The Essential CIO and Decision Management

May 18, 2011

in Analytics, BI, BPM, Business Rules, Data Mining, Decision Management, News, Strategy

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IBM recently surveyed CIOs as part of their ongoing CxO research. This was the second time they did this – 2009 was the first. They just released the results of their analysis of the 3,000 interviews they conducted in 71 countries. The results are summarized in the body of the post along with some Decision Management advice related to it.

CEOs have said their focus for the next 5 years are Getting closer to the customer, People skills, and Insight and intelligence. Meanwhile their CIOs focus on Insight and Intelligence, Client intimacy, and People skills (it’s a pity CIOs don’t think they can help with “getting closer to the customer” as I believe the effective use of analytics can do just that). CIOs see their most important “vision” elements as Business Intelligence and Analytics (stayed top from 2009 study), Mobility (up somewhat), Virtualization (down somewhat), Cloud (way up), Business Progress Management (down slightly) and Risk Management and compliance (down quite a bit).

IBM identified 4 categories of CIO Mandates and strongly recommends that organizations work across business and IT organizational boundaries to decide what the right CIO mandate is for their organization. This might change over time but each kind of Mandate has best practices that can only really be applied if everyone is explicit about it. IBM also asked questions to determine which IT organizations “outperformed” their peers so that they could contrast outperformers with others. The four CIO Mandates are:

  • Leverage – streamline operations and improve effectiveness
  • Expand – refine business processes and enhance collaboration
  • Transform – change industry value chain through improved relationships
  • Pioneer – radically innovate products, markets, business models

Let’s consider each in turn to see their differences and areas of focus according to IBM as well as both IBM and my advice for these CIOs.

Leverage CIOs

Leverage CIOs are focused on IT fundamentals and the business primarily sees them as a provider of basic technology services. They need to continually improve their legacy systems, improve their sharing of data with internal customers and use data to measure basic business and IT metrics. Key elements include rationalizing their application portfolio, gradually altering their hardware and, for some renew their IT environment. Many of these CIOs are in organizations with lots of assets and complex supply chains –these companies have the majority of their assets tied up outside of IT.

CIOs with a Leverage Mandate in outperforming IT organizations tend to do better with sharing information with internal clients and have more people who can cross over between business and IT. To excel, IBM recommends 5 things:

  • Focus on business/IT communication
  • Build the right team for each task
  • Standardize and consolidate infrastructure
  • Update and renew legacy
  • Discover dashboards for business and IT metrics

Decision Management advice for Leverage CIOs? Discover Business Rules Management Systems as a way to streamline and improve legacy applications (see this blog post on Decision Management and legacy modernization for more).

Expand Mandate

Expand CIOs are focused on optimization of technology to improve integration and effectiveness. The business sees them as a provider of technology, a facilitator of efficiency and a provider of industry specific solutions. Four key things for these CIOs are exploring outsourcing, enhancing internal collaboration, implement Business Process Management and continually update their legacy environment. They are aggressively changing the kind of skills they have in house and are partnering/outsourcing extensively. This is about 50% of the CIO population.

CIOs with an Expand mandate in outperforming organizations are much better at internal collaboration and have a ruthless focus on integration of business and IT. IBM recommends 5 things:

  • Enable state of the art collaboration
  • Increase business/IT integration and transparency
  • Focus on core and involve partners for everything else
  • Simplify, automate and integrate with BPM
  • Provide more sophisticated dashboards

Decision Management advice for Expand CIOs? Use Business Rules Management Systems to improve transparency and business/IT collaboration (see this white paper also on how to maximize the value of business rules with Decision Management) and focus on Decisions as well as Process to built smarter, simpler more agile business processes (see this white paper on the decisions at the heart of your process).

Transform Mandate

Transform CIOs are not focused on fundamental provision of services but focus on industry specific solutions as well as efficiency and enabling the vision. These CIOs have a lot of data that they want to use, they need to simplify things and expand the value chain outside the organization while increasing business/IT intimacy. Transform CIOs are using data to create insight and drive better real-time decisions primarily with client analytics (analytics about customers).

Outperforming Transform CIOs are better at driving better real-time decisions than others and are simplifying how external partners can work with them. IBM recommends 5 things

  • Simplify and remove unnecessary complexity
  • Real time dashboards
  • Extend the value chain outside the organization
  • Use more real-time data
  • Dive into advanced analytics

Decision Management advice for Transform CIOs. Remember that advanced analytics will add no value unless you can put those analytics to work in your systems so use Decision Management to make sure you can deploy and use your predictive analytics (see this white paper on Putting Predictive Analytics to Work in Operations). Real-time decision-making means having systems that make decisions, not just people that do. Remember also that using BPM for everything can result in over-complex business processes so make sure you focus also on Decisions to simplify those processes (see this white paper on the Decisions at the heart of your Process).

Pioneer Mandate

Pioneer CIOs are perceived as being a critical enable of the organization’s vision while still providing industry specific solutions. They focus on using predictive analytics to change the business, search for new sources of revenue and on taking customer experience to the next level. These CIOs are mostly in information-centric industries but are a minority even there. These CIOs do a lot of work on how money can be made in the future – revenue model changes, new sources of revenue, future profitability predictions etc.

Outperforming Pioneers focus more on profitability analytics and on social network analytics. IBM recommends 5 things:

  • Innovate on the top line
  • Act on deep customer understanding
  • Exceed expectations
  • Develop an analytic culture
  • Add predictive dials to your dashboards

Decision Management advice for Pioneer CIOs – go big on Decision Management. Improving customer treatment means taking (analytic) control of customer treatment decisions (see this post for more on customer treatment management with Decision Management) and to make the most of predictive analytics you must be able to put your predictive analytics to work in operational systems (see this white paper on Putting Predictive Analytics to Work in Operations). Finally add knobs to your dashboard so it becomes a cockpit – make it possible for dashboard users to change the behavior of the systems behind the dashboard not just look at it.

You can get the report and more at http://www.ibm.com/theessentialcio

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