In a rapidly evolving business landscape, the seamless integration of operating models is crucial. By aligning key elements of IT and Enterprise Operating Models (EOM), CIOs can facilitate strategic execution, streamline operations, and improve overall enterprise performance. In this blog, we’ll explore various perspectives from the Gartner report on aligning IT and enterprise operating models. Additionally, we’ll highlight key insights that CIOs should consider to optimize business efficiency.
Table of Contents
The Role of CIOs in Harmonizing Enterprise Operating Models
Enterprises continuously change their enterprise business operations (or EOM) to meet new strategic objectives. However, this adjustment may encounter difficulties when the old operating model is no longer suitable. CIOs can address this issue by managing the relationship between enterprise operations, business unit (BU)- specific operating models, and the operating model for information and technology across the enterprise.
CIOs should engage in the C-Suite to influence and orchestrate changes because a CIO alone cannot change the Enterprise Operating Model (EOM) to achieve the desired alignment with IT Operating Model (ITOM). By influencing and coordinating EOM changes, CIOs can ensure IT supports overall business objectives effectively. This alignment is vital as technology increasingly underpins nearly all business outcomes. CIOs must assess and adapt their ITOM to meet evolving business needs, considering factors like strategic planning, technology architecture, resourcing, and talent. Aligning operating models cohesively across the enterprise is essential for achieving business goals effectively.
The Mutual Effect of ITOM and EOM
The level of integration and alignment between ITOM and EOM will be shaped by the strategic priorities they can achieve together. As digital technology delivery becomes enterprise-adjusted, CIOs have the opportunity to improve the relationship between ITOM and EOM. CIOs can start by understanding how EOM relates to or impacts ITOM and vice versa. The level of support and integration between IT and EOM depends on the current maturity of ITOM.
The “business executive mindset” aligns the critical components of the ITOM around the following design principles.
- Technology-Centric Operating Model Principles
The principle of technology operations model focuses on providing technology as the core of ITOM. ITOM shapes the core technology architecture and plans to maintain the enterprise’s business model. IT is seen as a ‘factory’ providing technology assets to the organization. An example is ‘optimizing technology to improve efficiency,’ with the IT department creating technology assets to optimize business processes.
- Service- or Product-Centric Operating Model Principles
The principle of placing services or products at the center focuses on optimizing EOM by developing IT services into technology-driven business capabilities and managing them according to product management principles. Collaboration between the IT and business teams is crucial to achieving business outcomes. An example of an operational model principle is “Quality and impact are critical to the services and products we provide or offer.” This requires the provider’s mindset and discipline.
- Capability-Centric Operating Model Principles
When EOM focuses on exploiting strategic opportunities, ITOM needs to transform EOM to explore new technology-driven business capabilities, with higher risks and funding needs. Integrating IT and business is essential to determine and value these capabilities. This integration transforms the operational model to focus on shared business activities rather than individual programs, opening up distribution opportunities across the enterprise. Overlapping operational models make information and technology interconnected components of EOM’s resource, value stream, governance, and business.
What does IT contribute to an enterprise’s business capacity?
Business capabilities bridge strategy and execution through the EOM. Collaboration between business and IT enhances strategy execution, relying on technology, data, and evolving capabilities. The success of strategic plan execution depends on how well technology, data and business capabilities are leveraged. They work together, leveraging these elements to achieve the desired results and ambitions.
Business capabilities must adapt to meet evolving requirements, regardless of the source of change. CIOs play a key role in driving strategic evolution through business architecture, aligning goals with practical steps. They understand how technology and operations intersect and can enhance enterprise capabilities accordingly. This strengthens the organization’s direction by providing insights into current and future business operations.
Everything CIOs Need To further Understand How the ITOM supports the EOM
To further understand how the ITOM supports the EOM, CIOs must:
- Sponsor and elevate business architecture processes, activities and models to illustrate explicit linkages between the business model, the strategy and enterprise operations.
- Engage with executive leaders and teams to build understanding in the roles that are managing and supporting the enterprise business architecture
- Align technology solutions, data and business architecture as focal points for the ITOM that provide an integrated picture of the organization.
- Determine the requirements for the future-state ITOM (technology-centric, service- or product-centric, and capability-centric) to help their organizations achieve the desired business outcomes.
- Identify the gaps in their ITOM to move to the future state.
- Develop an ITOM action plan to close the gaps
Expand CIOs’ engagement tactics to achieve success in strategic execution.
The enterprise’s optimization has opened new leadership opportunities for CIOs beyond IT operations. With a focus on digital ambitions driving operational excellence and business growth, and CEOs expecting “digital dividends,” CIOs must shift focus to developing outcome-driven executive leadership.
As information and technology drive enterprise objectives, CIOs face new opportunities beyond traditional IT roles. They must reimagine leadership to deliver value beyond IT performance. This transformation begins with aligning the CIO role with enterprise objectives, shifting mindset and actions towards enabling successful execution and business transformation.
To further evolve or expand their influence across operating models, CIOs must:
- Identify and collaborate with key stakeholders to communicate and influence opportunities to digitize business capabilities and carry out EOM changes that achieve strategic outcomes
- Establish self-development plans to improve the CIO and IT leadership roles and skills that will further enable successful strategy execution.
- Master the four skills of influencing stakeholders, personal communication, business acumen, and negotiation
- Influence stakeholders by strategically determining how the CIO and IT are perceived
Wrapped up
In today’s digital landscape, the responsibilities of CIOs and CxOs have expanded significantly due to the democratization of digital delivery. With both parties now sharing accountability for digital investment, they are tasked with strategically executing business capabilities and outcomes. As enterprises pursue new or modified products and services to meet strategic objectives, there arises a critical need to proactively align and manage distinct business capabilities and resources across IT and the broader organization. Moreover, the ongoing transformation driven by technology is amplifying the role of CIOs, requiring them to navigate complex integration challenges and contribute more directly to business success. To navigate this evolving landscape effectively, CIOs must assess the impact of shifting digital delivery on the integration of IT operating models with enterprise strategies. Additionally, they should leverage business architecture to clarify IT’s contribution to enhancing business capabilities, thereby ensuring successful strategic execution.
References
Align the Enterprise and IT Operating Models for Business Impact
State of the CIO, 2022: Focus turns to IT fundamentals
Signature Series: CIO and Technology Executive Agenda for 2023
