Making it matter

Mark Parker, MD of Intelligent Finance for HBOS Plc on the impact of IT, its perceived value to the business, and how productivity growth will continue to be influenced by technology innovation.

“IT contributes value across the organisation – but its value is greater as part of the business strategy”
-Mark Parker

IT and value
The most common criticism [of IT] is coming from the boards, as executives feel there is a lack of real depth of understanding of their businesses from the IT team. In too many businesses, the IT function is divorced from the real drivers of business success, with IT not fully relating to the key priorities of the board agenda or acting to address areas of the business that truly need to have IT innovation.

IT teams and CIOs have the opportunity to make much more of an impact with the IT toolset and capabilities at their disposal. Those with the expertise and the vision can really make a step-change in their business’ profitability and its return on equity. Of course, the problem does not begin and end with the IT teams; the board itself should be making changes and opening their minds as well. It’s incumbent upon the CIO to demonstrate to the board the extent to which they can improve the business proposition.

IT contributes value across the organisation – but its value is greater as part of the business strategy itself. IT development in the marketplace is constant and fast moving; there are always new tools and innovative products that can be leveraged within the business to make a difference and staying on top of that external marketplace is fundamental to staying ahead of the game. Bringing in depth knowledge of the technology available and a technical skill set to apply to the business proposition and challenges can help drive results on a very high level, transferring a pure technology knowledge base into a true value proposition.

IT and innovation
At the highest level, IT plays a fundamental part in delivering our overall profit and volume growth and the value we deliver to our shareholders. And on the ground floor, innovation is fundamental to our success as a major telenet bank. Our customer interfaces are all electronic or online, and having web services up and running 24/7 is imperative.

Customer service is of paramount importance and serves as a key plank of our proposition – in fact, without outstanding service our entire model becomes much less viable. We must therefore be innovative in how we deploy IT to best support our customer base, be it through back office improvements, B2B integration or more flexible solutions through which customers can conduct business with us.

In addition to IF-specific issues, like all large corporations we’re always looking to improve upon our efficiencies and IT helps us to innovate the way we do business. In the back office, we can focus on automating non value-add manual processes; and with our product portfolio IT enhances our speed to market, the flexibility of the tools we offer, and advanced capabilities that we can extend to the customers.

IT and the business model
One of the first things I did when I joined as MD of IF was to look at the IT operation and evaluate whether it was really going to bring the value it was capable of. It wasn’t – not the way it was constructed at that time, with IT simply too divorced from the business to be an effective strategic enabler. So one of the key changes we made was incorporating the IT function into the business strategy and business change teams, in effect making all of that a single function. That delivered a much closer alignment between IT and business professionals. This made that link between and the integration of IT into the business proposition completely seamless, and that really delivered a vast improvement.

IT and pitfalls
I think the biggest pitfall I’ve encountered in the industry is a general mistaken perspective that they really understand the business and what it requires to make it successful. In reality, I would actually challenge whether a number of CIOs really do understand their business. I think there is a lot more detailed understanding that CIOs need to have in terms of the day-to-day running of the business and daily challenges, because it’s the day-to-day issues that, if addressed, make a fundamental change in the business operations. Understanding strategy and direction is one context, but actually delivering day-to-day results makes the difference.

This is one of the reasons that IT leaders have such great promise as business leaders. As IT becomes more and more integral to business strategy, understanding the day-to-day realities of technology becomes essential. I can speak from my own experience on this: because of my background, I can see the issues and anticipate when projects are going off the rails. I know what I want to achieve on the business side and I also understand the technical aspects, and this allows me to be well armed to really keep delivering and make an impact.

IT and the future
I think we’ll see technology playing an ever-increasing role in the operation of commerce and industry. The individuals who can bring knowledge of that technology to bear on their companies’ P&Ls will rise to become prominent figures in the boardroom. Unless CIOs of today grasp an understanding of the business and start to deliver high-level value, they won’t be the CIOs of tomorrow – those jobs will belong to the strong general managers that have aligned IT expertise with business strategy.