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Saturday, January 15, 2005

Transforming IT Into A Trusted Business Partner

(Via Optimize Magazine). Wing Lee, Director of IT strategy and research, Sprint writes Tough business times can prove to be the best opportunity for IT to establish strategic relationships with key people and organizations within their enterprises. Excerpts from this insightful and detailed article with edits and my comments added:

It's no secret the telecom business remains in the midst of a "perfect storm" that has already capsized—or at least badly shaken—many of the sector's stalwarts. New competitive challenges, technological developments, deregulation, and the commoditization of offerings once considered value-added propositions have converged with a poor economic climate to transform the entire industry.For years IT has been relegated to performing tactically important, but strategically neutral, operational, back-office functions. Most innovations came from external business partners, while IT dutifully processed orders, largely detached from corporate planning and product-development. If IT is merely a back-office function, it can easily be viewed as a nondifferentiating commodity. It's not hard to understand why outsourcing, as a way to optimize cost alone, has become a topic of keen interest in boardrooms across America. Sprint has successfully demonstrated that IT can be a catalyst for positive strategic change. In so doing, we've transformed both the form and role of IT at Sprint. For the company in general, and specific lines of business in particular, IT now plays a leading role in changing the way the company deals with customers and partners as well as how we work internally to develop, sell, and service offerings. Complexity has grown exponentially—more technology, more applications, and more users—while the business cycle has shortened. The world is becoming increasingly connected, while most enterprises now operate around the clock. Coupled with advances in technologies that enable clients to be more self-sufficient and mobile, these dynamics will fundamentally change the relationship between IT and business. The business is challenged by increasing competition, often from unexpected, nontraditional sources. Communications services, once the domain of a handful of incumbent carriers, are now offered by cable companies, Internet service providers, and wireless providers.
Commoditization and the ensuing pricing pressures have eroded many traditional lines of business. In this climate, allocating IT resources to existing operations will merely support the disintegration of the organization. But with creativity and leadership, software know-how can be used to translate technological innovation into business opportunities
At Sprint, we follow a three-pronged value-creation strategy that helps us identify such opportunities:
- Run the business: We actively look for opportunities to invest in cost optimization that can drive continuous bottom-line improvements. by encouraging the IT team to look at business processes with fresh eyes and identify how we can eliminate as many moving parts as possible without affecting performance. Reductions in complexity often translate into lower IT costs. This can free up resources to invest in the "grow" and "transform" strategies
- Grow the business: IT can uncover nontraditional opportunities by simply looking at ways to harness available resources and offer them to customers more conveniently and cost-effectively. For instance, when a customer purchases a new ring tone using his or her Sprint PCS handset, the transaction spans—in real time—network and IT systems. By creating an infrastructure that enables software-based value-added services and dynamic multichannel partnerships, IT can drive innovation that generates revenue.
- Transform the business: Slow-moving companies will be overtaken by the challenges that rapid change poses.. IT can digitize the enterprise to support constant improvements in business processes from the inside out to benefit both the enterprise and our customers. The Web is a facade; sustainable E-business enablement relies on the digitization of core enterprise processes. IT must facilitate business-process reengineering to be more efficient and customer-centric.
Leadership is required to help an IT organization make changes to become a source of technological innovation for business growth.
- First, IT must earn the trust of the business:Trust begins with executing responsibilities well. Few peer organizations will welcome expanded IT participation in new roles if they believe core operational tasks are being mishandled.
- Next, IT must develop the business acumen and relationships to work side-by-side with the business : Establishing understanding and trust requires more than occasional dialogue; it requires a fully collaborative process for making strategic decisions on technology investments that will drive business innovation.

On Outsourcing :Effective delegation is a byproduct of good leadership. To that end, Sprint has outsourced many IT activities. It turns out that partnering and outsourcing with good technology players has elevated IT's strategic profile. Off-loading software development and maintenance also helps free up cycles so we can focus beyond tactical projects.But outsourcing doesn't excuse the IT organization from strenuous oversight and management responsibilities. The ability to model and simulate activities before they go live provides the mechanism for controlling your destiny and maintaining accountability. Sprint's IT-productivity index is defined as = EVA/SG&A .Leveraging IT as a strategic asset isn't an intuitive exercise. It's a major shift that results in significant culture change and requires a keen focus on communication and paying close attention to the voices of business partners. Previous worldviews must be updated. My Take :Many CIO's are facing tough moments with changing technology landscape, Increased business competition,Expectations of higher ROI from IT, Offshoring etc. This excerpt elegantly articulates a disctinct approach towards making IT more and more strategic to entperprise. Excellent read -pregnant with definitive wisdom.

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