Effective CIOs help their enterprises respond appropriately to a crisis by focusing on business engagement and core leadership values. They demand collaboration between business and technical architects, arming both with the language and framework of business process and architecture.
A crisis can strike anytime. IT organizations focused solely on supplying expected services cannot react to a crisis quickly or effectively, and so they risk becoming commoditized or obsolete. The business-engaged IT organization, however, uses a crisis as an opportunity to help refocus on the core value proposition and transform the enterprise.
This report addresses the questions, What organizational structures, behaviors and competencies are available to increase IT’s relevance, and how can CIOs exploit them during a crisis?
“Don’t Waste a Crisis: Becoming an Engaged IT Organization” was written by members of the CIO & executive leadership research group, led by Patrick Meehan (vice president) and Leigh McMullen (research director), assisted by Jacques Begin (senior writer).
We would like to thank the many organizations and individuals that generously contributed their insights and experiences to the research, including:
The contributors to our interviews and case studies: Hesham Saad Al Ghamdi, ALJ Toyota Saudi Arabia; José Padrón, Banesco (Venezuela); Louis Carr, City of Arlington, Texas (U.S.); Jan Erik Ressem, Lånekassen (Norway); Magne Frantsen, Statoil (Norway); COL Hon Pak, M.D., U.S. Army Medical Command (U.S.).
Other Gartner colleagues: Audrey Apfel, Geir Balsnes and Bill Caffery.
Other members of the CIO & executive leadership research group: Diane Berry, Heather Colella, Richard Hunter, Partha Iyengar, John Mahoney and Diane Morello.
A crisis is too valuable an opportunity to waste. Effective CIOs help their organizations respond appropriately by focusing on business engagement and core leadership values. They demand collaboration between business and technical architects, arming both with the language and framework of business process and architecture.
A crisis such as the recent global economic recession has profound effects on all industries, whether in the public or private sector. Cutting budgets and head count while increasing IT operational effectiveness may allow an enterprise to survive a crisis, but for how long? When the next crisis occurs, will that response be appropriate? This report explores how an enterprise can thrive during a crisis, turn a crisis into an opportunity and position itself better for the next crisis.
Crisis begins with an inflection point that negatively affects the enterprise business model. The most effective CIOs not only lead IT through a crisis but also use a crisis as an opportunity to influence true enterprisewide change. They find leaders within the organization who intimately understand the crisis and have a vision of the enterprise’s future. These highly collaborative CIOs at times disregard organizational boundaries. With a business-engaged mind-set, they integrate IT with the business by establishing the competencies and tools necessary to instill cultural change that rapidly leads to positive results (see figure below).
External and uncontrollable factors cause crises, which can dramatically affect an enterprise’s strategy, operations and mission. A crisis may occur suddenly or erupt after developing for many years. Though the inflection points that trigger a crisis can be masked and may originate almost anywhere, they generally fall into the following spheres:
Political. Disruptions stemming from regulations (or sometimes from public pressure) that bring policy changes, such as the pay/bonus and outsourcing restrictions on funds distributed by the Troubled Asset Relief Program (TARP) of the U.S. government.
Business. Disruptions in markets or supplies, which may stem from a labor strike or a host of other circumstances, such as the channel disruption created by iTunes.
Societal/social. Disruptions stemming from social factors—for example, a drop in donut consumption could be attributed to the popularity of low-carb diets, and a terrorist incident in a mall could cause people to avoid malls for a time.
A sudden and unpredicted crisis often leaves an enterprise scrambling for a solution; a crisis that evolves slowly may result from a string of mishandled small crises. In either case, a CIO must not only recognize the impending crisis but also have an IT organization prepared with real enterprise solutions the moment it strikes.
CIOs do not have to wait passively until a crisis occurs and then evolves into a positive force. Disruptive technologies, risk management techniques and disintermediation of new market channels can serve as springboards to CIO-engineered “crises” revealing unexploited opportunities necessary to effect positive transformation.
An IT organization needs strong, business-focused, engaged CIO leadership to be part of the enterprise solution. In some crises, this level of leadership might not occur unless the CIO is replaced. A crisis response hinges on a CIO’s ability to lead, inspire and exert influence across the enterprise. In quieter times, a CIO will draw on the same talents to implement the cultural change that may be needed to prepare for and respond to future crises. This often calls for a division between operational IT and an area of IT focused solely on solutions to business problems.
Of course, CIOs cannot do all this alone. They need leadership teams that continually engage and integrate with the business, and that are always ready for an unforeseen crisis. These teams also serve the CIO as extra eyes and ears, aiding in crisis prediction (to the extent this is possible).
When IT can anticipate a crisis and respond rapidly and successfully, it builds trust with the business—an essential ingredient of the business-engaged IT organization. Bear in mind that the window of opportunity for responding to a crisis often amounts to no more than a quarter of the year. A crisis longer than this erodes CIO credibility and any trust IT has earned with business leaders. Without trust, IT cannot partake in the creation of solutions, nor can it solidify collaboration with the business to the point where it becomes a genuine partner.
IT organizations concerned exclusively with service delivery will almost certainly be disengaged from the business and its problems. This may lead the rest of the enterprise to view IT as an afterthought, which may subject the organization to budget and staff cuts, while forcing it to deliver solutions it did not help create and may not even understand.
In contrast, the business-engaged IT organization takes control of its destiny. Engaged and integrated with the business, it becomes an active and influential participant in solving business problems. The leadership of the business-engaged IT organization understands the strategy, direction and needs of the business, as well as the technology required to meet business demands. IT leaders with these qualifications can come from anywhere in the enterprise, provided they have a solid understanding of business processes and of business and enterprise architecture.
Business processes constitute the language that IT and the business understand equally well, with business process optimization a good conversation starter since it figures prominently in a crisis response. Similarly, business architecture—a subset of enterprise architecture—cuts across all lines of business (LOBs). It is the framework that reveals the effects of business processes. As the overarching IT structure, enterprise architecture can be enlisted to engage multiple stakeholders throughout the business. This way, an appropriate crisis response is assured, and everyone is on board.