IT or digital capability on your Board or governing group (Part 3). The how.

By Mark Nicholls, Partner, Information Professionals
Considering what options you have in order to add more IT or digital capability to your board? Great! If you haven’t had a chance, read our earlier article describing what capabilities you might need, and whether they might be a priority for your organisation/s. We also introduce the difference between the general IT skills and specialist skills of interest to Board Directors.  
digital strategy
Here, we define four approaches you can take for adding the capabilities you’ve identified.  None of them are mutually exclusive so you should mix and match them to suit.  

At times, multiple approaches may be necessary, as it may not be possible to have one person or one way that provides the right capabilities now and into the future. Some of these are better suited to building the general skills introduced in our last article, and some are more relevant to the specific or transient topics that can come and go in prominence from time to time.


The first option to consider is hiring Directors with the Digital/ICT capability who can inject their unique perspectives into your Boardroom.  As covered in our first article, this should not be at the cost of the corporate governance skills that all of your Directors should have.  You should focus firstly on the general IT/digital skills listed in our last article. If you feel you have these covered, then you could also consider specialist IT skills that your organisation will be focusing on over the coming years. 
The benefit of hiring is that there is no better learning than on the job learning. So having someone with good IT/digital skills can bring insights and perspectives that can help your entire Board to lift their own capabilities in this area. If you choose well, you may get someone willing to spend some time outside of the boardroom with your other Directors, to accelerate their learning.  This is a good step to building long term capability in your Boardroom.  Remember though, that depending on your Board culture, and the size of your Board, having one person on their own to quickly change the perspective of your Board, may be asking too much. 

The next option is the active development of your existing skills.  There are multiple ways of doing this.  On the job learning is one way through increased dialogue and discussion at the Board table, and increased discussion and information papers or presentations from the executive team.  As already mentioned, having Directors with more IT/digital savviness can help uplift everyone, either through Board discussions or discussions outside the Boardroom.
Additionally, there are significant opportunities for external training and education.  The AICD is one such body with increasing amounts of IT/digital education for Directors. Another option is coaching and mentoring for some Directors. If you have strong skills on your Executive team then building opportunities for high value contact time between specific Directors and Executive can be helpful. 
Skills development should be adopted by all Directors, as part of their continuous learning. And there is no better area to invest time than in IT/digital, given its changing landscape.

 
The third option is to extend the Board’s consideration of important or challenging matters through Board Committees or Advisory Boards.  This will be organisation specific, as one topic could be challenging for one organisation, but easy to deal with for a different organisation. 

This approach gives you flexibility to involve Directors (due to their special knowledge or interest, or to support their growth), Executive (due to their role, special knowledge, or to support their growth) and external advisors or experts.
 
Sometimes Boards may use Committees or Advisory Boards to assess candidates for future Board vacancies.  For those Directors or Chairs concerned about whether bringing in IT/digital skills means sacrificing basic corporate governance skills, then this could be a good testing ground.
Where you have existing Board Committees (eg Risk Management, Remuneration etc), it is prudent to consider how the IT/digital landscape may change their scope and role.  And in doing so, do they have the skills and capabilities to deliberate on this expanded scope.  For example:
  • Does your Risk Management/Audit Committees also cover Security/Privacy? How would this change the operation, make-up, reporting?
  • Does your Nominations/Remuneration Committees also cover IT/digital skill needs and recruitment/retention strategies? Have you got the skills on that committee to understand current and emerging needs in this area?
 
 

The final option to consider is consultancy or advisory input.  This could be used to accelerate the improvement in general IT/digital skills across the Board.  

It could also be used for specific topics that may be of interest from time to time.  It could take the form of research and discussion papers, presentations, hosted discussions, and guest presentations.  




About the Author:

Mark Nicholls, Managing Director, InformProsMark Nicholls is the Managing Director and a Partner with Information Professionals Group (IPG). He formed IPG in 2005, after a career of delivering software development and business transformation programs in the telecommunications, transport and government sectors in Australia and overseas including the United States.  

Mark leads IPG’s Programs, Projects and Change Practice.  He is a highly skilled program manager and adviser, specialised in leading, managing and advising organisations on the delivery of ICT, digital and business transformation.  

An active industry participant, Mark was elected to the QLD Council of the Australian Information Industries Association (AIIA) in 2013, was appointed as Chair in 2014 and to the Board of Directors in 2015.  

Mark is the inaugural Chair of the Qld Digital Economy Industry Collaboration Group, involving a range of industry groups that are supporting their constituents in the adoption of digital business.

IT or digital capability on your Board or governing group (Part 2). What capabilities?

By Mark Nicholls, Partner, Information Professionals


If you accept the need to improve the IT/digital capability on your Board or governing group (see our last blog) then a reasonable question is, what skills are required?

 
This article is unlikely to completely answer this question for your organisation, as all organisations are unique, but it aims to give you some prompts and guidance to assist.  Firstly, we’ll consider your organisation, then the range of skills in IT/digital.
 

Your own organisation

In considering your organisation, a good place to start is the Tricker Model.  It is one of many lenses you can use to determine where your Board priorities are and therefore where your skill priorities may be in relation to IT/digital.  Other areas to consider include your corporate strategy and corporate risk register.  These may provide guidance on where your priorities are.  You may also want to consider the confidence you have in various skills across your Executive team.


IT versus digital

Know your organisation


In considering what the range of IT/digital skills are, let’s unpack this IT/digital term.  As demonstrated, often when the term ‘IT’ is used, it is in the context of internal organisational capability.  Likewise, when the term ‘digital’ is used it is often in the context of how an organisation relates externally to its customers, competitors, suppliers and the broader ecosystem in which an organisation operates.


Of course the two are related, as it will be challenging to adopt digital externally unless you have the capability internally to deliver. 

When Information Professionals develops ICT strategy, some things we consider include:

  • Governance – how IT decisions are informed, made, implemented and assessed;
  • Alignment – aligning IT strategic priorities and intent with organisational strategy; and
  • Capability – the ability to deliver to the organisation’s needs, leveraging internal and/or external capabilities across infrastructure, security, technology, applications, data, business process and all other domains.


With digital strategy, we consider:

  • Digital marketing – to extend the sales and marketing capabilities into the digital world;
  • Digital business – to integrate digital strategy into business strategy;
  • Digital transformation – to drive digital across the enterprise along with the introduction of digital performance measures; and
  • Digital economy – to widen the scope of influence to the extended value chain and communities in which an organisation operates, and drive digital across this wider group.


How well informed are you and your Board in understanding your current and target state for each of the above areas of ICT and digital?

IT and digital topics


The AICD Essential Director
briefing (referenced in the previous blog) provides some guidance on where the peak body for Directors defines key areas of interest for the Director community.  Since 2013, these areas are:

Year
Topics
2013
Social Media; IT Governance; Current IT Issues (NBN, BYOD, Big Data, The Cloud, Cybersecurity, Innovation)
2014
Governance Landscape (Innovation, Social Media); Technology Trends (Digital transformation, Data, analytics and the power of information, Mobile, Cloud computing, Cyber security and resilience, IT-enabled projects, 3D printing and additive manufacturing, Robotics, Quantified self, Australia’s place in the digital economy)
2015
Risk Management (Cybercrime, Social Media, Real-Time Performance Dashboards); Technology Trends (Fintech Start Up Hub, Stone & Chalk, Crowdfunding, Retail Omni-Channel, Internet of Things, Live Streaming)
2016
Exponential Technology” (how “Technology has become indivisible from how people, enterprises and governments operate); Digital Disruption; Virtual Reality; Machine Learning; Data Analytics; Blockchain


Amongst these topics, there are a few themes which repeat over multiple years. The bolded topics are a clue.  These themes form a guide on the general skills each of us need to have.  They are:

  1. IT Governance (2013: IT Governance; 2014: IT-enabled projects)
  2. Digital Transformation (2013: Innovation; 2014: Innovation & Digital Transformation; 2016: Exponential Technology, Digital Disruption)
  3. Digital Media (2013: Social Media; 2014: Social Media; 2015: Social Media)
  4. Security and Privacy (2013: Cyber security; 2014: Cyber security and resilience; 2015: Cyber crime)
  5. Data and Analytics (2013: Big Data; 2014: Data Analytics and the Power of Information; 2015: Real-Time Performance Dashboards; 2016: Data Analytics)
  6. Digital Ecosystem (2014: Australia’s place in the digital economy; 2015: Fintech Start Up Hub, Stone & Chalk)


Each of these themes will have varying degrees of interest to all organisations and will feature in some form, for many years ahead.  Therefore, it will be prudent to consider how savvy your Board is in being able to properly enquire on, consider and discuss them.

What is most important about these themes is that they can be applied to many specific technologies that you may be encountering now and in the future.

Other topics covered in the AICD briefings are specific and more transient technologies which will have greater or lesser prominence for your organisation, both now and in the future.  They include:

  • 2013: NBN, BYOD, Cloud
  • 2014: Mobile, Cloud computing, 3D printing and additive manufacturing, Robotics, Quantified Self
  • 2015: Retail Omni-Channel, Internet of Things, Live Streaming
  • 2016: Virtual Reality, Machine Learning, Blockchain


These specific topics and others may come and go in prominence for your organisation over time.  If any of these (or other areas) are a priority for your organisation, then please consider how well informed your Board is.  However just because there is a focus on, for example, cloud or machine learning, in your current strategy, it may not warrant bringing on a Director with knowledge in these specific areas.

There are multiple ways of ensuring your Board is well equipped to oversee its responsibilities in relation to IT and digital.  In our next blog we’ll discuss what they are and how you can apply them.

About the Author:

Mark Nicholls, Managing Director, InformProsMark Nicholls is the Managing Director and a Partner with Information Professionals Group (IPG). He formed IPG in 2005, after a career of delivering software development and business transformation programs in the telecommunications, transport and government sectors in Australia and overseas including the United States.  Mark leads IPG’s Programs, Projects and Change Practice.  He is a highly skilled program manager and adviser, specialised in leading, managing and advising organisations on the delivery of ICT, digital and business transformation.  

Mark is an active industry participant. In 2013 he was elected to the QLD Council of the Australian Information Industries Association (AIIA), was appointed as Chair in 2014 and to the Board of Directors in 2015.  

Mark is the inaugural Chair of the Qld Digital Economy Industry Collaboration Group, involving a range of industry groups that are supporting their constituents in the adoption of digital business.


References

http://www.companydirectors.com.au/~/media/resources/events/essential-director-update/edu-2013/03687–13–nat–essential-director-update-2013_internal-pages-final.ashx

https://aicd.companydirectors.com.au/~/media/resources/events/essential-director-update/edu-2014/04372-3-evt-essential-director-update14-jun14-handbook_a4-46pg_web.ashx

http://www.companydirectors.com.au/~/media/resources/director-resource-centre/publications/books/pdfs-various/essential-director-update-2015_final-sitecore.ashx

http://aicd.companydirectors.com.au/~/media/cd2/resources/events/essential-director-update/PDF/05496-6-EDU16-Handbook_WEB_v6



IT or digital capability on your Board or governing group. Do you need it? Why?

By Mark Nicholls, Partner, Information Professionals
 
Considering whether you need information technology (IT) or digital capability on your Board? Then the first question to ask yourself is why.
 
It’s interesting how views have changed in just a few years. Take the Australian Institute of Company Directors (AICD) over the past five years. Each year, the AICD runs their Essential Director briefing and produces the Essential Director Handbook.  This is a useful gauge of where the peak body sees the role of IT/digital.
 
Alan Cameron, NSW Law Reform Commission

When presenting the 2013 Essential Director briefing, at the Wesley Conference Centre in Sydney, Alan Cameron said: “IT is now such a critical issue that failure to monitor and govern it properly is likely to be a failure of the director’s basic duty of care and diligence”.

 
He reflected on his own perspectives, stating that when the Essential Director handbook was first drafted, he considered removing the IT matters from it.  On further consideration, he accepted that many IT issues confront all directors, not just those of IT organisations.
 
2013 was the first year where IT/digital was covered.  Since then this trend is demonstrated by the IT/digital topics covered within the Essential Director Handbooks.  Let’s take a look:
 
Year
Total Pages
Dedicated to IT/Digital
Pages
%
2013
51pp
5.5pp
11%
2014
48pp
8.5pp
18%
2015
38pp
8 pp
21%
2016
39pp
6 pp
15%
 
In this past year, the % seems to have plateaued.  However, I will be interested to see where it lands in 2017 given the increased focus on digital both as a disruptor and an opportunity.  It is certainly now clear that IT/digital is firmly a key issue that should be continually addressed as part of a Board’s governance and strategy role.
 
IT management meeting

However, one objection has been stated by some very experienced Directors. It is that bringing in “special” skills like IT onto a Board comes at the cost of “traditional” skills, like being able to read financials or understand risks.  In my opinion, this view is a little misplaced for a few reasons.  Firstly, it sounds like they may have experienced a less than optimal Director appointment process. Perhaps there was a requirement to populate the Board with only a relatively narrow range of capabilities and without sufficient diversity. That can happen.  Not having the minimum mandatory skills to be a Board member should never be sacrificed, and shouldn’t have to be. However, the ideal Board composition should contain enough diversity of skills and backgrounds to adequately address all the challenges that the organisation faces, and of course this should include IT. There are many capable people out there that have the basic competency requirements as well as that of ICT/digital.

 
Secondly, there is an error in thinking that an understanding and appreciation of IT/digital is a specialist skill.  It is not.  It is a new general skill for all managers and directors.  I am old enough to remember a time when some senior executives and managers had trouble reading a set of financial statements, leaving such an understanding to the “bean counters”.  These days this attitude would be rare.  Today, financial literacy is an accepted general skill.  I would argue that the same evolution is underway with IT/digital.
 
If you need any more convincing, and I am sure most of you don’t, ask yourself these questions… who are the global leaders in:

Bookselling, then publishing then retailing and more………………..Amazon
Video entertainment………………………………………………….Netflix
Music entertainment………………………………….iTunes, Spotify and Pandora
Movie production ……..……………………….. Pixar (bought by Disney)
Photography…………….…….Apple, Samsung plus Shutterfly, Snapfish and Flickr
Advertising…………………………………………………………Google
Direct marketing ……………………………………………….Google, Groupon
Telco……………………………………………..………………….Skype
Recruitment Company ….………….…………………………..LinkedIn
Taxi/Personal transport……………………………………………Uber
Accommodation………………..………………………………..AirBNB
News media…..…………………………………….Google, Facebook, Apple
 
Each of these are leaders in a marketplace that used to be a physical marketplace, that is now largely a digital marketplace and they have leading IT capability to support them. 
 
If you accept the need for improved managed IT services capability on your Board, then the next question is, in which areas and how.  There are a few methods that are available to you to make these determinations.  We’ll cover that in an upcoming blog.
About the Author:Mark Nicholls, Managing Director, InformProsMark Nicholls is the Managing Director and a Partner with Information Professionals Group (IPG). He formed IPG in 2005, after a career of delivering software development and business transformation programs in the telecommunications, transport and government sectors in Australia and overseas including the United States.  Mark leads IPG’s Programs, Projects and Change Practice.  He is a highly skilled program manager and adviser, specialised in leading, managing and advising organisations on the delivery of ICT, digital and business transformation.  

Mark is an active industry participant. In 2013 he was elected to the QLD Council of the Australian Information Industries Association (AIIA), was appointed as Chair in 2014 and to the Board of Directors in 2015.

The Future ICT Organisation & the future CIO

Within ten years, (by 2025) the traditional internal ICT Organisation will cease to exist.


 
 

The statement might seem confronting and that is quite deliberate. The alternative to confronting the issue would be to bury your head in the sand. The writing has been on the wall for ten years plus and, like the paperless office, it hasn’t yet been realised. The stark reality is that 5 years to twenty-twenty should see the bulk of it shifted with the other five years to tidy up the legacy.

It is difficult to detach thinking about the future role of the CIO from that of the ICT organisation. Similarly, in order to anticipate where ICT organisations are headed, it pays to track their journey so far as a basis to predict likely scenarios in the future. So does CIO final stand for Career Is Over? This paper examines these topics.

The intention of this paper is to envision a way forward that will offer a viable and realistic future for ICT practitioners in the workforce.

Looking to the Past

Looking to the past has a habit of providing insight to the future. In doubting the potential extent of future change in the ICT world it is worth examining how far we’ve come.

I started in ‘ICT’ or ‘Data Processing – DP’, as it was then known, in 1980, working for a building society in the UK. In those good old days we had a mainframe with centralised Apps and a network of dumb terminals (Green Screens) and if you wanted to get anything done in the business you had to ask DP. As well as vesting us with great responsibility, this also vested us with considerable power.

The only suggestion of decentralised control was, I recall, over the Wang Word Processing minicomputer that would eventually replace the typing pool.

The late 80s and early 90s minicomputers started to increase in popularity and it wasn’t long before the first PCs started to emerge in the corporate world. Once they got a foothold, although initially under DPs control, some elements of distributed procurement gradually started to emerge.

Switch to today and consumerisation being what it now is, BYOD is now the trend. Businesses are going direct to the market to source Apps or even commissioning them through crowdsourcing and having them hosted in the cloud, often under the radar.

It’s truly a very different world. ICT practitioners need to demonstrate value and relevance in order to claim their place in this new world.

We’ve seen and we continue to see different models for ICT Organisations, with some working better than others. Examples include:

  • Centralised, Distributed, Federated and Centre-led;
  • Split Strategy/Governance, Projects/Change, Service Delivery/Operations;
  • Split between CIO and CTO – (often breeding adversity with the CIO often taking the high ground);
  • Shadow ICT;
  • IS Lite and IS Lean (Gartner);
  • In-sourcing, outsourcing and ICT as a Service (IaaS, SaaS and PaaS etc.);
  • Multi-Modal IT (Gartner);

Often ICT organisations evolve their structures and business models in line with these trends as they seek to move up the maturity curve. It’s also true to say that they tend to reposition themselves along the business value chain.

The key question is: what’s next?

Symptoms of change

Gartner’s IS Lite will move from IS Lean to IS Anorexic. Waves of Digital Disruption will rock the ICT boat and sink it.

We are likely to see the legitimisation of Shadow ICT – Mode 3? Co-design and collaboration will define the new way.

Potentially we will witness the re-birth of the ‘New Age Traveler’ or ‘Cyber-Hippie’ – Anywhere, Anytime. The difference is that mobility and virtualisation have come of age and with this; another disruption has taken place. The age of the virtual CIO is here!

In any event, the levels of business dissatisfaction that have plagued IT Organisations in recent years are more symptomatic of failings in the business model rather than mere failings in the IT personnel. Nevertheless, something needs to change if this situation is to be addressed. Current ICT Business Models do not and will not work for the New Age Business!

Traditional ICT Organisations

The traditional ICT organisation typically looks something like Figure 1 below:

(Figure 1)

Generally speaking, most have separation between strategic and governance functions and service delivery functions. Service Delivery functions generally include applications development, support and infrastructure. The service delivery functions may be in-sourced or outsourced to a greater or lesser degree with elements being hosted in the cloud.

This delivery approach, and this structure, is mired by the historical experience of the people now in the Cxx roles. It does not take into account the manner in which the new blood works, or wishes to work; providing the flexibility and intercommunication between the traditional functions that is mandated by the emerging IT professionals.

Looking to the Future

Transition Strategies

Organisations are at various levels of ICT maturity. Some are already following a path to create a Lite or Lean ICT Organisation as presented by Gartner (see Figure 2 below), whilst others have yet to embark on that journey. We do recommend that organisations attempt to apply the essence of these models as part of achieving readiness for establishing a Digital Business Centre (DBC). In doing so the will adapt for:

  • Strategic Sourcing;
  • Vendor Management;
  • Divesting commodity services;
  • Adopting a Service Management culture;
  • Optimising ICT Governance;
  • Developing new methods of working for professionals working on (and delivering) the service;
  • Embedding end user development in the business;
  • Establishing Centres of Excellence.

Each of these items will lead to a repositioning along the ICT Maturity Curve.

(Figure 2)
These learnings will serve them well in establishing a platform for new age ICT. Likewise, Figure 3 below demonstrates the migration towards becoming an IT Services Provider and Broker in a Hybrid Cloud Environment.

(Figure 3)
Drivers for Change

In order to consider what might be the next step in the ICT organisation maturity cycle, we need to understand the drivers for change. These include:

  • Business enablement;
  • Agility;
  • Market Responsiveness;
  • Need for Innovation;
  • Value for money.
The question is how best to position ICT to contribute in this environment?

The Future of the ICT Organisation

There are a number of potential scenarios for the future of the ICT Organisation. This paper presents one such scenario and provides some discussion to substantiate the outcome. In essence this scenario suggests that the traditional ICT Organisation will most likely be consumed and recycled as a new organisation; the Digital Business Centre (DBC) as depicted in Figure 4:

(Figure 4)

The Digital Business Centre (DBC)

The Concept of replacing the traditional ICT Organisation with a Digital Business Centre (DBC) recognises the tight interdependence between people, processes, information and technology in effecting business improvements and transformations. Indeed, it is the fusion between these components that is the essential step in the process. This exemplifies what Gartner terms the emergence of ‘Digital Business’.

The model recognises the need to blend these components together within and beyond the organisation to provide a holistic view and approach to bringing about transformational change. In essence for the evolving ICT Organisation, instead of being focused on decoupling and divesting core ICT competencies, the focus shifts to redefining the core function of ICT. It brings the pointy end to the customer, and lets the customer drive, if not design the services and products.

It also recognises a focus on change and transition rather than ‘Keeping the Lights on’, which becomes the domain of the standard ICT Cloud (Mode 1) operation. Here the focus remains on rigorous governance and service management and is measured and monitored against performance KPIs.

Business/ICT Fusion

For too long have organisations wrestled with the problem of trying to align business and ICT whether in terms of requirements vs solutions, resolving priorities, determining who should pay for what or simply interpreting language.

Business and ICT fusion is about the bringing together of business and IT functions and solutions. Functions that are most suited to fusion would include:



Retained ICT

The specialised ‘ICT’ functions should include:

These functions represent the core (mode 2) ICT elements that remain in-house although some external resources might be sourced as needed.

Lite Governance

Lite governance recognises the need for organisations to demonstrate agility in responding to market opportunities and circumstances. This is not the same as inadequate governance. It includes setting up lite governance structures, streamlining decision-making processes, allocating responsibility and accountability and maximising individual authority. It also involves governing on an exception basis. It indicates the breaking down of programs and projects into manageable sizes.

People Impacts

So what are the implications for people? I guess those people affected include:
• Management and staff from the ICT Organisation – Impacts might include:

  • New ways of working to match the emerging drive and direction of up and coming IT professionals;
  • Retrenchments/redundancies;
  • Outplacements;
  • Transfers out (e.g. to service providers);
  • Re-skilling to take on new roles;
  • Departures (i.e. choosing to leave).

• Business management and staff – direct impacts of the change e.g.:

  • Changes in roles/responsibilities (e.g. expansion/redefinition);
  • Changes in relationships (e.g. new IT Service Provider(s));
  • Changes in ways of working through co-design.

• Customers

  • Changes to the way in which they transact and interact;
  • Requirement to upskill and or reskill;
  • The need to take on more responsibility i.e. self-serve.
What will be essential is to place importance on:
  1. Understanding the emerging professional and customer ethos, the way in which they work and the manner in which they expect services to be delivered;
  2. Managing the change process and bringing people on the journey;
  3.  Opening up communications (bi-directional and multi/omni-channel) to create a dialogue and to manage expectations;
  4. Establishing a support network for those that will be affected by the change;
  5. Marketing and selling the benefits to the various stakeholders.

It is the combination of people, process, information and technology that will be the key to the success of Digital Business. As such the people factor cannot be taken for granted.

 

Conclusions
The following conclusions have been drawn from this assessment:
  1. The ICT Organisation is a shifting organism that morphs to suit changes its environment.
  2. The emerging way that people work and customers interact with organisations is driving a new paradigm.
  3. To optimise alignment of business and ICT, we will need to fuse the separate parts.
  4. A new ‘hybrid’ organisation should replace the more traditional ICT organisation over the next ten years, with bulk of the transition occurring over the next five years.
  5. The bulk of traditional ICT functions will be migrated to outsourcing with many of these services being provided over the cloud.
  6. New capabilities will need to be acquired by business and ICT in unison in the future.
  7. The transition should be managed as a major change initiative with a focus on delivering business benefits.

 

Testing the Scenario(s)

Before proceeding to divest your ICT Department, terminate your CIO or strip back your ICT Governance you may want to test out some of the theories. Some form of Scenario Testing or perhaps Guerrilla Testing might fit the bill. An initial step might involve identifying those key components that you will need to test before considering an integration test of the whole i.e.: 

  1. Divesting the (Mode 1 – the BAU) ICT Operations;
  2. Validating the new ‘core’ ICT Capabilities (Mode 2);
  3. Validating the ‘fused’ business ICT Capabilities (Mode 3);
  4. Evolving the cloud broker role;
  5. Designing effective ‘lite’ governance;
  6. Shaping the DBC.

In approaching a test of each of these components, we would suggest defining for each:

  1. The objectives;
  2. The problem(s) you hope to resolve?
  3. The perceived value or benefits;
  4. The risks, constraints and/or obstacles and potential mitigations;
  5. The people to be involved and the people that will be impacted?
  6. Steps involved (e.g. building capability, re-engineering processes etc.);
  7. Interdependencies (i.e. with other components);
  8. Roadmap and Action Plan.


The process should be approached in an agile way, not getting too engrossed in the detail. It should be structured but not process bound. Once each of the components has been assessed, a consolidated view should be taken in order to get the total picture and to determine the most preferable sequence of changes. 

About the Authors

Tony Welsh – Associate Partner, Information Professionals:

Tony has over 35 years’ experience as an ICT professional including 15 years in Chief Information Officer (CIO) roles. His particular skills include ICT and business strategic planning, program management, business and ICT alignment, stakeholder management. He is particularly valuable for organisations seeking to get more out of their ICT investments and/or to use ICT to transform their organisation. He has extensive experience in the management and design of ICT organisations.

Lynn Kincade

Lynn Kincade – Managing Consultant, Information Professionals:

Lynn has over 25 years of professional experience, with over 10 years’ experience in executive management positions leading people and change across commercial and government organisations. In undertaking transformation of IT and business services and initiatives, Lynn has transfigured IT organisations and their service delivery, developed and implemented IT strategies and the change programs underpinning those strategies, and managed the program delivery to make those strategies a reality.

Creating the ultimate digital proposition for a city.

The Ultimate Digital Proposition (UDP) portrays a destination such as a city as an integrated digital productivity hub, one with a thriving digital economy where digital businesses can start and thrive, intellectual property is developed and products are brought to market.

As a result, the city develops an international reputation, not only as a place where people want to live and work, but as a centre for global digital leadership, attracting talent and investment from all over the world.

Governments recognise that the digital economy is now too big to ignore and that digital technologies are critical enablers of innovation and productivity. It will create new employment opportunities and whole new industries by lowering costs and other barriers to entry, and removing geographical limitations. This will especially benefit cities by connecting them directly to global markets.

To achieve these ambitions, cities must aim to become digital productivity hubs in their own right, leveraging cloud infrastructure, world class digital events, research skills, business architecture, community engagement, access to export markets and high quality digital production. They must also become renowned as a hot-bed for startups and as a magnet for inward investment. Action is needed at government level to define and deliver the environment within which this reputation can evolve.

Capital cities are not necessarily the best at developing UDP’s. Regional cities are often quicker and nimbler and therefore better placed to respond to the opportunities presented by the digital economy. Ironically, regions are excellent at presenting a united front around sectors like tourism in the interest of external promotion while simultaneously maintaining a competitive internal market. Despite what we know about the value of the Internet economy, this still isn’t happening for digital. I am not aware of a role or initiative at any level of government anywhere whose sole focus is to deliver the Ultimate Digital Proposition.

Individual initiatives which could form the basis of a homogeneous digital showcase are usually managed and implemented independently of each other. Governments tend to give responsibility for anything related to digital to their ICT Department. However this will not work in at least one critical area of the Ultimate Digital Proposition – attracting inward investment. Meanwhile Trade & Investment Departments usually do not have a deep enough grasp of digital to promote it as aggressively as they do other sectors – such as the aforementioned tourism.

Last year, Gartner declared Brisbane’s digital economy strategy to be an example of global digital leadership. Accolade’s such as this should provide a clear motivation for a city to go further and create its Ultimate Digital Proposition. The UDP is multifaceted as its captures the essence of domestic digital economy activity within the city while at the same time developing its global reputation as a place where “cool digital stuff happens, and you should be part of it.”

Cities can do a number of things to create their UDP. A digital achievement audit or competition would highlight the collective digital excellence of its companies, universities, start-ups, local authorities and not-for-profits. It should also identify and recognise the efforts and achievements of its digital champions. It also needs to convert the following core objectives into KPI’s that it has the capability to deliver:
  • Providing the capacity for high-speed, high-volume digital transactions.
  • Transforming existing businesses and building new ones that are born online.
  • Positioning the city as a digital hub for investment and innovation.
  • Creating enhanced quality of life through the delivery of public digital services.
Infrastructure is an important element of a city’s economic development activity. In the digital age there needs to be a better balance between investment in digital infrastructure and physical infrastructure and between intellectual property and physical property. It follows that in a digital economy, achieving a more appropriate balance of investment across these areas will contribute to economic growth. Among the activities that can form part of this growth are educating businesses, leadership innovation, leveraging IPR from startups and supporting initiatives relating to knowledge creation.

All digital initiatives currently being managed independently in a typical city may continue to be managed independently, but should be showcased together in support of the city’s holistic digital vision. Wherever possible deliverables of a digital nature should be announceables of the city’s digital strategy. City digital strategies are becoming increasingly enshrined in economic development plans not just in ICT strategies. In this way the development of the Ultimate Digital Proposition can maintain more of a customer-focused, commercial perspective and be more relevant to the economic development of the city than if it were managed inside the ICT Department alone.

To oversee the development of its UDP, the city would need to appoint a full-time senior digital advocate, such as a Chief Digital Officer, as high up the organisation management structure as possible, ideally at Senior Executive level. This would have to be an appropriately resourced digital leadership role, developing the city’s digital strategy and overseeing its implementation, working not only with city officials but with senior stakeholders including Government, academia, technology providers, the business community and the start-up sector.

The senior digital advocate role would reflect and embrace an emerging focus by the city on new thinking for the digital era, on the one hand within the city’s digital ecosystem where it would encourage the growth of e-skills, e-Government and e-commerce and support business, research and innovation, and on the other hand as a destination ambassador for the city, fronting its Ultimate Digital Proposition beyond the city walls by establishing and promoting the city’s global reputation for digital excellence.
kieran o'hea digital officer
KIERAN O’HEA IP//DIGITAL Practice lead – Former Chief Digital Officer of the City of Brisbane.
Formerly the first Chief Digital Officer of Brisbane. He led the development of Digital Brisbane, the five-year digital economy strategy for the city. Deliverables included the Brisbane Digital Audit, the Chair of Digital Economics and the Digital Brisbane strategy. In its first year the strategy engaged with 30,000 SMES and funded 25 start-ups. Previous achievements include developing digital strategies for the Irish Government and a digital capability framework for the European Commission. His work in this area also features in the UK Government digital strategy.

How do I manage change for organisational renewal?

During and beyond transitions to ICT as a Service. 

cloud computing model

CIOs and business change leaders will face many challenges when moving to ICT (Information and Communications Technologies) as a Service. The momentum for change in public sector organisations and the pressure generated by expectations for action and results have been accelerated by recent government decisions and a growing sense of urgency that we need to get on with this.ICT as a service is commonly referred to as cloud hosting, cloud solutions or cloud outsourcing Put simply, it means that your organisation has decided to meet all or some of its ICT needs by purchasing services and/or renting assets, applications and storage space from suppliers rather than by owning and managing them. Transitions from one business model to another are commonly referred to as cloud deployments. Such transitions require a fundamental shift in your ICT and IM (Information Management) strategies and the business processes, stakeholder relationships and resources that support them.

Future directions set by state and federal governments are the main drivers for change. The Queensland Government for example, has adopted a cloud first policy to enable it to transition to lower cost, standard and interchangeable services, where quality improvement and cost reductions are driven by competitive market forces. Market forces, increased market share, profitability and growth remain the main drivers for private sector organisations to adopt cloud solutions. Other drivers may be known or will emerge as business leaders make decisions that will guide their ICT as a Service strategy and set the scene for renewal of organisational mission and purpose. Together they create a compelling case for re-thinking your information management (IM) strategies and the capabilities you will require to deliver them.

Transformational versus incremental change

TransformationThe approach to change that will best support a successful transition to a new business model is transformational rather than incremental although transformational change is usually implemented in manageable stages. Transformational change disrupts the current state and the roles, working relationships, business processes and behaviours that are embedded there and where the capabilities developed from your business technologies have become self-sustaining. The focus is on wholesale business changes that will be required to ‘unfreeze’ the current state and transition to a future state, while ensuring that your people will be ready to embrace a new business model and new ways of working with stakeholders and suppliers.

Transformational Change

What transformational change means will be understood differently from department to department and program to program. There is no one-size-fits-all template. The dynamics of transformational change may also be different from your previous experience with change management. Your business drivers, the type of cloud/s you decide on, the services you will purchase, deployment and migration complexity, unique workforce impacts and contractual relationships with your suppliers will guide your decision making and signal what your transition planning will need to cover.

Transition planning
transition planning
Moving to ICT as a service is a transition that takes your organisation to a desired future state. One of the main transition activities will be to build strong and lasting relationships with those suppliers or cloud hosting organisations who will become your service delivery and information partners. Another is the alignment of your people, processes and systems with your new cloud architecture and your new business or service delivery model. These alignments are important because of the role they play in stabilizing the business environment as the transition occurs. They may take more than one developmental step, depending on how embedded the current state is, the complexity of the transition and how ready and motivated your people are.

Building new capabilities

building new capabilitiesWe are working more and more with clients to help them get their people from where they are to where you need them to be as ICT as a Service transitions occur. We recognise that each business environment is different and that the pathway for a successful transition will vary. Above all, it requires business leaders and sponsors who can articulate a clear vision of their future state, the rationale for change and the plan to get there.

The capabilities required for ICT as Service environments are likely to be different from those that have served your organisation well in the past. The pathway for building or acquiring new capabilities will be an important part of your workforce transition. Common practice nowadays is to use a methodology or framework that leads to soundly based decisions. Gartner’s IS Lite approach for example, enables business leaders to formulate their vision for optimal information systems (IS) performance and decide which services can be exited and which capabilities should be retained and attained internally. This vision can then guide workforce transition strategies and plans to define and build new capabilities from old.

Building new capabilities also requires a depth of understanding about what new skills will be needed and whether these can be developed internally and/or acquired. A good starting point is to understand and respect the capabilities that are embedded in your current state plan for the retention of critical skills and knowledge.

Lessons learned

lesson learned

Case studies in Australia and elsewhere have already revealed some of the challenges for cloud deployments. Not surprisingly, a common feature is the imperative to get the deployment done quickly and successfully while also containing costs. Change management, infrastructure, migration complexity, vendor and supplier relationship building, time taken to build or acquire new capabilities and what to do with owned ICT assets, all feature in the literature that is available. Enabling changes required for procurement policy, capital versus expense cost structures and understanding current and benchmark costs for new business models have also arisen.

Case study 1

For a state government department, cloud hosting services provided an opportunity to integrate a myriad of different systems, each with their own administrative processes, into one. The current state was characterised by cumbersome and manual processes, difficulty in getting accurate information and embarrassing delays when responding to routine requests for information. The preferred option was software as a service hybrid solution which comprised of a private and a public cloud for different user audiences and information security standards.

Implementation of the solution took place within an aggressive timeframe and was widely regarded as a successful example of how to do large-scale software as a service (SaaS) deployment. It was not however without its challenges. Lessons learned revealed that change management was the biggest challenge and that implementing cloud best practice required a major and continuous effort to ensure that new practices were adopted.

Next Steps

the next steps

Your organisation may already have a change management methodology that has served you well in the past or a preferred approach to managing either incremental or transformational change. Information Professionals recommends that you familiarise yourself with our other publications and consider your approach against the following business change principles. They will serve as a reality check and guide you on the right path:

• Know your business risks, drivers for change and your cost structures and choose the pathway to ICT as a service that provides the best fit solution. What has worked well in one organisation may not necessarily work in another.

• Plan your transition around the program and project management life-cycle. Project management, business change, infrastructure optimisation, supplier engagement and workforce change products will overlap. They should be integrated for best effect.

• Treat your cloud deployment and transition planning as a business transformation project rather than an ICT project

• Be ready to communicate concepts that may be unfamiliar or not understood by your staff, stakeholders and suppliers, clearly explaining what they mean and who and what will be impacted. Focus on communicating the vision and rationale for change, what will happen and why. Be honest and keep expectations realistic about what is to come.

• Define the capabilities required for your future state and plan to build new capabilities from old. Keep in mind that these types of transitions are new and that it will take time to build or acquire new capabilities as your new business model takes shape.

• Know the value and cost structures of your ICT and IM assets and show that you understand and respect what is embedded in the current state. Aim to preserve the ‘know how’ that is there for continuing internal use or knowledge transfer to vendors and suppliers.

• Help your stakeholders – including future suppliers (where this is in your interest) to get ready for ICT as a service. Use these interactions as opportunities to build and strengthen the working relationship.

Success criteria

nailed it

Increasingly being successful at transformational change relies on speed of adaptation and the avoidance of lengthy and de-motivating implementation cycles that can undermine your transition planning and stakeholder engagement efforts. There is a constant need to balance immediate and longer-term interests. Successful transitions to new business models also require thought, care and attentiveness to planning and sequencing of business, deployment and workforce change initiatives. Most importantly, the people impacted need assurances from change leaders and business sponsors that their work efforts are valued, that no-one will be left behind and that there is a clear rationale for the changes they are being asked to embrace.

Janet Crews
Written by: Janet Crews 
Senior Consultant – Information Professionals
Janet is a storied, qualified, change management professional, with many years of both commercial and government based experience.
You can connect with or find out more about Janet on linkedin:  au.linkedin.com/pub/janet-crews/6/900/907

Why I LOVE Linkedin.


It was a problem in search of a solution.   

Communication Breakdown.
For Project Managers, the problem ‘bubbles up’ at an awful moment of realisation.  The new technology the project is installing and which will rely on collaboration and information sharing to deliver business benefits – is incompatible with your client’s business culture.  How could it have come to this and what do you do?  Compartmentalise the problem by calling it ‘out of scope’ or tell your client the truth – that their business won’t get a ‘bang for their buck’ from their investment because the culture gap is just too big to cross.     
It was during one of those discussions among peers that a ‘cut through’ insight about the problem came from an Enterprise Architect. “Why can’t change and benefits be integrated into enterprise architecture before the project starts, and before the influence of silo thinking and competing mindsets takes hold?
The chain of ideas was continued by a Change Manager and an IT Benefits Manager.  “Of course, integrating enterprise architecture and benefits goals would have a deeper and more effective impact on project viability, and it makes a lot of sense to assess cultural compatibility well before the project starts”.   This led to a more focussed discussion within the broader peer group about what this approach to change would look like, how it would fit together, how it could reduce risk and whether we could be certain that the problem IT Project Managers agonize over – and which our group had spent the best part of a month talking about – could be eliminated.   This in turn led to a realisation that we should develop these ideas further.   And so this is what I found myself doing in my spare time, contributing towards developing a better and more viable approach to change management in a project environment.
Chain of Collaboration.
The discussion did not take place in a workshop or a business strategy meeting.  The Enterprise Architect was in Montreal, Canada, the Change Manager and the Benefits Manager were in Brisbane, Australia.  Other contributors and reviewers were from Canada, United States, South Africa and the Netherlands.  It happened in one of those virtual networking spaces that we are increasingly gravitating towards to meet peers, build networks and collaborate around common interests – the linkedingroup for change management practitioners.   
These collaborations are commonplace nowadays.  New communities, causes and peer groups are formed everyday because technology enables it.   The tools we have at our finger tips are cheap, quick and effective.  And we like the speed at which we can connect, review others work, give feedback on ideas and contribute to innovation.   What started out as a professional networking space has literally exploded into a place of marketplace of ideas, debate and opportunity.   
I started taking cautious steps in this world, which led to more experimentation from increased confidence.   Here you interact, share ideas and participate in two-way communication.  It takes a leap of faith to do this with people you’ve never met.  But my experiences so far have taught me that the bad’s co-exist with the good’s.  Communication takes a constant effort, misunderstandings are frequent and disengagement is frustrating.  Continued engagement is vital, because without it, people do not share information freely or offer up the ideas needed to drive new thinking about the problems and challenges we face as practitioners.  

After each interaction, I resolve to get better at virtual communication.   I like being part of this world and am relaxed about where collaboration leads.  I am also curious about what it takes to build a cohesive team in cyberspace, a team that is robust enough to work through its creative tension and build the trust needed to keep engaged as volunteers.  So I keep engaged – contribute, learn, extend my network and try different things – some work and some don’t.   But I know we are a team and I feel confident that our work will contribute something important to the body of change management knowledge.  



– Janet Crews Senior Consultant – Information Professionals

Janet is a storied, qualified, change management professional, with many years of both commercial and government based experience.
You can connect with or find out more about Janet on linkedin:  au.linkedin.com/pub/janet-crews/6/900/907

Business Strategy vs. ICT Strategy vs. Digital Strategy.

Business Strategies have been around for a long time.  ICT Strategies less so.  But the new kid on the block is the Digital Strategy.  What is it, and how does it differ from the first two.
The Oxford Dictionary has two primary meanings associated with Strategy.  The first is below.  The second has a military context.  This is understandable as many management concepts still in use today originated from the military.
Definition of Strategy: a plan of action designed to achieve a long-term or overall aim.  Definition
It makes sense that a Business Strategy is therefore a plan of action designed to achieve a long-term or overall aim for a business, or an organisation.  Their names may vary from Business Strategy to Corporate Strategy, Organisational Strategy or something else.  However, most of us know what these look like even if their name may vary.  It is usually developed, or at least lead by the Chief Executive, and it may have extensive input from the Board.
An ICT Strategy can take a number of forms.  In many organisations it is a response to the needs of the Business Strategy.  That is, it defines the ICT plan of action designed to achieve the ICT related aims of the business.  It is usually developed by the Chief Information Officer (CIO) or an equivalent role.  The Chief Executive is often consulted and involved to varying degrees depending on the organisation and on the Chief Executive.  The Board could also be involved, although in my experience it is rare for most Boards in Australia to play an active role in the preparation of an ICT Strategy.
In my view, this approach to the development of strategy has been a big weakness for many organisations.  It is based on a flawed assumption.  And that assumption is that ICT can only form an output from Business Strategy.  By definition, that means that ICT is not a useful input into Business Strategy.  This is flawed thinking, and has been for many years.  ICT has the potential to impact on Business Strategy.  And this effect is becoming more pronounced with each passing year.  For instance ICT innovations are allowing new entrants to enter existing markets, the creation of brand new markets and the creation of new business models and industry structures.  ICT is changing our expectations (as clients and potential clients) for how we interact with organisations.  If you have any doubt, you would know that you and most of your friends use ICT daily to buy, consume or research various products and services.  If you still have doubts, read Marc Andreessen’s article, Why Software Is Eating The World.  I have put some direct quotes from this article below.
Despite this flawed assumption, Business and ICT Strategies have largely been developed in this way for many years.  In more recent times, and perhaps for only the past five years, the Digital Strategy has come along.  It primarily came out of marketing departments who realised that there were more digital marketing and advertising options that they were having to consider.  But beyond that, they also realised that customers wanted to interact with their companies in multiple ways, including digital and online ways.  In some cases they also saw their own market share being eroded by these new entrants that were capitalising on Digital approaches to doing business, and these Digital approaches were being very successful.
Hence we have seen the rise of the Digital Strategy.  While its development may be lead by the Marketing Department, it is increasingly becoming of major interest to Chief Executives and Boards.  There have been enough company failures caused through being blindsided by Digitally enabled alternatives that it is worth them taking a keen interest.  This also means that the Digital Strategy is taking on a broader view, not just a marketing view but a broader strategic view of the organisation, and considering things such as industry structures, competitor behaviour, organisational capabilities, organisational structures, and many aspects of an organisation’s business strategy.
This evolution of the Digital Strategy is now becoming what the ICT Strategy could have been, and perhaps in some rare cases, has always been.  The Digital Strategy is now becoming an input into the broader strategic view of the organisation, helping to inform the Board and Executive team, and providing an input into the entire organisation’s strategy.
A word of warning: Be careful assuming that the above descriptions apply in every organisation though.  In some cases ICT and Business Strategy formation does happen in concert with each other, but this is rare.  And in some cases a Digital Strategy remains a marketing only view although this is becoming less common as a broader view evolves of what a Digital Strategy should be.
Can all three strategies sit side by side?  The easy answer is yes.  But over time, it is natural that they could merge.  For instance, would Amazon or Google or Netflix or Apple or Skype have a Digital Strategy and a Business Strategy.  I cant say for sure, but I don’t believe that they would think of strategy in two separate domains in this way.  In most organisations, it will be useful to have a Digital Strategy.  It will introduce new ideas and concepts and challenge the existing organisation and hopefully have a positive impact on the overall strategy for the business.

Overall, the emergence of the Digital Strategy having a whole of organisation view, and even taking an industry and marketplace view, is a good thing.  It helps organisations to see the opportunity and risk that is in front of them.  The view of many commentators is that eventually every company will have to become a technology company or they will no longer be around.  If that is true then the sooner you start this evolution the better off you will be.  And if a Digital Strategy helps get you started then that is great news.

Business Strategy
Digital Strategy
ICT Strategy
Developed by the Board and Chief Executive
Always
Increasingly
Rarely
Strategy Development is Lead By
CEO and Board
Was Marketing, Increasingly CEO & Board
CIO
Implications for every aspect of an organisations
Always
Increasingly
Rarely
Considers Client and Market Needs
Always
Always
Rarely
Considers Industry and Competitor Behaviour
Always
Increasingly
Rarely
Considers new technology opportunities
Rarely
Increasingly
Always

Article Written By: Mark Nicholls.

Managing Director, Information Professionals. 
Mark is one of Australia’s most trusted IT Change Management advisors. He also has other entrepreneurial business interests that he operates through MaidenVoyages.

 If you liked this blog check out our other material at Informpros.com.au

Post your thoughts and comments below…

Excerpts from “Why Software Is Eating The World” (WSJ OP )
  • More and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense.
  • The world’s largest bookseller, Amazon, is a software company
  • Largest video service by number of subscribers is a software company: Netflix
  • The most dominant music companies are software companies: Apple’s iTunes, Spotify and Pandora
  • The fastest growing entertainment companies are videogame makers—again, software.
  • And the fastest growing major videogame company is Zynga (maker of games including FarmVille), which delivers its games entirely online.
  • The best new movie production company in many decades, Pixar, was a software company. Disney—Disney!—had to buy Pixar, a software company, to remain relevant in animated movies.
  • Photography, of course, was eaten by software long ago. It’s virtually impossible to buy a mobile phone that doesn’t include a software-powered camera, and photos are uploaded automatically to the Internet for permanent archiving and global sharing. Companies like Shutterfly, Snapfish and Flickr have stepped into Kodak’s place.
  • Today’s largest direct marketing platform is a software company—Google.
  • Today’s fastest growing telecom company is Skype, a software company
  • LinkedIn is today’s fastest growing recruiting company. 
  • If you still need convincing or want to read more, read the entire article.

So you still want to be a CIO?

 

The Reflective CIO – So you still want to be a CIO?
Welcome back! I figured it was about time to follow up on my original blog. Last time I discussed six time-tested observations I have made over fifteen years as a CIO. This time I thought I’d offer my perspective on a couple of topical subjects:
·       The evolving role of the ICT Organisation
·       The evolving role of the Chief Information Officer
You might believe that the two subjects are intrinsically linked and I would agree but I would suggest that the linkage will be radically redefined over the next couple of years.
1.     The Evolving Role of the ICT Organisation
First off, what are the main drivers for change? Well that might include:
·       Increasing the focus on business improvement
·       Freeing up scarce resources
·       Reducing the costs of running the business
·       Gaining access to a wider pool of capability
·       Refocusing on core business activities
·       Maximising profitability
·       Improving service quality
·       Achieving profitable growth
·       Differentiating products/services
·       Increasing customer self-service
·       Reducing risk
·       Increasing customer loyalty
At the same time you need to respond to emerging trends and realisations:
ICT Commoditisation
Let’s start with a clear definition.  I like the definition provided at www.BusinessDirectory.com – “Almost total lack of meaningful differentiation in the manufactured goods. Commoditised products have thin margins and are sold on the basis of price and not brand. This situation is characterised by standardised, ever cheaper, and common technology that invites more suppliers who lower the prices even further.
That same definition that applies to products can be applied to the services that are associated with those products.  Hence the trend in organisations to divest those services which have traditionally formed the backbone of the ICT Organisation.
BYOD – Now-Generation Outsourcing
An appropriate response to Gen Y and Gen Z consumers (i.e. staff and/or customers) is to let them redefine ICT as we know IT. The hardware is now user defined and supplied. The software and operating system is outsourced and managed over the cloud and Apps are readily available to download to devices of their choice.
In this scenario, the potential responsibility of the ICT Organisation or entity becomes that of providing secure (i.e. portal) access and facilities to update corporate information. BYOD is not without its challenges and it needs to be carefully planned and executed (see 10 Steps to a Successful BYOD Strategy)

 

Customer Self-Service –ultimate Business Process Outsourcing (BPO)?
An undeniable trend is that of customer self-service. How can it be possible that you can get customers to answer their own queries or choose their own product, at their own expense, in their own time? And there’s more: they can process their own payment, up front, and even make their own arrangements for delivery. Yes and we will rate those businesses very highly!
The world is changing!
Strategic Sourcing
Whereas organisations were once faced with two primary options:
a.     In-house – The generally low value, low cost option
b.     Outsourced – The generally higher cost, higher value option
There is now a multitude of variations available including:
c.      Sole-Sourcing – Outsourcing to one principle vendor
d.     Multi-Sourcing – Outsourcing to multiple vendors
e.     Co-Sourcing – Partnering with a firm that employs staff to meet your long term needs
ICT as a Service
With the emergence of the cloud, a proliferation of ‘ICT as a Service’ variations have emerged providing choices to organisations. These include:
a.     Software as a  Service (SaaS)
b.     Infrastructure as a Service (IaaS)
c.      Platform as a Service (PaaS)
d.     And other variations are emerging such as Data Centre as a Service (DCaaS).
The theme of ICT as a Service features throughout the Queensland Government ICT Strategy 2013-2017 http://www.qld.gov.au/dsitia/assets/documents/ict-strategy.pdf and increasingly of those in other jurisdictions.
In essence, these services provide for organisations to procure ‘turn-key’ solutions on a regular (eg. monthly) subscription basis. As a consequence the assets remain the property of the service provider as with the responsibility to apply upgrades and refreshments over the contracted term.
In some cases, these services can also be integrated with buy back and leasing arrangements to facilitate flexibility with financing and for those with existing assets.
The Overcoming of the ICT Stigma
Fairly or unfairly, many ICT Organisations carry a reputation for underperforming and failing to deliver business value. Some are judged to be expensive and lacking in capability and frequently external service providers are viewed through rose coloured glasses.

 

Implications for the ICT Organisation
When you add it all up, it would seem that the writing is on the wall for the ICT Organisation. Indeed, it’s fair to say that the writing has been there for some time. Certainly, as a CIO I have been presenting that message to my teams since at least early 2000. As I look back now, those teams bear very little or no resemblance to the teams of today.  On and off-shore outsourcing and more recently the cloud, have played a major part in redefining them.
In Gartner’s IS Lite publications from 1999, they have espoused the virtues of a slimmed down IS/ICT organisation. Much of that work continues to be relevant today. However, things look to be destined to move to yet a new level. I would expect to see:
a.     Acceleration of the slimming down of ICT organisations
b.     The emergence of new governance structures to accommodate what I refer to as ‘External Trusted Advisors’ (ETAs)
c.      Further divestment of ‘demand-side’ responsibilities i.e. some aspects of architecture and strategy development, business enhancement (e.g. project management) and technology advancement (e.g. prototyping)
d.     Emergence of new roles and capabilities to generate business value in areas such as data analytics, open data, business intelligence, social marketing etc.
They have been saying that the “mainframe is dead” as long as I can remember. The reality is that they are still around but their role that has changed. Likewise, ICT organisations can survive but not in their present form. How will you and your organisation be impacted:
·       What’s your value proposition?
·       Are you relevant?
·       What differentiates your services from those of others?
If your organisation has the right answers to these questions, you might survive and even prosper.
So what will this mean for the staff of the ICT organisation? Well, the technical skills will still be needed but those opportunities will mostly be with ICT Service Providers (SPs) including Cloud SPs. There will continue to be a place for high value capabilities including vendor management, strategic planning, relationship management and portfolio management. Otherwise, it will primarily be those occasional bad experiences with vendors that will slow down the inevitable transition to outsourcing and particularly ICT as a Service.
2.     The evolving role of the Chief Information Officer
So, with the prospect of his/her empire crumbling, will “CIO” finally stand for “Career Is Over”? Well, in some cases the answer is yes. For others it will depend on two main factors:
·       How progressive is the CIO?
·       How aligned is the CIO with the CEO?
Progressive CIOs will be reflecting on this blog as confirmation of the career development strategy that they already have in mind. Others might re-think theirs and start getting on board. The remainder I will call Blue Sky CIOs – because they see no room for the cloud – are most likely to dismiss the scenario I’ve outlined as being unrealistic. Well, to each, their own. What is for certain is that the role of the CIO is evolving. What is equally certain is that the role is evolving in different directions. These include that of:
·       The Chief Digital Officer (CDO)
CDOs will typically have experience with digital technologies, e-commerce and digital transaction processing, social media and online marketing. They will be concerned about how digital changes marketing, recruitment, procurement, sales and finance. They will be heavily involved in data analytics and in employing Business Intelligence and influencing business strategy to adapt to the Digital Age. The CDO’s focus is customer-focused (front end) technologies.
·       The ‘Traditional’ CIO/CTO
CIOs/CTOs toil to keep leading companies abreast of cumbersome, enterprise-wide technology upgrades and efficiencies – virtual servers, enterprise resource planning (ERP) and IT infrastructure of all kinds. The domain includes the maintenance of Enterprise Architecture, policies and standards was well as traditional ICT services such as Desktop support, telecommunications management, applications development. As these services increasingly become the domain of external service providers over the cloud, the role will become less relevant.
·       The ‘Hybrid’ CIO
The ‘Hybrid CIO’ reflects the evolution of the CIO as a business leader, tasked with leading business transformation with equal focus on business process optimisation, information exploitation and technology innovation. In the scheme of things, this will result in the technology taking a back seat with emphasis switching to stakeholder management, vendor management and cloud service brokering rather than ICT service delivery. Business Process Management and Data Analytics (as with the CDO) will be at the forefront.
·       The ‘Virtual’ CIO
It’s also worth contemplating the role of the ‘Virtual CIO’. For SMEs unable to retain a permanent CIO and for larger organisations requiring CIO capabilities to plan or oversee transformational changes, this might present an answer. It might apply for traditional, hybrid or even Digital nuances. Essentially we’re talking about CIO as a Service (CIOaaS) which may have particular appeal to organisations contemplating a move on from their current arrangement but being less certain of the flavour they need next.
With each alternative role I expect significant change. The likelihood is that the traditional CIO/CTO will operate with a reduced sphere of influence – to a large part reverting back to the role of ICT Manager and being consumed within the domain of the CFO, CMO or even the CDO. Not all CIOs will make the transition to CDO and many will choose not to. For those that don’t, I suggest that transition to the ‘Hybrid CIO’ role would offer a better alternative and (possibly) a transition step to being a CDO.
Final Word
  

It’s going to be an interesting time ahead for both CIOs and ICT organisations. Now would be a good time to contemplate what the coming changes will mean for you as a CIO or an aspiring CIO and to position yourself to make the most of it. Thanks for reading!

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Comment, please leave us your thoughts.

 

Tony WelshTony Welsh
Associate Partner, Information Professionals

Tony has over 30 years experience as an ICT professional including 15 years in Chief Information Officer (CIO) roles. His particular skills include ICT and business strategic planning, program management, business and ICT alignment and stakeholder management. He is particularly valuable for organisations seeking to get more out of their ICT investments and/or to use ICT to transform their organisation.

Government taxes, industry policy and the increasing relevance of ICT



Recent noise from the current federal government on various topics is increasingly seen as just that…noise. But that doesn’t mean that some of it is not without relevance and will become more so in the coming years.

I am referring to the discussion on tax minimisation by large corporates and in particular global tech corporates. It is a topic being discussed amongst all major western nations. This includes Australia, the UK and the USA where these tech corporates achieve solid revenue yet are alleged to pay just a fraction of tax in comparison to what would be their apparent profits. Of course their real profits are a lot less than their apparent profits, hence their ability to pay reduced tax.

One way they can achieve these lower real profits is through having to pay for the intellectual property that their products and services utilise. Local expenses include payments for this intellectual property, which is paid to the overseas owner of this intellectual property. The overseas owner of the intellectual property is an overseas entity of the same global corporate, and could reside in a lower taxing nation. Hence, via these payments, which are effectively an internal trading mechanism, they lower their profits in higher taxing nations and increase their profits in low taxing nations achieving a net global tax reduction.

This is not a new concept. It has been used for as long as I have understood such things, and probably a lot longer than that. For instance, Ireland became a hub for a lot of software development activities through the early to mid ’90s. This was due to Ireland’s tax and industry development policies, supporting its plans to grow its local software development industry. Many global, or global aspiring companies took advantage and started building offshore software and intellectual property development capability out of Ireland at that time. This dynamic remains in play today.

What is changing however is the increasing reliance on intellectual property in our everyday lives, reflected via the increasing revenues of companies providing technology products and services. And these companies are now becoming the biggest companies in the world, and have the ability be as innovative with their tax practices as they do with their products and services.

It is a natural role for government to want to protect their revenue base, and perhaps natural from some sides of politics to kick those who are successful, but this ignores the real issues.

Senator John McCain, one time Presidential nominee asked a very valid question of Apple CEO Tim Cook, at a senate committee hearing last month on this very issue, asking “couldn’t one draw the conclusion that you and Apple have an unfair advantage over domestic based corporations and companies, in other words, smaller companies in this country that don’t have the same ability that you do to locate in Ireland or other countries overseas?”

If it does, and I think the answer is obvious, then this issue has implications beyond tax receipts, with implications for those who want an industry policy that support innovation, supports new entrants, by lowering economy of scale impacts, and lowering barriers for growth.

For instance, if a start up is forced to pay 30c in the dollar in tax, and its competitors pay 10c in the dollar, that is an extra 20c in the dollar that can be reinvested into RnD, into marketing, into customer service, and into investor returns, thus attracting more clients and more investors. The formula is simple. The start up has a steeper climb ahead.

The ability for some nations to produce tax policies which attract investment or industry development is not a new phenomena. Michael Porter published The Competitive Advantage of Nations in 1990. In my view this should form compulsory reading for all politicians.

This point seems to be getting missed in the current debate about whether these corporates pay their fair share. In Australia, it is common practice for states to compete for the attraction of head offices through the application of state tax policy, such as payroll tax. Yet, we seem to have forgotten that as a nation, we too compete with other nations, for our share of industry.

And in a world where the global value of technology based products and services are increasing, and where intellectual property forms a larger and larger share of these products and services, then the opportunity to move profits based on internal trading of intellectual property will only increase.

The question for government becomes less one of how do we punish corporates that are successful in navigating the existing regime (although that will always be an easy political play), to how do we construct a tax regime which caters for this new reality.

The new reality is that Intellectual Property has increasing commercial value and importance. And the ability a nation has to create conditions that encourage local development and retention of intellectual property will define its global advantage. Australian government policies have never been good at reflecting this understanding.

What they will understand is that tax revenues will come under more pressure as profit based taxes perform poorly. This will also distort the tax take between those with the means for international structuring from those that do not or cannot structure this way.

This bodes well for increasing the scope and rate for transactional taxes such as the GST to restore both equality and equity to the tax take. And hence rely less on profit based taxes as a result.

Protecting the revenue base is a defensive reaction of the type we are used to our politicians taking. So the above shift in tax policy is a certainty in the next decade.

Taking a proactive leadership role in repositioning industry policy to attract intellectual property development and exploitation is a whole other story. Yet, proactive leadership is what is required in an age when information and communications technology (ICT) is moving rapidly and creating industry and community change just as rapidly.

There are enough corporate corpses over the past few decades to show that being proactive and not reactive to these ICT driven changes is the only thing that gives a shot at survival.

It is this need to take proactive leadership by our politicians that will be a big test for Australia. Lets see how the next 10 years goes.

Article Written By: Mark Nicholls.
Managing Director, Information Professionals. 
Mark is one of Australia’s most trusted IT Change Management advisors. He also has other entrepreneurial business interests that he operates through MaidenVoyages.

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