Across industries and markets, organizations rely heavily on their Chief Information Officers (CIOs) and information technology (IT) departments to provide technology and services that support business operations. In the mid-market, CIOs and IT leaders face many of the same demands as larger organizations, but they must accomplish their objectives with drastically less resources, fewer staff and smaller budgets, and often amidst much more rapidly changing conditions due to the pace of growth and market/regulatory dynamics. As a result, many IT leaders in the mid-market find themselves consumed with the demands of providing operational support simply to keep the business running, leaving little time for strategic initiatives.
However, mid-market CIOs with an understanding of the stages of innovation maturity can craft strategies to progress through these stages, evolving your role and the efforts of your teams to shift focus away from pure operational support towards pioneering innovations that proactively advance the business.
Four stages of IT innovation maturity:
1. Operational Support
Providing the necessary support to business operations is the most fundamental need for the IT organization. Ensuring that networks are up, servers are online, data is secure and business-critical applications are running to process transactions is essential, all while providing services to end users to keep the ball rolling.
In many growing organizations, manual processes established early on, coupled with rapid growth, often generate an IT environment that doesn’t support the scale of the business, is loosely integrated and continues to rely on manual efforts. All of this results in a heavy demand on your department’s resources to support the model, and efforts are largely reactive to changes in business conditions.
Strategies:
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Focus on building the right team with a balance of skill sets to support the business and begin to standardize and enhance processes and tools.
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Consider ways to effectively leverage external resources for support, such as outsourced service desks, allowing internal resources to focus on more value-added tasks.
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Standardize and document processes, common support items and manual procedures to shift the burden off of IT and allow your team to pivot away from constant support efforts.
2. Technology Enhancement
As a mid-market IT organization begins to generate bandwidth outside of core operations support, opportunities are presented to enhance technology to drive efficiency, lower costs and better support the business. While these enhancements are still often reactionary to the changing needs of the business — driven by growth, regulations, changing market demands, internal staffing, etc. — you will be the most effective if you can capitalize on these opportunities to build a more sustainable foundation.
Strategies:
- Develop an integrated technology environment to ensure a single source of the truth, enhance data quality and promote a consistent user experience
- Reduce complexity by optimizing processes and system functions.
- Drive the business to leverage standard application capabilities where possible.
This stage is a pivotal point in the evolution of the organization’s IT landscape; making the wrong decisions here can have long-term ramifications that affect enterprise value.
3. Strategic Planning
With a sustainable operating model and stable technology solutions in place, as a leader you have the opportunity to partner with business leadership to get ahead of the curve. By working closely with the executive team, you can work to craft a technology strategy that supports the broader business strategy and objectives. Your department can then develop and execute on a roadmap to proactively implement scalable processes and technology to support the changing needs of the business as it evolves, while mitigating risks associated with growth and accelerating value creation.
Strategies:
- Plan for the future by identifying the technology capabilities that must be in place to support the longer-term objectives of the business.
- Cascade business imperatives into IT strategies and set clear objectives and priorities for the IT function. Empower team members to deliver on individual goals that support the broader strategy.
- Execute a structured approach to identify, select and implement new technology or capabilities to support the strategic vision.
- Develop strategic relationships with external parties to augment your team and capabilities as needed.
4. Pioneering Innovation
In a recent survey, researchers found that greater than 40% of business executives believe most if not all of the internal IT function can be replaced by external, third-party service providers. Given today’s environment of SaaS solutions and outsourced IT vendors, many elements of the traditional IT organization are becoming commoditized. But perhaps these are just the new tools of the trade for the future CIO.
To provide increasing value in this changing environment, it’s clear that CIOs and IT leaders must move beyond the business support role. You must demonstrate and leverage intimate knowledge of the business, the competitive market and modern IT solutions to gain credibility as a business leader. This is critical if you hope to pioneer innovative capabilities that leverage bleeding-edge technology to actually drive growth, deliver faster and more meaningful insights, and enhance the performance of the business over time.
Every business is unique and, thus, the development of innovations and application of modern technology is highly tailored. However, many organizations are exploring potential capabilities that take advantage of these key tech trends, among others:
- Developing predictive analytics capabilities using big data and machine learning. This includes combining internal and external data sets to identify trends and correlations, and then leveraging these to identify business opportunities, anticipate employee and consumer behaviors, and predict future outcomes.
- Leveraging automation (yes, robots) to replace human efforts in environments that require significant manual efforts to drive efficiency, consistency and lower costs. (Think warehouse operations as a good example).
- Implementing virtual reality/augmented reality capabilities to enhance employee training programs, research and development efforts, and team member communication and collaboration.
Working with IT leaders through each stage of this maturity model, two things have become clear:
- With the appropriate business support and the right strategies in place, IT organizations can mature through these stages to become valuable business partners and enablers of growth; and
- Failure to mature at a rate greater than or equal to the growth of the organization — whether due to lack of resources, business partnership, leadership or passion — results in not only an inefficient and overburdened IT organization, but a faltering business that will struggle to keep pace with its competitors.
To get started, decide which type of IT organization you want to create and lead, take stock of your existing resources and capabilities, then craft a plan to begin working through each of the above stages to achieve your goals.
Cohen & Co is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.