IT and the Agile Corporation
CIO-Connect, November 2004
We live in a world of continuous change. The rapid economic growth of India and China are forcing companies to re-think how they are to remain competitive on a fast-moving global stage. The offered solution is agility.
It means that companies are always re-inventing their business strategies and their operating procedures. In some markets the pace of change is so rapid that it is almost impossible for them to have strategies in any meaningful sense. The need to respond to changing customer needs and relentless competitive threats usually relegates corporate strategic plans to chief executives’ bottom drawers. This creates businesses that are almost entirely reactive to external pressures and reduces the extent to which they can plan and control their immediate business environments. Perhaps, we have come to the end of business strategy as a corporate activity. Maybe it is about to be relegated to the classrooms of those sad get-a-life cases, the MBA students.
In any case, we should not forget the origins of strategic planning were the French five year plans of more than fifty years ago and of the Stalinist era of the old Soviet Union. It was also a feature of the old nationalised industries in Britain. And so goodbye to corporate strategy and hello to corporate agility.
It is this paradigm shift that is the nightmare for the CIO. It means the inability to plan for the renewal of systems. It creates major headaches in terms of what new systems can be implemented. It sets the almost impossible task of convincing others in the boardroom of any investment proposal. There will always be reasons for the CEO to say no because of the uncertainties in what the company is trying to achieve, and how it hopes to achieve it. Boardroom debates become battle grounds on which conflicting ideas and opinions of how markets are going to change and what the company should do to respond to these.
Corporate agility also means M&A activity and corporate divestment become permanent features of the business landscape. This again prevents the CIO from evolving a coherent IT strategy for the business as a whole. In fact, in this age of global supply chains and strategic outsourcing, where does the business start and end? Is the pragmatic and piecemeal approach better than the grand design or game plan?
Does this mean the days of the CIO as a corporate strategic player are over? Does it mark a return to being a system or technology fixer, operating from the corporate basemen as in the early days when the first IBM mainframes were installed? In many companies this mindset has always remained. The CIO has always been seen in this light.
But this is a pessimistic. On the contrary, a rapidly changing business environment and the consequential agile corporation demand an even greater presence from the CIO. It requires even more sophisticated data management processes and the construction of constantly updated, re-purposive data sets. The agile corporation needs to know its customers if it is to rapidly respond to their changing needs.
Here the comparison of Tesco and Marks & Spencer is illuminating. Both companies have histories of collecting sophisticated data sets on their customers. The difference is that Tesco has used these for creating greater customer knowledge and intelligence for rolling out new products and services. M&S, on the other hand, has failed to do this. Customer data have remained as customer data. They have not been used for a better understanding of changing customer needs.
And so instead of relegating the CIO to the role of the corporate technology fixer, the need for corporate agility requires quite the reverse response. It demands CIOs to leverage corporate intelligence through the constant renewal of systems and data management processes. In these days of greater corporate uncertainty, greater knowledge and understanding of our customers’ changing needs is almost all that we can hope as a basis for business planning and decision-making. With this comes an even more important strategic role for the CIO.
© Professor Richard Scase