How can CIOs embrace the fully digital world?

Mika Ruokonen • Vice President, HelsinkiIlkka Terho • Future Architect

Photo by João Silas on Unsplash

Gone is the world of “big eat small” – now it’s “fast eat slow”.

To stay competitive, companies are steadily moving into a fully digital mode, where digital tools are an elementary part of all functions, business processes and supply chains. The very heart of our business and work becomes digital, so companies need to cope with software systems and tools that have to run simultaneously for the overall business to function properly.

"Fast and slow IT”, where new digital applications are developed in short, iterative cycles and legacy core IT systems are developed using a non-iterative and slower waterfall development process, is one way to cope. Unfortunately, this approach is about to become obsolete as agile development works its way deeper into organisations and tolerance for waterfall development projects decreases. Slow IT may become extinct in the near future.

A makeover for the role of CIO

The change offers CIOs who lead IT functions an opportunity to remake their role. In a faster world, the “demand-and-supply” model, as well as the somewhat distant relationship between business and IT, are a thing of the past. Future CIOs and IT functions will act fast and deliver business-critical software and digital solutions.

Guiding IT operations into the future starts with the CIO, who is in a key role to spark the change and lead by example, implement new ways of working and lead the organization towards agile IT operations. The CIO defines how the IT function delivers what business needs on time, on budget and remains relevant in the future.

There are six key actions that CIOs can take to strengthen their agenda and better support digitalizing business:

1. Build APIs that allow business to tap into important data and assets

When company business engages with new digital innovations, apps, webshops and digitally-enabled business processes, they need access to critical data and enterprise technology assets that the IT organization possesses and maintains. Build re-usable APIs that provide business with this access. Enable loose and flexible interactions through APIs, instead of investing in heavy and tight integration. With the APIs are properly in place, existing legacy systems can be turned into an added value and strength, and new combinations of systems and data created quickly. IT should provide the APIs to players outside the company, too. This enables the formation of new kinds of digital partnerships and value chains across industries. A well-oiled API infrastructure in the IT systems is a great asset in making digital transformation possible.

2. Build loosely coupled, but highly aligned development teams

Create an environment where a startup mentality can take root in IT development work - whenever feasible. Establish modern, agile teams that work on small IT processes and a limited piece of underlying technology. The small, complementary teams should be guided by a common mission, beliefs and targets. They should be given plenty of autonomy to proactively and rapidly come up with new innovative technical solutions, as well as continuously release new software whenever it’s ready to go. For these teams to perform, the IT infrastructure needs to be broken down into smaller pieces that interact with each other through APIs (see point #1 above). CIOs should carefully review all IT development: where could the systems, processes and the working teams be split into smaller units? What are the operations where it is not yet feasible? Why?

3. Provide technical expertise to support business

IT should do more than maintain and gradually develop the company’s IT systems based on orders from business. Instead (and a bit exaggeratedly…), IT professionals should evolve from passive order receivers towards visionary and active technology leaders, critical sparring partners to business and providers of valuable technology insight that help business make smarter decisions. An IT team could contain visionary understanding of big data, machine learning, sophisticated algorithms, robotics, IoT and cloud technologies. IT professionals should be fast, nimble, insightful, business-minded and proactive and never hesitate to take action when business needs their help. How can CIOs make all this happen? First, work hard to make the IT function a desirable place to work that attracts the critical talent. Second, put the right people in the right roles. Hire new technology leaders, if necessary. You need the visionary digital leadership. The CIOs role in transforming the team is vital.

4. Provide governance and alignment

Going forward, IT does not need to try and solve every single technical issue that business might have. CIOs should work towards a shift where business takes some responsibility for their technology. In this new model, IT enables and empowers the business to autonomously deliver new digital solutions, providing a “self-service model” where business takes action and makes the necessary technology choices. During and after the shift, IT still needs to retain control and play a decisive role. It needs to make sure that all the company’s IT assets are re-usable. It needs to ensure that information security and privacy are sufficient to prevent potential unwanted actions or misuse of assets, data and sensitive information. CIOs should be able to define the technical boundaries within which business can operate and also guide business in making the right technology-related decisions - whenever guidance is necessary.

5. Fix the IT budgets

Companies can’t expect IT functions operate in a fast and effective way if budgets are reduced and no resources are designated for proper IT development, or with resources located in distant, offshored locations that lack the required link to business. The CIO makes sure the budget is sufficient for the renewal of vital IT systems that serve as the backbone of business operations and digital transformation. The CIO ensures there’s enough money for the development of new capabilities - like building APIs and hiring new people. If CIOs manage to show that the new APIs truly work, that the new small and agile development teams perform, and that there is enough visionary technology leadership in place, they have a strong case for getting the money. It may be necessary for the CIOs to first show quick wins in these areas and then ask for the resources necessary for scaling the new IT model.

6. Remake the role of the CIO

What is the future role of the CIO? Will the CIO keep maintaining the core IT systems of the firm, but not do much else? Or will the CIO play a bigger role in driving digital programs? Will the CIO and CDO work together to transform and digitalize business? In a company with both a CIO and a CDO, their agendas should be linked, forming a meaningful and cooperative working relationship. The CIO should start this discussion and make sure top management is aligned.

A brave, new future for IT

Future IT organisations will do so much more than just “keep the lights on”. They'll make sure systems and applications work, help people download new software and respond to inquiries. Under the guidance of a new breed of CIO, IT organizations deliver flexible systems and tools, develop software in autonomous teams, raise and empower proactive and visionary technology leaders and apply the governance necessary to guide the corporation’s digital functions. CIOs can become important enablers of the digital transformation that companies are currently engaged in. They can help push business towards a “fully digital” mode.

In many ways, some of the things that IT organizations are required to do are reminiscent of how small startups work and, at the same time, foreign to IT in large corporations. Are the CIOs capable of making the vital transformation towards agility, flexibility and speed happen? Can the traditional IT organizations be renewed?

Time will tell.

Text by Mika Ruokonen and Ilkka Terho

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