Editor's note: The following is a guest article from Jeff Reihl, Global Chief Technology Officer for LexisNexis Legal & Professional.
Achieving operational excellence and innovation are critical to the long-term success of any business.
Innovation, both internal and external, can help a company grow faster, better serve customers, and positively impact revenue. Operational excellence, supported by a strong DevOps culture, can drive the speed of innovation, accelerate time-to-market, enhance productivity, and improve reliability and quality.
Yet, 76% of IT leaders find it challenging to obtain the right balance between business innovation and operational excellence, primarily due to the increased focus on functional tasks brought about by the COVID-19 pandemic, according to this year's State of the CIO survey.
Every organization's needs are different, but arguably most CEOs are more focused on driving innovation. They are more likely to earmark capital spending for customer-facing projects that generate revenue or increase competitiveness versus improving the performance of internal or back-office systems.
CIOs in the survey seem to agree; 68% say that generating revenue is part of their mandate. The challenge for CIOs is to execute on the former without neglecting the latter while staying within budget.
Here are a few best practices and principles that strategic CIOs can apply to drive innovation and deliver operational excellence at the same time with minimal, incremental increases in investment.
Invest once to solve multiple challenges
When considering investments in innovation or operational excellence, look for ways to do things more efficiently and deliver added customer value at the same time.
For instance, when rolling out a next-generation product or a set of new technology features, take advantage to refactor the underlying technologies to improve performance, reduce code complexity, or initiate other changes that can make future upgrades easier and faster. Conversely, if investing in improving software or fixing a defect, take the opportunity to look for ways to deliver better and faster or improve workflow for end users.
Addressing both efficiency and customer value with each new initiative requires a little extra planning and a new way of thinking, but it allows CIOs to tackle multiple problems with a single investment of time and money.
Embrace automation around targeted processes
All organizations have certain expenditure categories, such as compliance and security, that are non-negotiable. In these situations, it makes the most sense to optimize spending through automation and seek out investments that will scale.
As an example, invest in automated tools to detect and automatically deploy patches or critical software updates instead of manual processes that are expensive and error prone.
Automating business and/or IT process improvements was among a number of activities that have increased in importance over the past year, according to the survey, and 81% of respondents said they expect it to become more important over the next six to 12 months. Doing so will allow CIOs to focus resources on value-driving activities, rather than squandering limited IT dollars on repetitive "mandatory" tasks.
Beyond that, automation can create operational efficiencies while delivering new capabilities and innovations to the market faster.
A great example of automation that can drive both outcomes is the move to microservices, or micro-frontend applications. Let's say an organization initially develops a new product or service for a specific geography or market segment, but eventually wants to scale the product globally. Re-usable micro-frontends can help streamline and scale the development process so that it only takes a sprint or two to localize the offering for a particular market or segment rather than the months or years it might require if each market or segment were addressed individually.
Breaking up large monolithic applications that are difficult to change at scale is critical for faster and safer software deployments.
Take advantage of market shifts or disruptions to invest in IT
Understandably, many organizations tend to retreat and retrench when facing financial uncertainties or similar seismic marketplace shifts. But organizations that embrace these shifts can bounce back more quickly and become more resilient when they have the means to innovate even faster.
Eighty-two percent of respondents to the CIO survey say they have implemented new technologies, IT strategies and/or methodologies due to the pandemic. Among the top business initiatives driving IT investments, 36% of CIOs now say transforming existing business processes is the top priority, followed by increasing cybersecurity protections (34%) and improving customer experience (33%). This is in contrast to last year's survey, where increasing operational efficiency (37%) was the most frequently mentioned business initiative driving investment.
The pandemic has made businesses realize they can (or must) change the way they operate. The move toward hybrid work environments required new IT systems and collaborative technologies, processes, and approaches. Addressing these new requirements has helped CIOs identify new opportunities for both innovation and operational excellence.
Implementing advanced technologies like machine learning and natural language processing, and exploring emerging technologies such as IoT, augmented reality, or blockchain are still in focus. Other customer-facing initiatives have become more of a priority. These include enabling better customer experiences and alternatives to face-to-face communications, adapting products and services to meet new demands, and delivering products and services in new ways.
As the pandemic recedes, CIOs will likely return to familiar priorities like driving business innovation, refreshing business and IT strategy, leading change efforts, and implementing new systems and architecture.
But hopefully the experience of having to make rapid technological changes out of necessity has permanently changed the way that CIOs approach new tasks, helping them recognize it is possible to drive innovation and operational excellence simultaneously, even with their traditionally tight budgets.
Shifting from an "either or" to a "both and" approach might cost a few extra dollars and a little more time up front, but the dividends from these incremental investments can include lower future costs, higher revenue, accelerated product and IT development/deployments, and increased efficiency, flexibility, and scalability. The approach is also likely to improve overall satisfaction among customers, the CEO, and other key stakeholders.
Correction: This article has been updated to rectify Jeff Reihl's name and title.