While many CEOs know that the use of technology is crucial for business success, what they don’t know or understand how technology use contributes to that success.
According to this CIO.com article, CIOs reported that less than 2% of their CEO bosses understood the totality of the technology stack.
And in today’s $24 trillion global digital economy, that is a problem.
The right technology solutions can enable competitive differentiation for any organization. But organizations need to have the right skills and mindset in place to enable, support, and deliver that differentiation.
Investments in technology is expensive – a wrong decision can cost an organization significantly. Those poor decisions can often be traced to the lack of an integrated business and technology strategy. In some cases, the IT strategy is developed separately from business strategy . IT doesn’t help itself either – how can CEOs decide where to make investments in technology when IT proposals discuss technology benefits, such as uptime or features, rather than business results like growth, margin, or customer experience?
According to this McKinsey article , many CEOs struggle to understand exactly how IT initiatives and investments drive revenue, customer experience, and efficiency. As a result, IT looks like a cost center. But more than that, projects and investments in technology often become fragmented and underused, resulting in missed opportunities for new products, services, or operating models. One need look no further than the well-documented technology “misses” of companies like Kodak, Blockbuster, and Nokia.
Good service management is the solution
Good service management can solve the technology understanding gap between CEOs and CIOs. But many CIOs often think “we’ve tried that and it didn’t solve this problem.”
But did those organizations really implement good service management? Good service management is not just standing up a service desk and installing a ticketing and workflow tools. Good service management is not just utilizing service management practices to manage IT. Good service management facilitates value realization and business results.
Think about it. Without alignment and integration with the rest of the organization, the IT organization cannot deliver the value and results expected from investments in technology. And this is exactly what good service management does. Good service management is much more than just implementing some tool and standing up a service desk. Good service management requires a holistic view of how technology enables value realization and business results.
Good service management starts with (I’ve said it before) alignment of IT with business goals. Adopting practices like portfolio management, business analysis, relationship management, and strategy management prevents implementation of “technology for technology’s sake” (like rushing to adopt AI-enabled capabilities for example), helps prioritize technology investments and IT efforts based on business impact. Doing this will give CEOs insights into how technology enables return on investment and delivers business results.
But adoption of these practices only establishes the needed scaffolding for enabling and delivering the business value and results expected by the CEO from investments in technology.
McKinsey suggests two actions that every CIO must take with CEOs to close the understanding gap. Coincidentally, these two actions are foundational for good service management.
- Meet with the CEO to clarify business outcomes, not technology. Identify and agree on 3-5 business outcomes where technology much help (such as growth, risk, customer experience) and capture these outcomes as plain, non-technical language statements.
- Map IT to these outcomes by creating simple, one-page views that link business goal to technology capabilities to 2-3 simple measures that the CEO can track.
These two actions will have the following impact on service management and IT:
- Identifies the right success measures for IT. Many IT organizations measure success in terms of technology (uptime, time to resolve, volume of tickets); measures that are meaningless outside of the IT organization. IT success should be measured and reported to the CEO in terms of business results – reduced waste, customer experience, and business growth.
- Shifts the perception of IT as being a “cost center” to a “value enabler” by providing the CEO with regular visibility into how IT is enabling business outcomes.
Three things you can do now to help the CEO
- Build better business relationships. Often the only interactions between IT and other business colleagues is limited to project meetings or interactions with a service desk professional. If you are an IT professional, when is the last time you met a colleague outside of IT for coffee to talk about how technology helps – or gets in the way of – doing work and delivering business results? These meetings will provide huge insights into how technology is perceived within the organization.
- Define services in terms of business processes and outcomes. Stop putting off or ignoring this task. Services facilitate the realization of business results. The more the IT organization defines services in terms of business processes and outcomes, the less the IT organization will be perceived as a “cost center” and barrier to getting work done.
- Start reporting the right things in the right way. Stop reporting metrics outside of IT that have no meaning to anyone outside of IT. Start reporting metrics like reliability and cost avoidance that are related to business objectives.
Technology doesn’t drive success – understanding how it enables success does. CEOs and CIOs who close that gap through strong service management transform IT from a misunderstood cost center into a true value enabler.
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