CIOs today have a top operational and strategic priority (not technology priority) to support the mission of the business through the application of technology. While they are under pressure to reduce costs, CIOs must deliver agility and efficiency to the organization. The CIO is also VERY concerned about risk. CIOs don’t want to disrupt what’s working while chasing new opportunities. Think of the CIO as managing a portfolio of applications, technologies, people and processes. The technology portfolio is allocated to initiatives that are designed to 1) Run the business 2) Grow the business and 3) Transform the business. Like a good portfolio manager, the CIO must balance risk and reward by allocating resources in a balanced manner. The degree of risk is a function of the objectives of the board of directors and the strategic plan and operating plans of the companies.
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Activities in the Run the Business (RTB) category are the CIO’s bread and butter and usually consume most of the investment. If keeping the lights on sucks up too much investment, it will prevent the company from moving forward on projects that can support long-term growth. RTB activities generally are low risk because they’re well understood and drive existing revenue.
Grow the business (GTB) activities are usually business projects that IT needs to support. They drive new shareholder value and stock appreciation. This is why (for example) mobile is such a high priority. These projects are higher risk but also higher reward.
Transform the business (TTB) activities are strategic. They involve major new ventures and longer term break evens – hence they are more risky. But they can be transformative in the sense that they position the company for new opportunities, new markets and efforts that will drive sustainable competitive differentiation. There certainly is a lot of discussion about how cloud computing and big data can help transform the business and provide new revenue streams.
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