If you’re not thinking like a software company, you’re already behind.
Software companies focus on codifying and then scaling everything they do. To do that, business subject-matter expertise and technical expertise must become one in the same, converging once siloed disciplines.
In a recent interview with Metis Strategy, Cathy Bessant, Bank of America’s Chief Operations & Technology Officer, explained that convergence must apply to all companies, saying, “Technology has completely changed the notion of business integration. You cannot say the business is technology or technology enables the business—they are one and the same.”
Your company will not be able to compete at scale and speed if delivery teams have not gone beyond typical IT-business hand offs to true convergence. This convergence extends beyond obvious points of technology dependence, such as an eCommerce website or managing internal productivity tools; it is happening everywhere.
“Metis Strategy helped us make big decisions on a number of key initiatives. Their real-world experience coupled with their ability to perform deep analysis gave our organization confidence in our new direction.” – Gary Reiner
Still, many companies struggle with where to start on this transformation. Business function leaders often communicate high-level goals that are difficult for technology leaders to translate into concrete actions, and technology leaders often approach a problem by addressing the technology first, and the business outcome second. They end up six months into a “digital transformation” effort with a disparate collection of projects, but no cohesive sense of prioritization or interdependence to create a more tech-driven future. The solution to bridge this gap between strategy and execution is for IT leaders to be better collaborators and communicators, and to understand the business and customer needs as well as their business partners do. But that is easier said than done. Start by rooting your IT plans in a well-defined business capabilities map, and then transform the way that IT goes to market by driving cross-functional operating model convergence in the long term.
Business capabilities are an integrated set of processes, technologies, and deep expertise that are manifested as a functional capacity to capture or deliver value to the organization. They outline “what” a business does, as opposed to “how” a business does it. They are the definition of your organizational skills, best represented in a landscape map that allows you to evaluate the full spectrum of capabilities against each other. Business capability maps are not just about technology; these tools are designed to improve an organization’s holistic ability to improve a business outcome, and in many cases, it is not the technology that is the constraint, but rather a process, skill, or policy issue. Consider the process for onboarding a new employee. Strong onboarding capabilities make the experience seamless for the new hire. From the second an employee steps into the office, they might:
• Be welcomed at his/her desk by a hiring manager, who provides a building access card and computer • Be given orientation training videos on the company’s mission, security protocols, etc. • Be added to email distribution lists, Slack channels, file access on shared drives, and to recurring meetings related to his/her role • Be coached through benefits enrollment for 401(k), health-savings accounts, and vacation accrual
Business capability maps are designed to improve an organization’s holistic ability to improve a business outcome.
There are various people, process and technology components behind each of the steps in the employee’s journey. However, the employee does not—and should not—feel the transition between, in this case, HR, facilities, and IT. If the desired outcome for this capability is to provide a seamless employee experience where the employee is productive in less than three days, the different functional areas should integrate their strategic plans to meet that objective. This is often challenging in an organization that thinks and acts in functional silos, but a capability-driven approach will bridge that gap.
Many organizations have never formally documented their business architecture and therefore struggle to understand business priorities. To bridge that gap, IT will generally dispatch enterprise architects or business relationship managers to form bonds with functional leaders, understand their current processes, and identify the pain points. As a result, they map the business capabilities. This exercise elevates technology leaders and their business partners to common ground, on which both can add value to the conversation: one around business process improvement, and the other around technology enablement. We generally suggest no more than four levels of cascading capabilities, with the fourth level most resembling the associated process. Keep in mind that business capability maps are not organizational charts. By definition, they are anchored by the business outcome, with many functional areas converging to realize that outcome.
Once you define your capabilities, prioritize them to help provide strategic direction to the organization. Not all capabilities are of equal importance to your ability to compete, so you need to ensure you are not boiling the ocean. While there is more nuance in practice, for simplicity, capabilities fall on a scale of achieving competitive parity through sustaining competitive advantage, and it is important to evaluate which are the most important to your business’ success. This segmentation will not change tremendously year by year, unless there are major shifts in the competitive forces at play.
• Competitive advantage: Capabilities that—currently, or in the future—are critical to creating or sustaining your market position in a fundamentally unique way. Customers will hire you because of these capabilities, your employees will love you for them, and your investors will celebrate the cost effectiveness that they bring. For example, you may be able to segment customers and tailor offerings in a way that economizes your marketing spend far better than a competitor. Or, if your competitor competes on price, you may compete on amazing customer service. Thus, you might prioritize your capability on managing customer cases. To be clear, further segmentation is needed within the “Competitive Advantage” bucket; remember: not everything is created equal.
• Parity: Capabilities that maintain customer expectations and operational needs. You don’t lose (but also probably don’t gain) fans because of these capabilities. For example, your “process payroll” capability probably needs to stay at current levels, but it does not need to be the target of heavy investment and prioritization. This doesn’t mean you don’t invest in these areas. For example, Uber uses Stripe to instantly pay drivers, giving them cash in hand each day, but Lyft also offers this capability. Uber needs to continue to invest in this area to stay at parity, in the case that, say, Lyft started predicting revenue for drivers and giving them advances. Still, if the offerings are similar, they may not be a deciding factor for whether a driver goes with Uber or Lyft.
Once you segment and prioritize your capabilities, you should evaluate the current state maturity for each capability, as well as the target future state. Evaluating maturity levels is as much art as it is science. As a result, the defining of maturity levels cannot be done independently, and often the conversation around why something is or is not mature is as valuable as whatever score you give yourself. We recommend undertaking this exercise with cross-functional groups that have an understanding of the capability from different perspectives. We often evaluate capability maturity as a function of process definition, degree of automation, organizational reach, and the measurement of the business outcome. This evaluation will influence the prioritization of near-term investments and will not always coincide 1:1 with the segmentation mentioned above. For example, if you have low maturity in a “parity” capability, you would still want to invest in that capability to get it up to par.
Enhancing a capability may require investments in people, processes, or technology. Therefore, a converged team of business function experts and technology leaders should jointly identify improvement activities. IT should lead in aligning the technology services (if your organization uses an ITSM approach) and technical architecture needed to enable these capabilities—but all in the context of how the business process may change. Once you have aligned your technical architecture, IT can identify gaps and redundancies. For example, if you have multiple applications supporting your “expense management” capability, you might opt to undertake a cost-benefit analysis of maintaining all of the applications. Conversely, you might discover you have a prioritized business capability of sales forecasting without a technology architecture supporting or enabling that capability. You might identify this an area where a new technology services is needed to provide data analytics to the sales operations team. Once developed, capability maps can bridge the gap between strategy and execution by driving organizational alignment around where investments are needed. For example, we recently helped a growing technology company through this journey. The IT organization had been viewed as an order-taker, and it often struggled to get budget consideration for more strategic projects that would add value to the business, but the CIO was intent on evolving the organization into a more strategic partner. The CIO knew that the convergence of business process improvement and technology enablement was key, so the team worked closely with business function leaders to develop prioritized capability maps across the organization. Then they leveraged the capability maps to identify areas in greatest need of investment, and in turn forced trade-off decisions that resulted in a meaningful prioritization of focus areas that galvanized the team. The converged business and technology teams, oriented around shared business outcomes, had threaded the needle from strategy to execution. In the end, one of the business partners said, “We have tried to do this many times over the past six years, and this is by far the best it has ever gone.” That is how IT goes to market differently, and wins.
Kimberly is the Chief Operating Officer of Fannie Mae, a Fortune 25 company with revenues exceeding $112 billion. As COO, Kimberly is responsible for overseeing the company’s technology, operations, innovation, data, and strategic execution functions. Previously, Kimberly held a variety of roles in her twelve years with the company, including Chief Risk Officer and Chief Credit Officer.
Prior to Fannie Mae, Kimberly was the Director of Fixed Income Sales at the Investment Bank, Credit Suisse. Before Credit Suisse, Kimberly was an equity trader at D.E Shaw & Co.
Kimberly received a Bachelor of Arts in Economics from Princeton University, and an MBA in Finance and Economics from Columbia Business School.
Kimberly serves as a Director on the Board at Calvert Impact Capital.
Podcast: Play in new window | Download
Subscribe: Apple Podcasts | Spotify | Amazon Music | Android | Podcast Index | Deezer | Youtube Music | RSS | More
Steve is the Chief Information Officer of FINRA, a non-governmental organization that regulates member brokerage firms and exchange markets, such as the New York Stock Exchange. As CIO, Steve focuses on building surveillance systems that assist the company’s staff in examining firms and regulating the markets.
Prior to FINRA, Steve was the Co-CIO at Citibank. Before Citibank, Steve was the Executive Vice President, Chief Information Officer, and the Head of Operations and Technology of the NASDAQ. Prior at the NASDAQ, Steve held the same roles at the Chicago Stock Exchange. Before the Chicago Stock Exchange, Steve worked as a Managing Principal at IBM. Steve began his career with KPMG.
Steve received his Bachelors of Science in Computer Science from Northern Illinois University and his MBA from the University of Chicago’s Booth School of Business.
Bill is the Chief Technology Officer of Blackstone, the alternative asset management and financial services firm with revenues exceeding $7 billion. As CTO, Bill is responsible for working with vendor partners to better understand the business to make better types of investments. Bill is also responsible for advising companies across Blackstone’s portfolio operations group.
Prior to Blackstone, Bill was the Chief Technology Officer at OpenSky. Before OpenSky, Bill served as the Chief Technology Officer at Capital IQ. Bill also worked as an Architect at Sapient.
Bill received his Bachelor of Science in Engineering with a computer science major and a concentration in Finance from the University of Pennsylvania.
Among other topics, Anil discussed the following with Metis Strategy:
Anil is the former Corporate Executive Vice President and Chief Information Officer of SunTrust Bank, having retired in March 2018 after six years with the company. While at SunTrust, Anil led a transformation effort that saw the consolidation of the company’s digital efforts, as well as the implementation of a new operating model to align IT to the business.
Prior to joining SunTrust as CIO, Anil had a long career in consulting. Anil spent over nine years as a Partner at IBM, and spent fifteen years at PWC prior to that.
Anil sits on the advisory board of several growth-stage startups including Fenergo, Mirantis, Skytap, and Tricentis.
Anil earned a Bachelor of Science degree in Electrical and Electronic Engineering from the Imperial College London, as well as a Masters of Science in Management Science and a Masters of Philosophy in Management Science, both from the Imperial College Business School.
Among other topics, Brad discussed the following issues with Metis Strategy:
Brad is the CIO of PayPal, a Fortune 300 company that is transforming the world of global payments, commerce, and how individuals access financial services. As CIO, Brad is responsible for contributing to PayPal’s ten year revenue growth rate, leading the transformation of technology functions for PayPal’s global operations, and transforming how technology can enable a large global workforce to operate with the speed and flexibility of a startup. Brad also led PayPal’s IT separation from eBay, successfully completing the effort in less than 9 months despite outside expert estimates of two years. Brad leads a team of over 1,400 in providing both IT functions and product development for operations that support a global enterprise operating in over 200 markets, 24 languages, and 65 locations.
Prior to PayPal, Brad held several senior executive roles at Bank of America, including leading the Next Generation Payments and Commerce team. Prior to Bank of America, Brad led the creation of a new rewards platform at JP Morgan Chase that has delivered innovative new credit card products propelling growth. Brad’s early career spanned a wide range of strategy and financial roles including M&A work, turnarounds, and strategic planning roles.
Brad received a Bachelor of Science degree in Mechanical Engineering from Purdue University, as well as an MBA from Purdue’s Krannert School of Management.
Brad holds several patents, is a frequent speaker at business and technology forums, and has authored numerous articles on innovation. In 2018, Brad joined the Board of Elevate.
I recently caught up with Brad by phone from his office in San Jose, California, and our conversation covered World Class IT Principle Three, Product and Portfolio Management, as Brad discussed how he prioritizes initiatives across the themes of security, stability, and strategic initiatives to enable the company’s business strategy; and Principle Five, External Partnerships, as Brad shared how he collaborates with customers to create a tight feedback loop for product improvements. We also discussed PayPal’s successful transition to mobile, Brad’s career path, among other topics.
Among other topics, Denis and Gill discussed the following issues with Metis Strategy:
Denis is the VP of Information and Technology Solutions (ITS) and CIO of the World Bank Group, an international organization and development bank focused on the twin goals of ending extreme Poverty by 2030 and boosting shared prosperity for the bottom 40 percent of population in every country. As CIO, Denis manages the World Bank Group’s information management and information technology portfolio, which is tightly linked with the institutions’ overall strategic direction.
Denis joined the World Bank in 1998, where he has held a variety of leadership positions before ascending to the CIO role.
Denis has a degree in Civil Engineering from Laval University.
Gill Haus is SVP Retail and Direct Bank CIO at Capital One, a Fortune 100 company with $25.5 billion in revenue. At Capital One, Gill is responsible for building and sustaining an innovative technology organization while fostering a culture of excellence in software engineering, all in pursuit of Capital One’s strategic mission.
Gill joined Capital One in January 2016 and has held a variety of leadership roles, most recently as Managing VP Retail and Direct Bank CIO. Prior to Capital One, Gill had technology executive positions at AOL, Curb, and at PayPal.
Gill received a Bachelors in Information Systems from the University of Maryland.
Among other topics, Greg discusses the following issues with Metis Strategy:
Greg is the President and Chief Executive Officer of Fifth Third Bank, a diversified financial services company with $142 billion in assets.
Greg joined Fifth Third in 2003 as Executive Vice President and Chief Information Officer. By 2006 he was offered the Chief Operating Officer role, and became President in 2012. Greg has served as President and CEO since 2015.
Prior to joining Fifth Third, Greg was the CIO of Emerson Electric, and held several information technology and leadership positions at General Electric.
Greg earned a bachelor’s degree in computer science from the University of Dayton and a master’s degree in business administration from Central Michigan University.
Greg is a member of Fifth Third Bank’s Board of Directors and of the Financial Services Roundtable Advisory Board, the leading advocacy organization for America’s financial services industry.
Among other topics, Chris discusses the following issues with Metis Strategy:
Chris Corrado is the Chief Information Officer and the Chief Operating Officer of the London Stock Exchange Group, a $1.7 billion international markets infrastructure business. The firm focuses on capital formation, intellectual property, and risk and balance sheet management
Prior to joining the London Stock Exchange Group, Chris held senior technology and executive roles at MSCI, UBS, and Asurion. Chris has also worked at high technology growth firms including eBay and AT&T Wireless. His current position marks his second time working in the UK. Chris previously worked for Morgan Stanley International and Deutsche Bank.
Chris earned a Bachelor of Science in Management Information Systems & Business Administration from the University of New York at Albany.
Among other topics, Ann discusses the following issues with Metis Strategy:
Ann Kono is Partner, Chief Information Officer, and Risk Officer at Ares Management, a $2 billion global alternative asset management firm. Ann is responsible for Technology, Investment Operations, and Enterprise Risk Management for the firm.
Prior to joining Ares Management, Ann served as Head of Global Application Delivery at Western Asset Management, and as Head of Software Development for a startup that specialized in building high traffic commerce sites.
Ann has a bachelor’s degree in finance from Boston University and an MBA in Finance from the University of Southern California’s Marshall School of Business.
