Finding common strategic ground between technology and the business proves paramount to being a market leader.
Money makes the world go 'round. Score one: CFO.
Technology moves the money 'round. Score one: CIO.
Earning money is the point of business. Money is earned with technology. Score one each.
One would think that sooner or later these two chief officers would discover their common ground and mutual interests, and that stories about the â€œnatural riftâ€ between them would disappear from the pages of magazines.
Here's a starting point: both want a â€œseat at the table.â€ Both want to escape their image as technicians of arcane minutia and become players in the strategy game. Among all those desiring these things, however, CFOs and CIOs have not only the enterprise-wide view necessary to think strategically, but also the tools â€“ money and technology â€“ to act strategically.
CIOs, of course, have always had to justify their schemes and dreams in terms of money, no more so than in times of economic weakness such as we are now facing. And CFOs are more in need of technology than ever. The new reporting requirements, the need for accurate, timely and consistent information, the growing complexities of working with partners outside of the firm, and the new emphasis on innovation â€“ most often driven by and empowered by technology â€“ all make getting the technology right imperative.
In a report last year on the evolving role of the CFO, KPMG concluded that successful CFO leadership has eight components. Interestingly, many involve technology indirectly and others directly:
- Efficient processes and systems so finance can spend less time gathering data and performing basic â€˜number crunchingâ€™ tasks and more time on implementing transformation and other strategic initiatives.
- Better information for decision-making processes to provide greater transparency into business performance and risk.
- Up-to-date, integrated IT systems that drive better performance and risk management through high-volume routine processes.
These conclusions mirror our own findings that has shown a link between maturity in technology management and enterprise-wide financial performance. Companies that have converged the management of their business and technology consistently lead their industry peers in revenue growth, earnings per share growth, and returns on equity, assets and investments.
The data on which the BTM Instituteâ€™s Business Technology Convergence Index is built lend credence to an intuitive notion previously supported by anecdotal evidence: technology is strategic today, and companies able to manage it as one with the business will naturally develop a more realistic strategy and execute it more effectively. Firms unable to overcome the divide between technology and business, particularly finance, will never lead the pack.
Hereâ€™s the dirty little secret of strategy. It requires new kinds of information from outside of the firm. Information about markets. About customers, existing and potential. Information residing in the heads of researchers anywhere in the world. Or in the heads of existing or potential partners. Information about new technologies that might work for your company.
All of this information can be gathered electronically, as leading firms are showing: customer and public input, virtual â€œgathering placesâ€ for freelance technologists and other problem-solvers for hire, real-time data on the operations of partners.
In this torrent of information lie signals of opportunities and threats â€“ a shift in the buying patterns of your customersâ€™ customers, the introduction of a new product based on a new technology by an existing competitor, the sudden appearance of an entirely new competitor. Or a change in the rules of the game: someone else meeting your customerâ€™s needs more efficiently or effectively through a new business model, process or product. An opening in the market you can exploit, or the realization that an entirely new market is ripe for the picking.
To avoid the risks and seize the opportunities, to actually execute on a strategy, firms must marshal this tsunami of information, filter the signals from the noise, and feed it into the appropriate corners of the organization where it can be acted upon. The organization must be so designed as to be able to act appropriately, in concert with the firmâ€™s strategy, and in a cost-effective and profit-minded way.
Any organization can stay busy, caught up in its rituals and grandfathered processes, but action not directed at meeting the needs of a customer so effectively and effectively that a profit results is activity that benefits the competition. Technology will do the work; dollars will measure the result. And it is here that the green eyeshades and the pocket protectors will find common ground.
Together they must be advocates for:
- An enterprise-wide strategy that relies on an adaptive organization able to sense and respond to the shifting desires of existing and potential customers, seizing opportunities and deflecting risks in a global marketplace.
- The creation of a Strategic Enterprise Architecture (SEA), a story of what the firm is trying to accomplish and how, taking into account customers, external partners and internal business processes. This is a map of the business with a complementary map of the technology that enables it.
- An assessment of what the organization is now, and what it should be, and a plan to create the organizational structures, employee incentives and information flows necessary in the desired future state. Further, exactly how does the firm intend to get there?
- The convergence of the management of the business and the management of technology to eliminate one of the chief sources of inefficiency and ineffectiveness in many organizations.
These workaday management tasks constitute an agenda that can replace the petty annoyances and misunderstandings that easily distract the CFO and CIO as they approach common concerns from different backgrounds and with different points of view.
Trust me: leading companies have figured this out. And if you havenâ€™t, you might be wise to worry that your competitors have.
Â© BTM Institute.