With business growth back on the agenda, the role of the CIO is changing from manager of technology to C-suite collaborator in enabling innovation that matters for the business. Successful CIOs recognize that information technology (IT) has become far more than a means of automating existing processes and increasing productivity. Rather, they see IT as a prime stimulus for business innovation and an enabler of competitive advantage—and themselves as key participants in a process that develops business and IT strategies in concert.
At the same time, CIOs must still contend with budget and resource constraints, as well as rising operations and application maintenance costs. Too often, keeping critical legacy systems functioning siphons off funding and people earmarked for development of new business-enabling capabilities. The question becomes: How can CIOs rebalance the spending mix to maintain or improve service, increase efficiency across the business and drive top-line growth?
While even the largest enterprises find it difficult, if not impossible, to achieve IT scale and prowess sufficient to deliver anticipated cost savings, more and more companies are considering alternative methods of sourcing IT delivery. At the same time, new tools and solutions continue to emerge, allowing CIOs to manage their infrastructure much like a utility.
Sourcing alternatives, along with new IT management solutions, offer an opportunity for progressive CIOs to create a self-funding model for investing in new capabilities. In this model, the IT infrastructure itself can become a critical part of the overall funding equation. By taking costs out of infrastructure and reinvesting the savings, CIOs can drive both cost reduction and business enablement and innovation.
The key to successfully deploying this self-funding model lies in understanding which areas of IT are the levers of growth and which are non-differentiating functions. For CIOs, this means developing a mind-set of running IT as a business, and employing the same kinds of analytical and management tools that their business-line peers are using. For example, IBM is helping many companies employ the IBM Component Business Model™ approach to determine the processes and activities that will differentiate the business as a whole.
IBM has extended component-based business modeling with the Component Business Model for the Business of IT, an approach to helping CIOs understand where resources are being applied and whether IT is aligned with the direction of the business. By breaking down the IT organization into discrete building blocks—the people, processes and infrastructure that perform a single function—CIOs can begin to see which activities are differentiating and which are non-differentiating; which carry the highest and lowest costs; and how effectively the organization performs the activities within each of the IT components.
The result is clear visibility into how strongly IT investments are aligned with strategic IT and business priorities. Furthermore, this approach supports decisions around how to optimize the IT portfolio, develop new sourcing strategies and prioritize investments—all with the objective of delivering new capabilities and improving IT infrastructure productivity. IBM understands the importance of aligning IT with business priorities and has successfully used component-based modeling with clients in a wide range of industries and enterprise sizes.
To learn more about the IBM Component Business Model for the Business of IT and how to develop a self-funding approach to enabling innovation that matters for your business, contact your IBM representative or e-mail us.
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