CIOs need to manage their IT portfolio so it increases enterprise value and evaluate the portfolio's performance in terms that business leaders understand.
By Samuel Greengard
The one-two punch of digital technology and massive enterprise disruption has left many CIOs feeling as though they've been unexpectedly dropped into a war zone. What's more, there's a growing recognition that many of the tried-and-true systems and tools of the past are no longer completely effective in running IT and the business of today.
A recent technology trends paper written by Deloitte consultants Tom Galizia and Chris Garibaldi makes the argument that CIOs are now the stewards of business growth and innovation.
"Like venture capitalists, CIOs should actively manage their IT portfolio in a way that drives enterprise value and evaluate portfolio performance in terms that business leaders understand—value, risk, and time horizon to reward," they argue. "CIOs who can combine this with agility and align the desired talent can reshape how they run the business of IT."
This means tying together a diverse array of technologies, including crowdsourcing, mobile only, big data and cybersecurity. It means tackling the pesky task of organizational governance. Unfortunately, the "current tools for managing risk and leveraging assets may not work in this new world," the authors point out.
Here's what VC-based CIO thinking looks like and what IT leaders need to focus on:
- Valuation. Understand the quantitative and qualitative value the IT organization contributes to the business.
- Handicap. Grasp how the competitive landscape will likely evolve by more fully understanding product and technology roadmaps.
- Hedge. Develop a strategy to invest and divest technology and assets.
- Promotion. Build an IT brand that is respected, if not admired, within the organization.
- Talent brokering. Identify skill gaps and understand which capabilities the organization can develop internally and how to tap external talent.
- Agility. Balance nimbleness and responsiveness with architectural integrity.
The authors note that this transformation will take time—and patience. A CIO must possess a complete technology inventory, have the means to evaluate the portfolio (including risk, value and strategic importance of each portfolio item), double down on winners and fold losers, and have direct line of sight to revenues.
"At first blush, comparisons between CIOs and venture capitalists may seem like a stretch," Galizia and Garibaldi point out. But, "venture capitalists operate in a high-stakes environment where extraordinary value creation and inevitable losses can coexist inside a portfolio of calculated investments. So do CIOs."
About the Author
Samuel Greengard is a contributing writer for CIO Insight. To read his previous CIO Insight blog post, "Rethinking Privacy," click here.