Where does all the money spent on technology go? More importantly, are the dollars getting a return, are they adding value to the organizations? Here are 5 questions we as CIOs should ask, and the answers we should be getting to ensure we are spending our technology budget the right way.
5 Business Technology Questions
- What are the business/organization problems technology is solving for us now?
- Who in our organization is helping technology solve these problems (and who’s not helping at all)?
- Who are the vendors helping us solve the problems (and the ones not helping at all)?
- How are we doing with digital transformation (and the emerging technologies that enable DT)?
- How are we measuring the return on our technology spending?
What are the business problems technology is solving for us now?
The question refers to operational and strategic problems. Operational problems are what way too many executives define as “technology” – email, MS Office, ERP systems, networks and laptops. While these all are necessary, they are not sufficient to technology optimization. Strategic technology supports manufacturing and distribution, finds customers, services clients and optimizes the entire product/service value chain. While the trains have to run on time, they also have to stop at the right places. If you cannot directly link operational or strategic technology spending to a specific problem, you’re wasting money. You also need efficiency. You need to “rationalize” your entire technology inventory every year. I guarantee you’re upgrading and supporting 50% more software applications than you need (or even use). You’re also probably not spending enough on data, data integration and data analytics. You need to make sure your networks, databases and applications – everything – are secure. Hard questions about security (and privacy as GDPR extends to your company) must be asked every day: you are one event away from a major financial disaster.
Who in our organization is helping technology solve these problems (and who’s not helping at all)?
Do you have professionals with the right knowledge, demeanor and ambition to acquire and leverage digital technology? Really? Who are they – and why are they so special? Who are the operational technology experts who know strategic technology well enough to grow your business? You need professionals who see the technology world through operational, strategic and disruptive lenses. You also need absolutely clear governance structures and processes. Who “owns” technology at your company? Is it a central office of the CIO, or is ownership shared across your business units? Do you pride yourself on strict technology standards, or do you “allow” business units to explore the operational and strategic technologies that contribute the most to growth and profitability? How many members of your team deeply understand your business “domain”? How many understand the nature of digital transformation Does the team understand the trajectory of business and that digital technology is changing almost quarterly?
The answers? Technology cannot be owned by one central organization. Business models and processes change too fast. Centralized “IT” should only include operational plumbing. The rest should be strategically compatible with the plumbing, but acquired, deployed and supported by business units focused on traditional and (internal and external) disruptive competition. This means that you must assume the business model and processes that generate revenue and profit today will change dramatically over time (and sometimes over a very short period of time). Technology is the new fulcrum. Track it, leverage it, fear it. If you have Luddites on your team, eliminate them. If you have managers and executives who need to control technology for undisclosed reasons, remove them from all governance teams. If you have professionals weak in either domain or technology expertise, replace them, and if you have professionals who know very little about industry and technology trends, replace them immediately. “Seek-and-destroy” technology cheapskates, skeptics, dilatants and terrorists. They have no role to play in business enabled by – and now completely dependent upon– operational and strategic technology.
Who are the vendors helping us solve the problems (and the ones not helping at all)?
It’s always time to hold your vendors’ feet – and fees – to the fire. This continuous task is job one for companies (like yours) that outsource some, part or all of its technology products and services. List the operational and strategic vendors on your payroll. Examine the costs and benefits of each one. But do so strategically. For example, how fast are you moving your infrastructure and applications services to the cloud? Assess your vendors’ contributions to an aggressive data strategy. Which ones understand your business and technology architectures? Eliminate the ones that compete for your business even when they’re sleeping. They’re only mission is to increase revenue, not improve your business. You are the final arbitrator of value – not your vendors. Be careful not to abdicate responsibility for your business model and processes to vendors simply because they’re “informed,” glib or fun. You must own the business technology strategy of your company. Real vendor “partnerships” are hard to find. Remember that the marriages between you and your vendors are arranged and defined completely by the size of the dowry – nothing more and nothing less.
How are we doing with digital transformation (and the emerging technologies that enable DT)?
How attentive are you to your traditional – and disruptive – competitors? Probably more the former than the latter because it’s hard to see what’s coming at you from left field. So you focus on the competitors you know, which is a huge mistake. Digital transformation (DT) is about both kinds of competitors. It’s a matter of how far you look into the future and how encompassing your peripheral vision is. Some of you will look to the next quarter, while some will look several years out. Where do you sit on the DT spectrum?
The first step is modeling current processes followed by simulated models of future processes. What will these processes tell you? Find the inefficient processes, simulate new ones and then pilot the digital technologies most likely to enable the improved processes. Managers, executives and other stakeholders should require quarterly updates on DT projects, programs, successes and failures, which requires piloting emerging technology-enabled processes and sometimes even whole business models.
Are you piloting the contributions these technologies can make to improved business processes and models? If not, why not? (AI, mobile, etc.?)
How Are We Measuring the Return On Our Technology Spending?
First, the easy answers. Reduce the number of applications you have in your operational and strategic technology portfolio. Make sure that business unit strategic technology spending is compatible with enterprise operational technology spending. If it’s not, you will pay handsomely to get technologies to work together: “technology integration” makes vendors richer. Hire some independent consultants – none of your current technology vendors– to develop ROI models of operational and strategic technology effectiveness. The metrics for both categories are well known, such as the # of security breaches (for operational technology) and social media advertising customer conversion rates (for strategic technology). The metrics should be refreshed on a real-time dashboard for everyone to see. This project team should be treated as an “independent counsel” to the entire business technology environment of your company. No one with a vested financial interest in technology delivery should own any part of it.