The role of the Chief Information Officer (CIO) is to oversee the people, processes and technologies within a company’s IT organisation to ensure they deliver outcomes that support the goals of the business (Gartner).
A critical success factor for CIOs to do this well is for the agency to define a blueprint for creating and delivering value for their customers. In other words, their Operating Model.
An Operating Model is a visual, holistic representation that shows the combination of elements within an organisation (such as people, processes and systems) required to deliver products and services to customers. Its clarity serves as a blueprint to bridge the gap between the strategic vision and what individuals and teams should be doing in their roles, helping them answer “what does the strategy mean for me?” While strategy engages 10% of the organisation, operating models engage the remaining 90%.
Unfortunately, many CIOs are hamstrung by their agency and their stakeholders, not having a clearly defined Operating Model for how they do things today, let alone what they should do differently in the future.
This post will describe 5 reasons why CIOs benefit from an Operating Model approach.
5 reasons why CIOs benefit from an Operating Model approach
It provides a mechanism for making informed decisions regarding technology
A key component of an Operating Model is to map out the end to end value chain of activities required for an agency to deliver services to customers. A clearly articulated Operating Model answers the questions contained in our BE HOLISTIC Framework™.
The visual aspects of an Operating Model help simplify complexity so that the CIO and their peers can have strategic conversations regarding which activities add value and which don't. The needs of customers drive the criteria for assessing value.
Breaking down the value chain into greater levels of detail then increases transparency for how technology currently supports each activity, highlighting areas where technology is an enabler and where it is a hindrance. Having an executive completely aligned on how technology can enable the organisation to add value for customers is extremely powerful for CIOs because:
It provides an anchor point for decisions regarding where to prioritise investment in technology so that CIOs can make the best use of their budget.
It makes it easier to drop initiatives that aren’t aligned to the organisation's strategic direction. Instead, they can focus on initiatives that are targeted at maximising value for the customers.
It enables discussions to be based on solving customer problems rather than technology problems.
It provides rigour to business cases, making it easier to demonstrate outcomes, a return on investment, and secure funding.
It keeps technology in sync with exponentially evolving customer expectations.
In every organisation today, the way customers want to consume services is changing at unprecedented speed. Organisations need to evolve just as quickly to continue providing exceptional services to their customers.
CIOs play a huge role in this by providing the organisation with the right tools and technology. However, this becomes a guessing game if there is no blueprint for how the agency provides services to customers. An Operating Model is a glue that ensures both customer and technology changes are in sync with one another.
It simplifies and standardises how things are done
According to an Independent Review of the APS, over 170 bespoke IT systems are being separately managed and maintained across the APS to deliver corporate services. There are over 200 bespoke business processes across government agencies with little coordination.
The value chain helps to identify similar activities that are delivered across different divisions. CIOs can critique why an agency uses multiple systems to do the same thing and provide clearer rationale as to which applications need to be part of an integrated enterprise system. This analysis is extremely powerful because it enables applications to be retired and frees up resources on those that remain. Common technology also leads to improvements in the ability to undertake cyber security, data sharing (for example Estonia’s X-tee platform) and analytics. Standardised processes also lead to greater automation (around 40% of APS time spent on highly automatable tasks) and opportunities to leverage AI, freeing up resources to focus on improving those activities that add more value to customers.
It reduces the risk of a failed digital transformation program.
According to a study by the Boston Consulting Group in 2020, around 70% of digital transformation projects fall short of their goals. An Operating Model can help CIOs mitigate the risk of digital transformation failure by:
Helping to prevent layering “shiny new object” technologies onto broken processes. According to Accenture Strategy Research, over 50% executives are reinvesting cost savings into digital technologies, but without clarity on how digital affects the operating model, that reinvestment may be wasted.
Helping employees connect what they are doing with why they are doing it. This connection allows employees to get behind the program and overcome resistance to change.
Having clearly defined end-user experience goals to make the most out of opportunities of digitised services and processes rather than just converting existing services and processes to a digital form
Enables alignment, commitment and collaboration across leaders and teams on the why what and how for transformation
Articulating the outcomes at the enterprise level rather than in silos
Identifying the skills required to retrain or recruit the employees
Win the war on talent as scarce resources are more attracted to work for an agency that has clear direction
Having sufficient information at hand to not overestimate benefits or underestimate costs
It can help IT become an enabler for the agency
While CIOs are dependent on the agency’s Operating Model, they also must ensure they are set up to support the business’s goals. CIOs can analyse their value chain for providing services to the agency and identify where there may be improvement opportunities. Some organisations focus too heavily on applications creation and maintenance and support rather than the architecture and office of the CIO teams.
These teams can bridge the gap between the agency teams and the rest of IT. For example, a strong architecture team can help leaders across the agency think about the longer term, then guide the office of the CIO team to prioritise investment decisions using the Operating Model framework. The CIO can also use an Operating Model to take cost out of the day to day operations of their organisation and invest in value add activities.
These are just several considerations for the CIO to develop their Operating Model to become digital enablers for the agency.
In summary, there are many benefits for CIOs to use an Operating Model approach. The ones included in this list will help CIOs fulfil the objectives of their role to oversee the people, processes, and technologies within their organisation to ensure they deliver outcomes that support the business's goals. This can not be achieved if the agency and its divisions have not clearly defined their Operating Models.
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