Chris Davis co-authored this article.
Companies continue to face implementation challenges as they rush to comply with data privacy regulations such as Europe’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). This is due largely to a mismatch between their management of data and the stringent requirements set by the regulations.
Organizations can address the complexities of privacy regulations via a well-defined data governance framework, which leverages people, processes and technologies to establish standards for data access, management and use. Such a framework also enables companies to address elements of privacy, including identity and access management, consent management and policy definition.
As leaders implement data governance models with privacy in mind, they may face challenges, including lukewarm executive buy-in, lack of a cohesive data strategy, or diverging opinions about how data should be used and handled. To address these obstacles, leaders should consider the following actions:
While a Chief Data Officer or CIO may lead the implementation of a data governance framework or model, data governance should be a shared responsibility across a company. At a minimum, the IT department, privacy office, security organization, and various business divisions should be involved, as each has an important stake in data management. Bringing in a variety of stakeholders early allows firms to establish key data objectives and a broader data governance vision. This collaboration can take the form of a dedicated task force or may involve regular reporting on data governance and privacy objectives to the executive board.
Data privacy, similarly, is also a shared responsibility. All employees have a part to play in maintaining data privacy by following accepted standards for data collection, use and sharing. Indeed, implementing a successful data governance model with privacy in mind requires educating employees on governance concepts, roles and responsibilities, as well as data privacy concepts and regulations (e.g. the definition of “personal information” vs. “consumer information”).
After establishing a governance vision and driving employee awareness, organizations can define their desired data governance roles – such as data owners, data stewards, data architects and data consumers – and tailor the roles to their needs. Some companies may distinguish between data stewards and data owners, for example, with the former responsible for executing daily data operations and the latter responsible for data policy definition. For one client with a large and complex IT department, Metis Strategy established a governance hierarchy with an executive-level board, combined data steward/owner roles, and other positions (e.g. data quality custodians). This structure facilitated ease of communication and enabled the client to scale its data management practices.
In the long term, firms should incorporate data governance and management skills into their talent strategy and workforce planning. Given the expertise required and the shortage of qualified people for some data-intensive roles, organizations can consider enlisting the help of talent-sourcing firms while focusing internal efforts on talent retention and upskilling. As companies’ strategic goals and regulatory requirements change, they should remain flexible in adjusting their data governance roles and ownership.
To respond adequately to consumer privacy-related requests for data, organizations should establish standardized procedures and policies across the data lifecycle. This will allow companies to understand what data they collect, use and share, and how those practices relate to consumers.
For example, the CCPA provides consumers with the right to opt out of having their personal information sold to third parties. If a retailer needed to comply with such a request, it would need to be able to answer questions in the following categories:
Establishing policies and standards for the above can help organizations quickly determine the actions needed to respond to customer requests under privacy regulations. Companies should communicate policies widely and ensure that they are being followed, as failing to do so can propagate the use of inconsistent templates and practices. At one Metis Strategy client, for example, few stakeholders had sufficient awareness of data management and access standards, despite the fact that the client’s IT department had established extensive policies around them.
To successfully implement data governance frameworks and ensure privacy compliance, firms may also need to address challenges posed by legacy infrastructure and technical debt. For example, data often is stored in silos throughout an organization, making it difficult to appropriately identify the source of any data privacy issues and promptly respond to consumers or regulatory authorities.
Firms also need to evaluate the security and privacy risks posed by outsourced cloud services, such as cloud-based data lakes. Those using multiple cloud providers may want to streamline their data sharing agreements to create consistency across vendors.
Some technologies can help companies leverage customer data while mitigating privacy risks. In a Metis Strategy interview, Greg Sullivan, CIO of Carnival Corporation, noted that data virtualization enhanced his organization’s analytics capabilities, drove down operational and computing costs and reduced the company’s exposure to potential security and privacy gaps.
Companies can also consider new privacy compliance technologies, which can enhance data governance through increased visibility and transparency. Data discovery tools use advanced analytics to identify data elements that could be deemed sensitive, for instance, while data flow mapping tools help companies understand how and where data moves both internally and externally. These tools can be used to help organizations determine the level of protection required for their most critical data elements and facilitate responses to consumer requests under GDPR and CCPA.
Although legacy technology overhauls can be time-consuming and costly, firms that are decisive about doing so can reduce their privacy and security risks while avoiding other challenges related to technical debt.
As the global data privacy landscape evolves, organizations should continuously adapt their data governance models. Companies should proactively address their obligations by designing data governance roles, processes, policies, and technology with privacy in mind, rather than reacting to current and forthcoming privacy legislation. Companies doing so can not only improve risk and reputational management, but also encourage greater transparency and data-driven decision-making across their organizations.
We are so thankful to all who took their time to participate in the 2020 Metis Strategy Digital Symposium. During this period of heightened uncertainty, it was especially encouraging to hear perspectives from global CIOs, CEOs, entrepreneurs, and investors about not only about how they are navigating the current challenges, but also how they are seizing the tremendous opportunities that have arisen.
Here are a few takeaways from the event:
The digital acceleration goes beyond the #WFH pivot. The pandemic forced many companies into to speed up their digital initiatives as they pivoted to remote work, bolstered cybersecurity measures, and began to automate a broader range of business processes.
In a poll of roughly 100 global CIOs who attended the Symposium, 42% said their digital initiatives have accelerated significantly, while 30% said they saw some acceleration. We have heard many CIOs say that digital projects that would have taken years under normal circumstances were completed in a matter of weeks, if not faster.
That acceleration appears poised to continue. CIOs noted that their firms have an increased appetite for transformation as they think about how technology can prepare them to emerge from the pandemic in a position of strength, armed with the digital tools that allow them to seize future opportunities.
This transformation requires more than automating tasks or cutting costs, however. Teams are now thinking about the broader changes across people, process, and technology that will make these transformation efforts stick.
People come first. Speakers noted that it is critical for leaders to openly acknowledge the human element of the crisis and the fact that people at every level of the organization are facing new challenges. Leaders continue to focus on ensuring their teams’ safety while working to create a sense of belonging.
It is critical for leaders to be visible and lead their teams with empathy, speakers noted. Overcommunicating – even to the point of sounding like a broken record – is essential, particularly while managing a largely remote workforce.
As the crisis wears on, many CIOs are also thinking about how to keep their teams motivated and productive, remove obstacles, and unleash their ability to innovate. That includes providing employees with the technologies they need to work productively and creating opportunities to gain skills that will help them thrive in the new normal.
Let customer needs guide new initiatives. A common refrain during our sessions was the need to focus relentlessly on the customer. This is particularly true in IT, where technology sometimes is deployed for its own sake rather than solving a particular customer need. CIOs noted that when they allowed customer needs to be a beacon for new initiatives, payoffs were often more immediate. They reiterated that a solution doesn’t need to be sexy to be effective, as long as it solves a key customer issue.
A customer obsession at the enterprise level, particularly with strong buy-in from the CEO and the rest of the C-suite, can also help break down organizational silos and provide a common cause for teams to rally around. CIOs noted that driving this customer-centric mindset requires a culture shift and new governance structures, but that the work is paying off.
Get the basics right. The quick and massive shift to remote work amid the pandemic changed the way many CIOs think about business continuity and scenario planning. It also created a heightened focus on security and spurred new discussions around the technology needed for employees to do their jobs effectively.
These discussions have driven home the need for companies to have a solid foundation in order for new digital initiatives to thrive. As companies plot their paths forward, many CIOs are seizing the opportunity to make sure the basics are as good as they can be. That includes reassessing enterprise architecture and evaluating systems and partner ecosystems.
Adaptability is a new core competency. Many CIOs noted the remarkable speed and adaptability shown by their teams as they pivoted to work from home and quickly shifted business processes to adapt to the new business landscape. Facing an uncertain future, the ability for organizations to quickly assess changing market needs and shift gears accordingly is becoming a must-have skill.
CIOs noted that in many cases their teams are more productive and moving faster than they ever thought possible. A key question now is how to maintain that momentum in a sustainable manner and ensure teams are chasing the initiatives that help the company meet its strategic goals. To that end, extreme focus and ruthless prioritization are critical, as is broad alignment across the enterprise.
As one CIO noted, it is important that technology leaders gain alignment with the rest of the organization rather than chasing new revenue opportunities for revenue’s sake. A shift to product-centered operating models is helping to drive that alignment, dissolve organizational barriers, and increase agility.
Look for the silver linings. While executives expect it will be many months before a return to some version of normalcy, speakers underscored a number of silver linings, including a renewed focus on strategic imperatives, an openness to new ways of working, and an increased appetite among corporate leadership to drive growth through digital.
While it is difficult to know with certainty what the weeks and months ahead will bring, there is nevertheless a strong push to identify and seize new opportunities.
As companies work to adapt to a fast-changing business environment and increasingly complex technology landscape, leaders are taking a closer look at their enterprise architecture strategy to ensure their IT portfolio supports strategic business objectives. Done well, a strong enterprise architecture provides the foundation that enables companies to be more agile, scale new innovations quickly and securely, and ultimately deliver greater value to customers.
Creating a solid enterprise architecture strategy can help take product development organizations to the next level by providing the technological runway they need to create seamless customer experiences and respond quickly to market needs. Inside many organizations, however, we often find that enterprise architecture has not reached the level of maturity needed to deliver on those promises. Often, employees rely on patches and workarounds to get data from one system to another, time that could be spent working on product and system enhancements. In other cases, existing technology architectures no longer align with strategic business objectives. One of the main problems stemming from this lack of alignment is that it limits the capacity to create efficiencies and synergies that support business goals. It can also hamper business agility by making it more difficult to create and share relevant data and insights across the organization.
To overcome these challenges, firms need an enterprise architecture strategy that can adapt to changing market demands. That requires making EA an ongoing and evolving part of any digital transformation initiative.
At its core, enterprise architecture refers to the configuration of IT resources in service of an organization’s business strategy. It creates alignment among a company’s strategic goals, its existing business processes, the data and information created, and the underlying infrastructure that supports it. It forms a blueprint of sorts, noting not only what technology the company currently has, but also how future technology investments will fit into or change what currently exists.
There are four main components of the EA:
We will explore each of these later in the article. These components cascade down from one another, each serving a different purpose (see image).
Having a clear EA does not magically solve business operations issues, nor does it enable a company to generate insights with a single tool. What it does is create vertical alignment of the business and functional objectives, foster collaboration between functions, and help create synergies based on data.
For many companies, the Enterprise Architecture is an afterthought, something only relevant to the architect who needs to give his or her sign-off during product feasibility meetings. But as mentioned above, the EA needs a seat at the table throughout the process to share guidelines and strategies with product development and IT teams that enable key growth levers. Among the reasons a clear EA is essential:
There are four key components of any enterprise architecture strategy:
The first step in creating an enterprise architecture strategy is understanding the overall business outcomes an organization wants to achieve. The Objectives, Goals, Tactics & Metrics (OGTM) framework provides a useful framework for aligning business goals to the mission and vision of the organization, then tying those goals to specific operational tactics. You can read more about the OGTM framework here.
Once there is clarity about the organization’s path and desired outcomes, it is important to partner with business functions to help each understand their role in the company’s strategy. Conversations with functional leaders should focus on objectives, roadmaps and blockers, the functional leader’s needs, and which technologies support and enable their goals.
Discussions with functional leaders should also include how they use data to influence their processes and decisions. This creates a bridge between business strategy and data strategy and leads to understanding about how data will flow across and within the organization. In the age of artificial intelligence, it is important to discuss and set a direction for the use of tools and structures that enable the use of algorithms, automation, machine learning and eventually AI.
With an understanding of the overall strategy and functional objectives, as well as the data needed to execute business processes, technology leaders can determine the tools and applications that will best help the organization achieve its goals.
These tools may be internal, such as an employee lifecycle management tool. At the center may be an application that includes an employee’s personal information and is connected to recruitment and onboarding tools. That data may also connect to a learning management system (LMS) to track training and employee growth paths. Connecting all of these applications can, for example, allow HR team can generate valuable insights used by the management teams.
Applications may also be external, directly related to customer-facing products or digital channels. Say a financial services firm sells an application to help bank branches process customer transactions. If the firm also offers related products, such as mobile or web banking or fraud detection products, it is important that the different products work seamlessly and appear as a single system to the end user. A single application architecture can help influence requirements for user experience, product development, and operations teams.
When creating an application architecture, it is also important to understand the role that Application Programming Interfaces, or APIs, play within the business. APIs are the building blocks that ensure all systems can communicate and share data effectively. This is one of the most important, yet often overlooked, aspects of the product development process that needs to be addressed by your EA strategy.
Organizations first should assess whether the company has all of the technological components necessary to support the business tools and applications. This includes hardware and software that will enable these tools to be deployed, such as on-premise servers or cloud storage, networking, and security. When thinking through technology architecture, it is critical to consider how infrastructure will affect the organization’s agility and ability to grow.
There are different risks and challenges associated with the creation of an enterprise architecture strategy. Due to how quickly technology changes, it is very easy for systems, applications, and even entire methodologies to become obsolete in a short period of time. Combined with an inclination to go after the latest trend, it is particularly easy for the EA model to become outdated or to have changed by the time a standard version is in place. In this scenario, enterprise architects constantly play catch up and the strategy fails to deliver its real value.
Similarly, business teams may perceive architects as people sitting in an ivory tower, not tied to the reality developers face. As a result, developers may not see the value in creating documentation. Technology leaders, then, must constantly communicate the strategic importance of enterprise architecture in achieving both short-term and long-term business goals, and drive operational accountability for documentation across the organization.
With a clear understanding of the business objectives, as well as the data, applications, and infrastructure that will help a company achieve its goals, technology leaders can create a roadmap for transforming the organization. That includes thinking through which frameworks and tools may be used to implement the new enterprise architecture. There are a number of EA management tools in the market that you can use to map all business capabilities to the strategy, as well as to the logical and physical infrastructure. Depending on an organization’s maturity, leaders may also opt to have more informal plans and architecture mapping, but it’s worth noting that this may inhibit the speed and effectiveness of implementation.
At the same time, it is important to frame EA as a light tool rather than an onerous process that only delivers documentation. When creating or improving an enterprise architecture, leaders should think through how EA teams will continue to add value by enabling new product development and creating new opportunities for innovation at scale.
Creating a comprehensive EA strategy is not a linear process, and it takes time and many conversations to go from an idea to full execution. The journey does not stop once the EA has been implemented, but rather is an iterative process that will change and mature over time as technology evolves and priorities shift.
We are thrilled to announce the 2020 Metis Strategy Digital Symposium. On July 15 from Noon to 3:30 p.m. ET, global CIOs, entrepreneurs, and CEOs will gather virtually to discuss the future of digital transformation and the critical role technology will play as firms navigate an increasingly uncertain world.
An overview of the agenda is below. To learn more or request an invitation, please email steven.norton@metisstrategy.com.
Noon ET
Welcome and introductions
Peter High, President, Metis Strategy
12:15 pm – 12:45 pm ET
Fireside chat with John Chambers, former CEO of Cisco; founder and CEO of JC2 Ventures
John will share his thoughts on the technology trends rising in importance as the world navigates the post-pandemic world.
John Chambers, former CEO, Cisco; founder and CEO, JC2 Ventures
Moderated by Peter High, President, Metis Strategy
12:45 pm – 1:00 pm ET
Panel: Toward an AI-driven operating model
This panel will spotlight how technology leaders are changing the DNA of their organizations to enable data-driven experimentation to drive better customer outcomes. They will discuss refactoring their operating models to spur agility and promising AI use cases.
Paola Arbour, Chief Information Officer, Tenet Healthcare
Chris Gates, CTO, Allstate
Moderated by Michael Bertha, Managing Director and Central Office Lead, Metis Strategy
1:00 pm – 1:15 pm ET
Beyond CIO Spotlight: Timothy Kasbe, President, Zoho
A fireside chat with Timothy Kasbe, who shares his journey from CIO to president of a fast-growing enterprise technology firm.
Timothy Kasbe, President, Zoho
Peter High, Metis Strategy
1:15 pm – 1:30 pm ET
Panel: IT’s role in developing revenue-generating products
Panelists will explore how technology departments are helping to develop new, revenue-generating products and share their strategies for contributing to top-line growth.
George Lee, Chief Information Officer and member of the Management Committee, Goldman Sachs
Clay Johnson, Chief Digital and Technology Officer, Yum! Brands
Moderated by Chris Davis, Vice President and West Coast Office Lead, Metis Strategy
1:30 pm – 2:00 pm ET
Panel: Security in a work-from-anywhere world
Orion and Sarah will discuss the tools that IT teams need to deliver modern and secure employee experiences in an all-digital, work-from-anywhere environment.
Orion Hindawi, co-founder and co-CEO, Tanium
Sarah Franklin, EVP and GM Platform, Trailhead, and AppExchange
Moderated by Peter High, Metis Strategy
2:00 pm – 2:15 pm ET
Panel: Customer experience in the digital age
How the Chief Information Officer can drive superior digital experiences for both internal and external customers.
Vijay Sankaran, Chief Information Officer, TD Ameritrade
Wafaa Mamilli, Chief Information and Digital Officer, Zoetis
Moderated by Steven Norton, Co-Head Executive Networks, Research, and Media, Metis Strategy
2:15 pm – 2:30 pm ET
Beyond CIO spotlight: Sanjay Mirchandani, CEO, Commvault
The former CIO of EMC and former CEO of Puppet shares his journey through the enterprise technology sector and his current role as CEO of the publicly traded data protection and management firm Commvault.
Sanjay Mirchandani, CEO, Commvault
2:30 pm – 2:45 pm ET
Panel: Digital transformation in the ‘new normal’
We will dive into how digital capabilities have been used to shape new customer interactions during the pandemic and explore the evolution of digital strategy in a post-pandemic world.
Keith Fulton, Chief Information Officer for Bank Solutions, Fiserv
Mike Macrie, Chief Information Officer, Subway
Moderated by Alex Kraus, Vice President and East Coast Office Lead, Metis Strategy
2:45 pm – 3:15 pm ET
Fireside Chat with Reid Hoffman, co-founder, LinkedIn and partner at VC firm Greylock Partners
Reid will share his insights on the changing role of venture capital and where the investor community is focused now.
Reid Hoffman, co-founder of LinkedIn, partner at Greylock Partners
3:15 pm ET
Closing remarks and adjourn
What’s the right approach? For that we caught up with Laszlo Bock, co-founder of Humu, whose technology combines machine learning with people science to “nudge” employees toward better work habits and unlock the potential of individuals, teams, and organizations.
Bock spent 11 years as Google’s senior vice president of people operations (equivalent to a chief human resources officer), is the author of the 2015 bestselling book Work Rules, and he had plenty to share about leading through crisis. Read on for his recommendations.
Chris Boyd co-wrote this article.
Leading digital transformations is the CEO’s top priority for CIOs, according to the 2020 IDG State of the CIO study. Doing so effectively requires an IT operating model that allows business and IT to work together to navigate a dynamic competitive landscape, a seemingly infinite set of digital tools and shifting stakeholder demands.
In our work with Fortune 500 companies, we have found IT organizations that use the traditional “plan, build, run” operating model struggle to conceptualize, launch and maintain momentum on digital transformations. To bolster their transformation capability, IT organizations across industries and geographies are shifting toward product-oriented operating models, or “product-based IT”. When done right, organizations experience increased agility, happier customers and more successful transformations.
A product is a capability brought to life through technology, business process and customer experience that creates a continuous value stream. Examples of products are eCommerce, supply chain, or HR. An operating model defines how an organization positions its people, process and technology to deliver value to both internal and external customers.
A product-oriented operating model, then, is one in which IT resources are organized around business capabilities or “products” instead of specific IT systems (e.g. SAP, CRM) or functions (QA, Engineering, Infrastructure). In this model, each product team works as if they are managing a market-facing product such as a consumer electronics device. They develop a product strategy and roadmap in lockstep with the business that clearly articulates how they will mature the product to better meet customer needs and optimize competitive positioning. Every feature on the roadmap is aligned with a measurable business outcome and goes through a rapid discovery phase to validate value, usability and feasibility before it is slotted in a sprint to achieve a minimum viable product.
Most organizations have honed their ability to deliver when the scope and desired outcome are static, but struggle when next steps aren’t defined or are painted with a broad brush. Several leading IT organizations have turned to product-based IT to cut through this ambiguity and elevate their role from service provider to business partner.
Art Hu, the global CIO of Lenovo, is one of the pioneers in the shift from project-to-product. He noted in a recent conversation that his organization grappled with the question of what to work on next after completing a series of legacy ERP integrations resulting from acquisitions. “The fundamental paradigm shift for us was that the level of uncertainty had changed when there was no longer one single imperative,” he said, referring to the ERP project. “When we took that away, it was a totally different world and traditional waterfall didn’t make sense anymore. Until we as an organization realized that, the business teams and my teams struggled.” Product-based organizations rely on continuous customer engagement to remove guesswork from the prioritization process, which often leads to better business outcomes and increased agility.
CIOs have targeted key behavioral changes to jumpstart the shift to a product-based operating model:
Project plans developed with fixed deliverables and timelines encourage predictability but rarely equate to business outcomes. This plan-driven work is increasingly yielding to continuous discovery and delivery, which seeks to answer two questions on a recurring basis: what should we build, and how should we build it? A discovery track intakes opportunities, ideas and problems to solve. Teams then engage with customers to validate that those ideas create value (desirability), will be used once released (usability) and are feasible in the current business model (feasibility/viability).
“Great companies that have built a product orientation start with desirability and leverage design thinking to have empathy-based conversations to get to the core of problems,” Srini Koushik, the CIO/CTO of Magellan Health, said during a recent product management panel. Ideas that make it through discovery are added to a product backlog and are slotted into sprints for delivery based on relative business priority. Discovery and delivery tracks operate concurrently to ensure that a steady stream of validated ideas and a working product that drives business outcomes is delivered at the end of each sprint.
In a recent strategic planning session, one CIO stated that “transformation is not a part time job,” noting that dedicated teams are critical for both digital transformation and building a product orientation in IT. Teams that are formed on a project-by-project basis spend valuable time ramping up subject matter expertise and building chemistry, but then are disbanded just when they start to hit their stride. Product-based IT organizations, on the other hand, favor dedicated teams that own a product from introduction until sunset, including the execution of discovery, delivery, testing and maintenance/support. In this model, the dedicated teams become true experts on the domain and avoid pitfalls resulting from intraorganizational handoffs and revolving resources.
The increased frequency and quality of customer interactions is a hallmark of product-based IT. Ideally, customers are engaged during the discovery phase to validate ideas and prototypes, and then provide feedback at regular intervals after the product is released. If your end customer is a business unit, you should strive to have even more interactions. Some organizations have business stakeholders participate in daily stand ups, and some may even have their product owners sourced directly from the business instead of IT.
Atticus Tysen, the Chief Information Security, Anti-Fraud and Information Officer at Intuit, is another pioneer in the shift from project to product. At the 2019 Metis Strategy Summit, he emphasized that true product organizations reflect on key questions that demonstrate their strong relationships with customers. For example, do you really know who your customers are, and are you organized around serving them? Do you have metrics to measure customer happiness and show you are working with them in the correct way? “You have to have customers if you’re going to have a product organization,” Tysen said. “Product managers in a lot of ways are relationship managers.”
To achieve the benefits of a product-centric operating model, the funding model must shift as well. Rather than funding a project for a specific amount of time based on estimated requirements, teams instead are funded on an annual basis. Also known as perpetual funding, this setup provides IT product teams with stable funding that can be reallocated as the needs of the business change. It also allows teams to spend time reducing technical debt or improving internal processes as they see fit, which can improve productivity and quality in the long run.
Here are a few key steps to begin the journey…
Organizations should first and foremost target business impact when shifting to product-based IT. For example, one Fortune 500 client chose to measure Net Promotor Score to assess business satisfaction, product team velocity to assess speed to market and the number of critical defects per product to assess quality. It is also prudent to create metrics that track the adoption of key aspects of the working model. For example, you may track the percentage of product teams that have developed strategic roadmaps, or survey product teams on a regular basis to see how many feel like they have the skills needed to succeed in the product-based operating model.
Start by identifying the highest-level customer-facing and internal capabilities in the organization, such as Product Development, Sales, Marketing, Supply Chain, HR and Finance. At the highest level, these are your Product Groups, or “Level 1.” If your organization is smaller and has a relatively simple technical estate, you may not need to break this down any further.
However, we have found most enterprises with multiple business units and geographies need to do so. Inside the Sales group at a SaaS company, business processes would likely include steps such as Discovery, Lead to Cash and Customer Success (which includes activation, adoption, expansion and renewals). These may become your product groups since each of these steps involves different business stakeholders, targeted KPIs and technology components. However, the way you design your product teams will ultimately depend on the intricacies of your organization.
Absent a one-size-fits-all approach, we suggest the following guiding principles:
A key to product-based IT is building cross-functional teams that have the business and technical skills needed to accomplish most tasks inside their teams. The most important role in your product team will be the Product Owner (or Product Manager). Referred to as unicorns by some, these individuals possess the unique blend of business (strategy, competitive analysis), technical (architectural vision, technical project management) and leadership (decision-making, stakeholder management) skills and are responsible for driving the product vision and strategy and leading execution.
To fill this role, many organizations will conduct a skill assessment with their organizations to determine the skills needed to be successful, gather an inventory of available skill sets and shape a training program to fill gaps. As you structure the rest of the product team, think about how the skills of other team members can complement the product owner skill set so you are creating a strong blend of business, technical and leadership skills in the team. Beyond the Product Owner, you may have a Business Analyst that serves as a Junior Product Owner and supports detailed data and process analysis. A Scrum Master would drive Agile ceremonies, a Technical Lead would create a solution architecture and orchestrate technical activities, and an Engineering/QA team would ensure delivery of a high-quality product.
Think about IT services that are BU agnostic, needed across all product teams and in demand only on a part-time basis by the product group. These are your Shared Services. Shared Services cut horizontally across the product groups and teams. Just like products, these specialized groups endeavor to mature and develop new capabilities and empower their customers (in this case the product teams themselves).
Typical Shared Service groups include Enterprise Architecture, Infrastructure & Cloud, Security, DevOps, Customer/User Experience, Data & Analytics, Integration, Program/Vendor Management and IT Operations/Support. The Office of the CIO is an increasingly prevalent Shared Service that is responsible for defining the enterprise IT strategy, setting metrics and measuring success. Each Shared Service should publish a service catalog detailing their offerings and processes for engagement with a bias towards self-service (where possible). Shared service resources can be “loaned” to product teams if there is demand for an extended period.
IT often starts with feasibility and viability, approaching desirability only if the former two boxes are checked. Product managers need to start with desirability and build the ability to adapt their storyline based on the audience. Avoiding technical speak and endless strings of three letter acronyms will also go far in building this rapport.
Shifting to product-based IT is a major cultural and operational change. When done well, it can result in better relationships with customers and business partners, increased agility and improved business outcomes.
In order to compete with the speed and agility of startups, organizations need efficient, disciplined financial management practices that detail how their money is spent and how each investment ties to specific business outcomes. This requires decision-making frameworks and management systems that use credible, timely information to empower leaders to quickly evaluate a situation and determine a course of action. Often, the fastest-moving organizations either are those with the most streamlined financial management practices, or the most careless. Developing these sound financial practices can give leaders critical information they need to act with confidence during uncertain times.
IT financial management is a journey. CIOs can mature throughout this process by managing costs, increasing cost transparency and partnering with the business to communicate the true value of transformation initiatives.
Many organizations still manage their budget based on traditional general ledger categories such as hardware, software, labor, and the like. The difficulty with this approach is that it provides a financial view that is not particularly helpful for IT. Business functions might track revenue by the accounts served or services provided. To improve cost transparency and promote accountability, IT leaders should do the same, tracking and managing costs based on the services provided, whether end-user, business or technology services.
Technology Business Management (TBM) is one of the most common service-based cost models we have encountered with our clients. The TBM framework allows organizations to track how costs and initiatives align to different cost pools, IT towers (e.g. compute, network etc.), services and business units. This helps drive cost accountability among IT teams by establishing baseline and ongoing costs for the services provided to the organization while providing business owners with the true cost of IT services.
With the help of Metis Strategy, an international financial services organization implemented a similar framework to gain more clarity about how it’s nearly $500 million budget aligned with business goals and created value for the company. We first analyzed the labor and managed service spend on key IT services such as application support, IT service desk, network and telecom, and other business functions. With this breakdown, the client was able to identify cost per employee based on location, job type, and which application or service the employee supported. This increased transparency ultimately allowed the organization to save or reallocate $15 million in costs.
While service-based models provide greater cost transparency, they come with their own set of challenges. A common one is tracing shared infrastructure costs back to the business unit that consumed them. Often things like laptops or storage budgets are listed as run items that aren’t tied to specific business units. This often results in a large bucket of “run items” that no one outside of IT quite understands. Without the ability to see how these costs directly support business units, CIOs often face pressure to undertake arbitrary budget cuts.
To provide more clarity on how costs are allocated, adopt an allocation model across the entire financial portfolio. Based on their maturity, organizations typically use the following two allocation models:
After defining an allocation model, IT organizations should aim to influence business demand and accountability for IT services by educating them on the cost impact of their decisions. We recommend that IT start with a “showback” model that illustrates the cost allocation through a dashboard or report. This will give IT the data it needs to shape the demand for additional requests and have more productive conversations with colleagues: “What is the return on this investment? We can show the cost, but are you able to articulate the value?”
In many cases, a showback approach can create a sense of shared ownership for how a business decision may impact an IT budget (i.e., if I hire 10 more people, the IT costs will go up by $100*10). In other cases, where a single stakeholder is consuming a large volume of a service, or has a justifiable business need to control spending, a direct “chargeback” may be more appropriate. For example, if a business unit is driving a major sales campaign, they may need a burst of capacity on a website for a finite period of time. There is a clear return on the investment, but very little value in IT governing whether it is the right way to spend the money. The business unit should simply be charged directly for its consumption and be empowered to control its own destiny.
Once a well-defined financial management framework is established, IT can begin to shift conversations with business partners away from IT costs and toward IT-driven value. A showback or chargeback model will provide transparency on the total dollar spent and can also help illustrate the benefits and trade-offs of different initiatives.
Metis Strategy worked with a manufacturing company that went on this journey. The IT organization was responsible for running and maintaining the Manufacturing Execution Systems (MES) in the factories. Over time, the systems had become disjointed and expensive to maintain. However, upgrading them would be a multi-million-dollar project that would span two to three years. The CIO tried to make the case for an upgrade, but his proposal fell on deaf ears until he was able to articulate the hard and soft benefits of the upgrade to the business. Implementing a showback model allowed his team to build a robust business case that highlighted the potential for future savings by reducing data storage, maintenance and labor support costs. That financial information also allowed the CIO to show how the upgrade would create a more harmonious manufacturing environment and better access to data.
Financial management cannot happen in isolation from project and portfolio management processes (PPM). Organizations need to align their portfolio to the company’s strategy, manage demand, and prioritize investments. This becomes easier to achieve when these key activities are supplemented with the right financial data. Instead of prioritizing a project portfolio based on arbitrary soft benefits, improved financial management practices can help organizations understand and quantify costs and negotiate a seat at the table by demonstrating value for the company.
There are many financial management solutions in the marketplace, but they will be of little use if they are codifying and scaling a broken process. Before adopting a solution to kickstart your financial management practices, it is important to start with the problem you are trying to solve and define the financial metrics that will help improve decision making. It is also critical to ensure your company can produce credible data. If the data collection, manipulation, publishing, and consumption processes are not ironed out first, organizations are likely to run into data quality issues, which can ultimately lead to a lack of trust, branding challenges, and a less successful implementation.
Dynamic companies need well informed leaders who can quickly decide how to respond to a competitive threat, where to invest more money or where to make tradeoffs. With IT budgets often among the top five cost centers in companies, a clearly defined IT financial management framework can provide greater cost transparency and help influence those decisions. An elevated financial management discipline will also strengthen relationships throughout the business by streamlining investment decisions and more clearly quantifying IT’s value.
Technology executives continue to tackle urgent tasks related to the COVID-19 pandemic, from supporting a surge of remote workers to keeping critical business systems running. But as remote work becomes the new normal (at least for the next few weeks), many CIOs are also grappling with larger cultural questions, primarily how to keep teams engaged and productive while working from home.
Below are a few practices leaders can take to maintain a culture of engagement and prepare their teams to emerge empowered on the other side of this crisis.
This is a time of immense uncertainty for both companies and individuals. Personal and professional routines have changed overnight as people make the shift to working remotely. Regardless of job title, everyone on your team is making an adjustment. One of the easiest ways to help create stability is to acknowledge that adjustment and do what’s possible to help the transition go smoothly.
A small but concrete way to do this is to provide training sessions on how to use various collaboration tools. While an IT team may be proficient in making calls on Zoom or communicating with Slack, others may using the technology for the first time. (One technology executive I spoke with recently said a training session for Zoom drew more than 5,000 sign ups.) Developing these opportunities is a simple way help your teams navigate the change and get to work faster.
“Every CIO knows change is not just about technology, it’s about people, process and technology,” Citrix CIO Meerah Rajavel wrote in a recent blog post. The company’s IT team worked closely with HR to craft the company’s work-from-home policy and develop a list of resources. “We decided to lean in and take a walk in the user’s shoes and collect feedback along every step of their journey that could be used to deliver a superior experience that would enable them to perform at their best.”
When visiting corporate innovation labs in recent years, it has been increasingly common to see a company’s leadership principles hanging poster-size on walls throughout the building, a not-so-subtle reminder of the firm’s cultural tenets. With the switch to remote work, it is now more incumbent upon executives to ensure those principles remain top of mind. Consider posting your team’s strategic priorities in prominent places across virtual channels and reference them when communicating with team members. Doing so can serve as a reminder that just because employees are no longer in the office, the company is still guided by the same vision.
While CIOs should continue to share frequent business updates with their teams, they can also magnify key wins and lessons learned. When working together in an office, it can be easier to see and celebrate victories, or to notice when something doesn’t work as it should. Without a shared physical space, CIOs can help develop cohesion by broadcasting the stories of teams solving challenging problems or otherwise rising to the occasion during the crisis.
Regardless of the message you are communicating, be clear and tailor it to the platform you are using. A request delivered “face to face” via video conference may come across differently than a terse message on Slack. Also, while it may sound dated, don’t be afraid to use the phone. While there is a plethora of communication tools at our fingertips, sometimes an old fashioned phone call can help you deliver a message most efficiently.
It is easy to think about remote work as an isolated activity, but it’s worth considering how it can help create new connections. As Adam Ely, deputy chief information security officer at Walmart, said in a recent LinkedIn post: “I spoke to one company that said this drove (security teams) to have better relationships with people in business lines they didn’t know.” Those teams now have a better understanding of their colleagues’ business processes and plan to work more closely with peers across the business. It is a potential silver lining for IT, where strong relationships with business partners are increasingly critical to growth.
The surge in virtual communication tools can help foster these connections. Virtual coffee chats, lunch breaks and happy hours have sprouted up both inside and outside the office as people look for new opportunities to connect. At health technology firm Cerner Corp., which has 27,000 employees working from home, teams are using collaboration tools in new ways, such as creating specific channels for discussing health-related topics, sharing work-from-home tips or sharing photos of their home offices.
While many companies are still in crisis response mode, it is increasingly important for CIOs to think about how their teams can emerge from the crisis in a position of strength. This presents an opportunity to bring a variety of voices into the conversation, working with colleagues across the organization to research the technologies and trends that are likely to rise in importance over the coming months. Even if your organization is unable to invest in those technologies today, exploring business cases now can prepare you to move quickly when the time is and give people a role in shaping the organization’s future.
As the shift toward remote work continues, leaders will be tasked with creating an inclusive work culture that also encourages productivity and innovation. Prioritizing health and safety, equipping employees with the right tools and fostering new forms of collaboration can go a long way toward making it happen.
