Focussing IT for strategic value in public sector organisations

While attending the interesting presentations at the Chief Strategy Officer Summit (#CSOLDN), it struck me that when applied to IT, strategy somIMG_0208.JPGetimes focuses on the wrong elements. Here is a short article on how to focus IT on bringing strategic value.
It is generally recognized that as a baseline, an organization’s overall IT budget (i.e. not just the IT function but also the shadow IT elements) can be split according to a 70-20-10 rule rule of thumb:
– 70% covers operations (“running” of infrastructure and information systems, with accountable, cost-focussed resources);
– 20% covers transformation of business processes (demand and process-improvement driven, competency centers,medium-term life-cycle);
– 10% covers innovation (digital business driven, fast, innovation focused partnering of IT & business).
One of the problems is that the better the 70% runs, the less visible the whole IT element becomes to top management creating the false impression that it can be safely ignored. “Why should one invest in IT if everything works?” If the answer to the question “Did we have any major downtime with IT services?” is yes, then the immediate priority should be on fixing operations (a no-brainier, really). If the answer is no, then the focus should be on investing in innovation & transformation of business processes. Being satisfied with the optimal running of existing services without investing in IT innovation and digitization of business processes creates a future handicap for the organization.
Considering that IT enables most of what an organization does these days, an indicator of how serious such organization is about the development of its future capability is the amount of budget spent on IT excluding operations (this means on transformation of business processes and innovation). A further indication is how much of this budget relates to the programmatic work (for public sector) or to the core revenue streams (private/commercial).
Current top IT priorities for public sector organisations are the focus on innovation and investment prioritization, data solutions, decision support and business intelligence, interoperability and architecture as strategic elements. All this requires additional investments, and the results can positively change the organization, enhancing capabilities & capacity. The danger is that if the increased budget is associated with administration or operations, and not associated with the budget for the core/substantive/programmatic activities, then these increases will be negatively perceived by stakeholders.
In the light of the rationale presented at the beginning of this article, organizations need to consider having IT budget distinctly associated with their programmatic one.
A strong leadership is needed at the top to recognize the comparative advantage that IT brings to the organization, and implement this type of budgetary changes.