Most company leaders understand that technology is important, even critical, to their organization’s success. What many decision makers do not fully consider, however, are their information technology (IT) capabilities — the organization’s ability to create business value through its IT assets and competency.
Although important as operational tools for nearly every business, IT assets alone do not equal technical capability. How a company makes use of those assets (Hardware, Software, Mobility, Applications, etc) and how well it integrates them — both with one another and across the enterprise — is what drives operational maturity, competitiveness, agility and innovation.
In many organizations, IT capability is deemed directly attributable to the prowess of the IT team, i.e., “How well our tech guys do their jobs.” Nothing could be further from the truth. Achieving the highest levels of IT capability is an organization-wide effort, involving appropriate technology used in a collaborative, connected fashion. To achieve this level of IT capability, organizational leadership must actively strive for superiority in four key technology areas:
- Business & IT Strategy
- IT Infrastructure
- The IT Organization
- IT Process
Furthermore, not only must the entire organization and its players be interconnected through and with business technology, but these elements must also be aligned with one another. Later in this article I will explain that concept, but let’s talk a bit more about technical capability, first.
The Nuts and Bolts of Technical Capability
No function (process) or department within an organization is an island. Marketing, sales, operations, finance, customer service, etc., rely on each other to deliver products and/or services to your customers and to make their projections and drive profitability. Yet, many companies do not think of technology, let alone technical capability, as an interconnected resource.
That’s a net negative for the company, because each employee, function and department, including IT, can gain from and enrich each other. This value “bleed” is nearly impossible to quantify, yet it is undeniable. Here’s an analogy from an operational perspective: When operations aren’t functioning at a desired level, revenue and/or quality goes down and companies often try to reverse departmental dysfunction by introducing Enterprise Resource Planning (ERP) platforms and other systems.
However, it is how these tools are deployed, designed and managed that will determine whether or not they produce true business value.
The actions taken between installation and adoption will determine if the ERP platform will become an asset or a failed opportunity. Only with full adoption — where functions provide accurate, timely input, exchange information through the system, provide the knowledge needed to make decisions and embrace the solution as a vital business tool — will the organization gain maximum business value from its ERP platform.
The same is true of technical capability, but on a much broader scale. When an organization’s members “play as a team,” i.e., their functions collaborate and interconnect, positive value passes between them and the organization’s technical capability becomes greater than the sum of its parts. All the functions are better off because they are working together in concert. Conversely, when an organization is dysfunctional and real teamwork and integration is not evident, the value bleed is negative and the organization’s IT capability is less than the sum of its parts.
Ensuring that your firm is maximizing its technical capability is one of the single, most important competitive weapons you can wield. I like to say that ever business is a technology business.
The Components of Technical Capability
Whether technical capability is positive or negative is determined by competency in, and integration among, four technology “areas of emphasis.” Ideally, firms should achieve excellence in all of these areas. Companies will see dramatic benefits when they plan for competency and establish attainable goals with benchmarks for achievement. This process should be designed for continual improvement.
1: IT Strategy
IT strategy is the embodiment of a firm’s technology vision. It includes identification of opportunities, assessment of current and future needs from a business perspective and a proactive plan for ongoing operations and future advancements. A completely developed IT strategy (and its associated vision) should align with business goals and allow for staged improvements on a realistic timetable. Doing so avoids the reactive technology decisions that destroy productivity and diminish value.
Executive Takeaway: Strategy is one of the most challenging aspects of IT capability for many small and midsized business (SMB) owners, especially if they do not have a CIO or other IT visionary on staff.
2: IT Infrastructure
Infrastructure is the foundation of any organization— hardware, software, databases, applications and tools, the design and architecture of networks and systems, and best practices that the firm either follows or ignores. Whether on premises, in the cloud or both (hybrid), infrastructure must be appropriately designed and configured, as well as effectively maintained and updated, if it is to support the high organizational productivity that builds value.
Executive Takeaway: Embracing best practices, from proactively monitoring and maintaining systems to adopting cloud computing, also builds value.
The term “best practices” may be a cliché, but the underlying concept — selecting best-in-class solutions and ensuring they are deployed and used securely and productively — has never had more relevance for SMBs (small to mid-sized businesses.
3: IT Organization
This is the IT “people quotient” — how employees and/or IT partners approach and make use of IT. Personnel must have access to the skills, processes and knowledge to use the tools available to them and they must embrace their usage.
Executive Takeaway: IT partners must maintain best practices, relevant certifications and other hallmarks of excellence. They must also be committed to providing value to the organizations they serve as well as creating it for themselves.
4: IT Process
IT Process is the underlying thread that unites the other elements in pursuit of excellence. It consists of four components:
- Automation: Adoption of automated tools, where possible, streamlines technology usage, increases consistency of service delivery and reduces the incidence of human error.
- Management: Active management of technology and its capabilities promotes realization of full value. In fact, it is a requirement for achieving it. To do otherwise is like planting a field and then failing to water and fertilize it. The harvest will be disappointing.
- Measurement and Analysis: Metrics and key performance indicators (KPIs) provide the visible evidence by which management can evaluate the success of its decisions, from strategic planning to IT automation. Without benchmarks, it is impossible for a business leader to be certain if his firm is moving in the right direction.
- Control: As a final step in the loop, control provides the opportunity for decision makers to take action and make improvements based upon information gleaned through measurement and analysis.
Executive Takeaway: The four components of IT Process are not standalone activities. They must all be included in the effort to deliver maximum business value.
The Value Is Waiting
In the final analysis, technical capability is not the sum of these parts but rather the synthesis of them. Organizations that build modern IT infrastructures and deploy them broadly also need to implement processes that foster organization-wide collaboration and communication. Then, by continually measuring and refining the components and processes, they can reap extraordinary value.
Unfortunately, here is the cold reality. While a great many firms have made some strides forward, most fail to fully implement and integrate the technologies that support technical capability. Not only does technological excellence deliver business value; it also equips firms with three crucial competitive advantages — availability, mobility and security — that support robust business growth. For decades, I have watched businesses flounder because they do not understand the importance of technical capability and its significance to the business. Can you say for sure that your firm is really where it needs to be?