servers at a time, and roll back website changes with a single system command, you need to find new ways to compete. Many organisations are addressing the problem by shifting towards two speeds of operation – rapidly launching innovative customer-facing applications or upgrades, while maintaining slower (but still reliable) back-end transaction-focused systems.
  4. How efficient is IT at rolling out technologies and achieving desired outcomes? Around 90 % of an organisation’s IT staffing and spend is absorbed by the basics: infrastructure operations, application development and maintenance, and security. But what does that provide to the business and how efficient is the IT function at delivering those basics? Boards, executives, and IT leaders have to agree what IT is expected to achieve, and how you will measure how efficiently it is achieving it.
  5. How strong is our supply of next-generation IT talent? Data analytics; mobile app development; digital design: increasingly, IT personnel are being asked to participate in projects and initiatives that require them to take on additional responsibilities beyond their traditional roles. But while this can present them with more opportunity, the change in expectations can also increase stress and create risk. To address this, the board urgently needs to develop a detailed understanding not only of the skills and capabilities the organisation needs now, but what its requirements will be in the future.

These are the five crucial questions for today. But get the conversation going now, and build a better mutual understanding, and as the questions necessarily evolve, you’ll be in a better place to answer them. Read the full McKinsey article here.

 

Magnus Wettermark
Pre Sales Director, Nordic

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