CIOs Must Develop New Strategic Business Capabilities

Over the next two to three years, CIOs will be tasked in helping business leaders identify, develop and instill the new strategic business capabilities (SBCs) that will help restore their businesses to full health in the post-recession world, according to Gartner, Inc. Those who don’t may find themselves sidelined.

“If you think the task ahead of you (the CIO) is simply to introduce a new technology, standardise a disparate set of computer systems across the corporation, update vendor agreements and revise the IT governance structure for your company — think again,” said Mark Raskino, vice president and Gartner fellow.

Great companies compete by advancing SBCs. Customer relationship management (CRM) and supply chain management are two clear examples of what is meant by an SBC. These are not “just” technologies. They involve process changes, mind-set shifts, new job roles and organisation changes.

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“Think of SBCs as a vector through which technology changes the way companies do business, and SBCs also creates industry disruption. A number of these major business strategic ‘weapons’ are moving to a point of maturity where they can provide considerable new business value,” said Raskino. “The pipeline of newer and emerging SBCs is very healthy. For these reasons, we believe IT will continue to have disruptive potential, in business strategy terms, for at least 15 years. These major innovations depend on funding, ingenuity and market development. Even if Moore’s law stopped next year, we believe that most of them would continue to fruition.”

However, analysts said SBCs are getting more complex and challenging. They require skillful and often enterprise-wide change management at the transformation level. This carries failure risks on significant investments, and many CEOs may find simpler and easier ways to compete and win new business. The path of least resistance may be the barrier to SBC-based business progression.

Gartner has created the Strategic Business Capabilities Hype Cycle that plots SBCs at their various stages of advancement (see Figure 1). After the great economic “reset,” analysts said the Hype Cycle will help businesses to identify the biggest value-producing capabilities IT is enabling in progressive businesses.

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The action to be taken by CIOs varies as the Hype Cycle progresses. At the earliest stages, the task is to assign resources to R&D, in order to give the organisation the option to invest in the SBC later. For example, today, a toy company might examine the possibility of 3D-printer-based digital fabrication for uniquely tailoring Lego-style plastic building bricks. The main window of investment opportunity comes next, that is the period when leading organisations, through their own trial and error, incubate and define the SBC itself, gaining perhaps five years or more of competitive advantage. M-commerce is being defined by leaders now - for example, what mobile banking will look like and how it is controlled.

For organisations that wait until later, fast follower, or copying, action will reduce the negative effects of industry disruptions. Those who leave any decision until the Plateau of Productivity will likely find themselves at an increasing comparative disadvantage and must invest quickly to repair damage to business results. For example, slow incumbent retailers that failed to invest in a move to e-commerce five or 10 years ago can find themselves losing share and trying to catch up today.