Evolving Corporate Information Technology

Since my last blog I have half written about 10 or so blogs, but can’t seem to finish them, or perhaps I’m not satisfied with my conclusions. So here I am, streaming music on Spotify sometime after midnight writing this blog. I blame Starbucks and their policy to give a free coffee when you buy a pound, or perhaps it’s my selection of music (Metal). But I digress.

Tom Golway

During the past week the subject of change came up a couple times, particularly around how information technology has risen to a prominence in corporations equal to other core business functions. Having been in the technology field for many years has given me an amazing opportunity to participate in some of the most radical changes in the history of business. Early in my career the concept of a “C” level technology executive was non-existent.

Over time as information technology became more pervasive, companies hired technology savvy CIO’s whose primary focus was on efficiency and lower TCO. In some industries, companies began to think of themselves as “technology companies”, however many of these companies forgot their core business and looked to innovate in the creation of technology not innovation in how they use of technology to create ROI.

Companies evolved and we saw the emergence of CIO’s who were business savvy and understood the role of the IT department is to manage TCO while partnering with their internal business units to leverage technology and achieve a greater ROI.

We saw a digital divide in the business world. Companies whose IT departments were great technologists and companies whose IT departments who were great at creating technology based business solutions.

But understanding the effectiveness of IT departments was a bit difficult as they didn’t fit the standard mold of measuring performance. Large corporations are typically organized vertically aligned business units with key performance metrics being revenue generated and profit margins. The IT department has traditionally been horizontally aligned and generally considered a support organization and is part of the corporation’s TCO with no little to no perceived contribution to ROI.

IT departments in leading companies have morphed into what could conceptually be thought of a business unit that is measured by service delivery metrics as opposed to revenue or profits.

One of the more significant trends in recent years is the IT department partnering with the business units to identify key technologies or ways to leverage technology to achieve a greater ROI. Being horizontal, the IT department can further leverage enabling technologies and best practice across the corporate business units.

So as this happens, the IT department will increasingly become an accountable partner with the business units to achieve what I’ve called efficient revenue. Efficient revenue is all about rapidly achieving economies of scale throughout the value chain while maintaining predictable margins, margins that can support profitability as well as growth.

For companies to maintain their competitiveness, their CIO needs to have cross-functional skills with knowledge in diverse areas such as finance, business models and strategy. Depth of technical knowledge is no longer a requirement for the CIO.

Comments and thoughts are always welcome.