3. Partner with the Business

CIOs know that aligning with the business is critical for successful digital transformation. Business functions now control 46% of technology investments, up from 43% in 2016, according to the State of the CIO 2017 survey. As the spending power shifts, the challenge for many CIOs is to become a trusted partner, not just to advise on platforms or technology choices but also to position IT as an enabling force for innovation.

Business functions control 46% of technology investments, up from 43% in 2016.

To become a true partner, CIOs need a transformation plan that extends their traditional business case development beyond the typical ROI process, which remains focused on benefits such as reducing costs or boosting operational efficiency. In the accelerated pace of the digital world, it’s even more critical for CIOs to demonstrate how IT can help the business quickly execute new ideas, create new products and services faster, and deliver positive business outcomes – without the barriers long associated with IT.

“You still have traditional ROI where you make the case that something will work harder or be faster or is cheaper,” notes Craig Partridge, Director, Data Center Platform Consulting for HPE Pointnext. “Now it’s also about making sure IT isn’t seen as a roadblock but, rather, as an innovation engine that can support the pace at which the business wants to move.”

Top Business Drivers of Tech Investments

Heads of IT
Line of business
Improve customer experience
40%
26%
Increase operational efficiency
35%
36%
Transform existing business processes
34%
21%
Grow the business
33%
28%
Increase cybersecurity protections
26%
20%
Improve organization’s agility
23%
9%
Improve profitability
20%
24%

The innovation engine that Partridge describes consists of a carefully constructed mix of people, process, technology, and economics. It is built from the outside in, emphasizing business outcomes in the form of improving customer experience, increasing operational efficiency, transforming business processes, and/or growing the business. As part of a broad transformation plan, the CIO needs to define how the infrastructure that enables these outcomes meets a multitude of requirements, from performance and latency needs to security and compliance.

Flexible consumption models

Adopting a flexible consumption model for IT services is a critical step toward meeting business expectations, because it ensures that IT can respond to changing business needs in a timely and cost-effective manner.

New consumption models deliver much more flexibility, enabling businesses to throttle up and scale back IT services, paying only for capacity used. In addition, as cloud services proliferate under Hybrid IT, CIOs can play up the potential benefits of shifting IT and data center spending away from a costly upfront capital expense (CapEx) model to an as-a-service or pay-as-you-go operating expense (OpEx) model. Aquilent, a government IT solutions provider, estimates that companies can achieve 75% to 90% savings with an OpEx model, compared to traditional data center costs.

“It's my job to help the organization understand that moving from a capital investment expense to an operational investment cycle enables us to better match and change capacity on demand,” says Randall Gaboriault, CIO and senior vice president of innovation and strategic development for Christiana Care Health System.

Gaboriault emphasizes that the business isn’t really concerned about where systems run, just that they’re delivering the promised benefits to the business. “My customers don’t really care anymore how their services are being delivered,” he says. “They just care about getting what they need. Whether I deliver that through the cloud or on-premises is irrelevant to them.”

“To be seen as a real business collaborator, and not just a technology leader, the first thing I like to do is get out and visit our customers.”

– Alan Crawford
CIO, City and Guilds Group

Four Benefits of a Flexible Consumption Model

1

Reduce operational costs

  • Don’t make upfront payments
  • Pay for what you use
  • Optimize cash flows
  • Eliminate the cost of overprovisioning
  • Align IT costs with business demand
2

Decrease time to value

  • Increase available capacity in minutes, not months
  • Refresh as needed with simple change orders
  • Avoid long procurement processes
3

Reduce risk

  • Improve IT delivery
  • React quickly to market demands
  • Share utilization risk
  • Free up IT staff to focus on innovation
4

Scale to the cloud

  • Scale with public cloud services
  • Have one contract, one invoice, one usage portal

Strong governance

Regardless of the consumption model, strong IT governance is critical. For example, Aetna’s IT organization has built a robust portfolio management practice to help guide decision-making related to various IT services, according to Renee Zaugg, the firm’s vice president of IT infrastructure and development. Business-controlled investments in technologies such as Microsoft Office 365 are put through a traditional ROI benefits analysis. Service catalogs provide a menu of available services, and Zaugg’s group provides full transparency by comparing the cost of its in-house services with those of leading IaaS, SaaS, and PaaS offerings. Other checks and balances come by way of a centralized procurement organization, which ensures that the business doesn’t adopt technology that puts the enterprise at risk.

“Our services are generally one-third the cost of cloud services, once you add everything in,” Zaugg says. “We have a way to vet that, along with core infrastructure, to inform them so they can make the best business decision about where to invest.”

CIOs need to follow Zaugg’s lead to help dispel the myth that on-premises services are always a more expensive option than the cloud, especially if companies have already made a significant capital investment in data center capacity.

Six Myths About IT Financials

The CFO just wants to cut costs and limit spending. OpEx is better than CapEx. Leasing is preferable to ownership from a cash flow perspective. Everything is moving to the cloud, so there’s no point in investing in the data center. The public cloud is always the cheapest option for running a workload. The public cloud eliminates management and administrative costs. 1 2 3 4 5 6
1 The CFO just wants to cut costs and limit spending. 2 OpEx is better than CapEx. 3 Leasing is preferable to ownership from a cash flow perspective. 4 Everything is moving to the cloud, so there’s no point in investing in the data center. 5 The public cloud is always the cheapest option for running a workload. 6 The public cloud eliminates management and administrative costs.
Reveal all myths
Key Play

3. The Return

Three principles for financing Hybrid IT
Keep a close eye on operational expenses during cloud deployments.
Have a plan and
goals to determine the effectiveness of cloud and hybrid cloud transitions. If those goals aren’t being met, find out why.
Don’t be afraid to
“de-cloud” applications and services if they prove more expensive to operate in the new paradigm.

Take a Deeper Dive into Hybrid IT

The Strategic CIO’s Playbook

Create a game plan for accelerating digital transformation with the right mix of Hybrid IT.


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