CIOs: Scenario Planning Can Save Your Job

August 29, 2013 Editor 0

It’s the rare CIO who applies scenario planning to the business of IT. Yet, in a function driven by innovation and the uncertainties surrounding the application and implication of future technologies, not using scenarios is tantamount to management malpractice.

Scenarios can help IT organizations create more resilient plans, practice for business climate changes, and better drive innovation. IT often falsely believes that once a vision is set, a single narrative must dominate its future. But that belief leads to misalignment as the future unfolds contrary to the assumptions underlying the vision. IT leaders should acknowledge that they need to develop a way of sensing directional shifts early, so that they’re not caught flat-footed by the next thing that will disrupt the foundations of their business or their infrastructure.

Creating More Resilient Plans
Any IT professional who believes that their intuition or logic about a future will prove accurate hasn’t worked long in IT. Scenarios help IT create more resilient plans by providing a new testing mechanism for everything from portfolio management to the consumerization of IT to employing cloud services.

Let’s consider the last example: many organizations are making a big bet on cloud services. This decision brings with it a range of threats, along with new opportunities. Threats range from periodic, temporary outages, to catastrophic failure from the dissolution of the provider, to a merger or acquisition that requires rethinking existing relationships and perhaps renegotiating existing service contracts. Opportunities might include reducing portfolio complexity, driving down costs, and shifting talent from tactical to strategic work. These threats and opportunities require a clear way to test how they will play out against various social, technological, and economic assumptions.

The way threats and opportunities play out will affect talent needs, in-house infrastructure investments, security models, and the deployment of mobility solutions, just to name a few implications. For IT professionals, scenarios help them create a deeper, richer view of the potential futures.

Practice for Business Climate Changes
Building resilient IT plans that take into account future uncertainties in the technological realm is just the start. For IT to deliver its best value to the business, it must test its assumptions about applications, business needs, even its own roll in the business, against the larger context of the business climate.

Much of the fall-out of the Great Recession was exacerbated by the failure of organizations, public and private, to understand how technology and automation would perform under the stress of unusual circumstances. Those organizations did not effectively use tools like scenarios to help them imagine what could happen, let alone establish technological contingencies for mitigating the impact of systemic failures like the dissolution of Lehman Brothers or averting automated trading cascades in various markets.

For many industries, technology has become the transformative force. Often that technology does not directly arise from existing information technology, but IT will be called upon to integrate, leverage, and ensure service levels and communications to support the business transformation. Scenarios can play a strategic role in helping both the business and IT understand how these new technologies might evolve, what information technology support they may require, and where the risks may lie.

Scenarios and Innovation
Many organizations look to IT to help innovate products, processes, and business models. But there is a problem: there is no data about the future. IT cannot foretell which technologies or vendors will dominate in the future. But if IT leaders document uncertainties and create scenarios, they can provide better-informed guesses, and more importantly, monitor the uncertainties to determine which of their imagined futures is most likely to unfold.

As CIOs strive to provide more strategic value, scenarios can offer a tool to help facilitate business transformation. IT, perhaps more than any other individual function, faces mounting uncertainties that affect how the CIO’s organization is run, but also how well the organization as a whole adapts to a more technologically enabled future. As marketing, for instance, takes up its own technological destiny with online and mobile ads, app development, marketing automation, and the deployment of digital experience, IT owes the organization guidance and governance on these developments–and they owe their business partners a robust way to help them mitigate the risks and maximize the opportunities.

Today’s CIOs who want to prosper in tomorrow’s tumultuous business climate need to embrace scenarios as a framework that will infuse their leaders with strategic perspective and meaningful doubt, and offer tools for working through both. The best of tomorrow’s IT leaders will help their entire organizations recognize the impact of uncertainty, and force them to grapple with its implications in every decision they make.

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Categories: HBR, Insights

Tags: future technologies, misalignment, SCENARIOS, uncertainties