Business school professor Rita McGrath on the battles IT leaders are fighting to ready their organizations for the new age of disruptive competition.
The role of the IT leader is in flux. According to Rita McGrath, professor of strategy and innovation at Columbia Business School, IT leaders are playing a pivotal role in ensuring the businesses they support are capable of constant innovation and frequent reinvention.
“We are seeing a struggle for CIOs between their role of managing the legacy backbone, keeping the lights, setting security rules, running IT for the lowest possible cost, and the work that needs to be done to bring businesses into the digital era,” she says.
“Every company today is a digital company, so the concept of having a CIO, at least in the traditional sense, is starting to feel a little bit old,” she suggests. Nonetheless, as someone who has been a keen observer of the role since initially beginning her career in IT, she sees today’s best CIOs as demonstrating two fundamental traits.
“The first big thing they’re doing is actively retiring the legacy systems that are impeding company flexibility. Just because a system is old doesn’t mean it’s bad but the problem with it being old is that it creates inflexibility. Such systems embed processes within companies, trapping them into old models, old ways of doing business and old ways of looking at customers. They don’t allow change and movement,” she says.
CIOs need to become masters of “healthy disengagement,” she says, “a force for bringing old systems and technologies into the future. ” And that requires a mix of tactics – fiscal, diplomatic and technical.
“It’s a battle a lot of CIOs have to get into. A request to the CEO for $5 million to retire systems that might date back to the 1960s or 1970s will be met with the some tough questions: ‘What are we going to get for that spend other than a more up-to-date system? What’s the RoI on that?’ The issue is it’s negative RoI and CIOs somehow need to build an appreciation among their CEOs and CFOs of the invisible cost of that technical legacy and what its renewal might bring,” says McGrath.
Securing resources for such investment is hard for another reason. “People don’t want to work on that kind of thing. Nobody wants to clean up the old, they want to go and do the new,” she observes.
The second battlefront for CIOs is more positive and forward-looking: how do they deal with the pieces of the business that are going digital – often much faster than expected.
“CIOs need to be the management team’s partner in terms of digital and taking things into the future, while protect the fort from hacking, loss of confidential data and other security issues,” she says.
“And today’s best CIOs are meeting those dual challenges head on,” she argues.
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