By: Donald A. Marchand
How can companies acquire greater maturity in the use of information? Ground-breaking research reveals some answers. Following an ambitious program of “field” research – involving more than 1200 managers in more than 100 companies across 26 economic sectors and 40 countries – we at IMD have scientifically demonstrated a causal link between a company’s performance and its maturity with regard to its “information orientation” (IO)
IO maturity is determined by three disciplines: namely information and communication technology practices; information life cycle management; and information behaviors and values.
Many organizations have long developed performance scorecards. However, up until now, they haven’t determined an effective way of seeing, measuring and managing their information capabilities. Now, however, companies taking an ever closer interest in the way information systems are used, have a toolkit developed by IMD at their disposal to evaluate and analyse their IO maturity – the IO Maturity Framework and Metric.
In an unprecedented exercise using two analytical tools, the research, done as a collaborative effort between IMD, Capgemini Consulting, CIGREF and Enterprise IQ, combined the use of a questionnaire with an online diagnostic tool for assessing Information Orientation Maturity we developed. Designed to evaluate an organization’s capacity to create value through the use of information, this tool has demonstrated its effectiveness around the world. The combination of these two instruments has made it possible to compare and statistically cross-correlate the answers on information usage and information value from the CIOs who took part.
The research had two main objectives. The first was to validate, across a broad sample of companies, the pertinence of the reference framework and practices defined during an earlier CIGREF study on the “Dynamics of IS-driven value creation” (White Paper 2008). The second was to look beyond information systems as containers and focus on their content, the information itself, and finally, as a side benefit, to assess the impact of the economic context of 2009 on the IT function.
Only 37% of companies think that the way they use their information, and their information systems, represents a competitive advantage.
Traditionally designed and deployed to automate operations and obtain scale effects, information systems are now firmly established at the core of the enterprise. In addition to the absolute necessity of ensuring uninterrupted operation, this situation opens up new possibilities.
Only 37% of companies, however, think that the way they use their information, and their information systems, represents a competitive advantage. These are companies where the IT function has reached a certain degree of maturity that enables it to look beyond the support function role and position itself as a partner to the firm’s business units. These companies have broken through the first barrier in the utilization of the company’s information capital and acknowledged the need for a style of management that encourages behaviors centered on collecting, sharing and updating information. Performance is measured using indicators that gauge the efficiency of their business processes, and additionally, they have improved their ability to identify and promote managers and employees who have IT as well as operational skills.
The study also demonstrated the existence of an evolutionary pathway by which the IT function progresses from one stage of maturity to the next. Most of the other companies surveyed were shown to have IT functions at intermediate stages of evolution.
While 82% of private sector firms have been affected by an IT cost-cutting plan and budgets have been subject to downward reviews, expectations continue to rise. However, contrary to trends during the economic crisis of 2001-2002, CIOs are seizing the opportunity to underline the contribution that their function makes and to develop its maturity within the company. The most mature IT functions have managed to maintain investments in strategic priorities, through faster execution of decisions taken and a real ability to accelerate high-impact projects or initiate new projects to capture opportunities that present themselves.
CIOs as ambassadors of reform
The near-omnipresence of Internet technologies and mobile communication solutions enables companies today to invent new business models, launch innovative product and service offerings, and adopt cooperative, distributed ways of working that engage all of the actors in their value chains.
More than ever, it is essential for companies to look beyond the traditional IT management framework to take account of all the factors involved in the effective use of information. Making progress solely on the IT front will not produce the desired effects on corporate performance and will only aggravate the under-utilization of IT potential. CIOs need become the ambassadors of a reform within which current forms of IT governance must evolve to explicitly encompass information usage.
In the present economic context, CIOs who have developed their function’s maturity stand out as the ones who are able to capture the opportunities that abound. At a time when many companies are extending and reinforcing their business model, they must also energize their information capital by leveraging their IT function: information matters! Putting information to effective use is clearly the next big challenge for business.
By Professor Donald A. Marchand,
Professor of Strategy Execution and Information Management at IMD
About the author
Donald A. Marchand is Professor of Strategy and Information Management at the International Institute for Management Development (IMD) in Lausanne, Switzerland. His special interests include managing information and knowledge to drive superior business performance, internet strategy for established companies; demand/supply chain management and the strategic use and deployment of information systems and technology in companies operating in local, regional and global markets.
Dr. Marchand is also Founder, Chairman and President of enterpriseIQ®, the first global business analytics company offering proven metrics that link superior performance to how effectively a company manages and uses knowledge, information, people and technology.