"Why is IT so expensive?" is a question I've been asked more than once, in different words, across almost every year I've been a CIO.
Boston Consulting Group (BCG)'s
Rohit Nalgirkar,
Dr. Michael Grebe, and colleagues published research this week arguing CIOs and CFOs need a shared way to value technology, based on its contribution to day-to-day operations, business expansion, and genuine innovation that provides very helpful reading.
I'd frame the CIO's mission as three commitments that have to run together: drive visible operational excellence, continuously drive down cost, and build the business capability that creates real competitive advantage.
In one of my former companies, we ran a program called Run to Grow. Part of it was renaming the organization, from IT to IDS, Information and Data Solutions, and being explicit with the business about why: the new name stood for a real shift in emphasis toward building capability, not just running infrastructure.
Operational excellence came first. It was important to use reliability metrics that actually reflected what the business experienced, so we could avoid green scorecards and red faces.
Costs came next. We showed how we could reduce IT costs as a percentage of revenue by 100 basis points over five years, and we held ourselves to that glidepath: simplifying architecture, consolidating suppliers, eliminating overlap, and right-sourcing to vendors who had much more scale and could do the same work often better and cheaper using that scale.
That combination, strong operational results plus the rebrand, changed how the function was seen. It earned us a seat at the table with business leaders to figure out, function by function, the capabilities that mattered most to the long-term strategic plan, capabilities that had the potential to deliver hundreds of basis points of value in EBIT over time. Revenue Growth Management was one. eCommerce was another.
Winning at operational excellence and cost is often what earns the credibility to lead on the third commitment, building capability, where the real upside tends to live.
Without that credibility, stakeholders have far less reason to follow your lead on changing how their part of the business runs.
Full research from BCG below.
https://on.bcg.com/3UwXfLF
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How CIOs Can Prove the Value of Technology in the Age of AI
How CIOs Can Prove the Value of Technology in the Age of AI