7 business concepts you MUST master to be an IT leader
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As technology has become a critical component of businesses across all industries, many organizations have added technology professionals to their leadership teams. This enables technology leaders to reach further and contribute to broader business strategy and decision-making. It requires familiarity with fundamental business concepts to understand all the potential ramifications and effectively communicate your views to other leaders and members of management.
So what do CIOs, CTOs, and other technology executives need to know to become full members of the leadership team? This article describes some of the concepts you need to master to be an effective IT manager.
Related: The Entrepreneur’s Simple Guide to Business Concepts
1. The company’s key performance indicators (KPIs)
As businesses establish new models based on digital technology, IT departments need to monitor two categories of digital business key performance indicators.
The first set assesses the current state of digitization of the business model, including sales, marketing operations, supply chain, goods and services, and customer service. The second set of KPIs assesses the development and potential of new net revenue streams developed by exploring new digital business models and clearly distinguishes them from non-digital sources.
It’s one thing to develop key performance indicators, but it’s another thing to discuss them. CIOs need to be able to explain to their colleagues and boards what these digital KPIs measure and why they are important to the organization.
2. Cash flow
These are the cash flows in and out of a company. Cash inflows can come from sales, stock sales, financing and other sources. The influence of cash flow is significant, immediate and unforgiving if mismanaged. The key is to understand how to monitor, protect, manage and invest funds. IT managers and CIOs need to understand cash flow because cash is the king of any business. If CIOs understand the importance of cash flow, their IT strategies will be centered around cash flow.
To manage cash, it is necessary to renegotiate all IT-related contracts using a win-win strategy. CIOs should initiate an assessment of how they can manage IT spending without compromising IT service quality and business impacts, and they should discuss with business leaders how spending can be controlled, especially where IT can help them.
3. The corporate culture of the company
The company’s DNA is made up of its values, its beliefs and the way its employees think and act. It’s sometimes difficult to articulate, sometimes deliberate, and always meaningful on many levels. CIOs need to understand the corporate culture of any company because all IT-related projects and changes depend on the corporate culture.
Related: Company Culture Is Everything
4. Emotional Intelligence
Emotional intelligence is the ability to work and interact with others while managing one’s own emotions. It is typically used to describe a person’s interactions with a team, prospects, or customers. People are human beings and need to be treated with respect to build successful teams.
CIOs and IT managers need to understand this truth when interacting with IT and business staff. They must always have an emotional understanding of the problems people face and how information technology can help them solve them.
Which processes and materials require optimization? Therefore, if IT/CIO managers can manage people with emotional intelligence, they will gain the trust and respect of the business, and IT will become a trusted business partner.
5. Individual incentives
To communicate successfully with your leadership team, it is necessary to capture the incentives. Each team has its incentives, including financial and social capital rewards. To be a great leader, you need to put yourself in each employee’s shoes and understand their motivations. Customers, prospects, and board members are the most important stakeholders for technology leaders. Therefore, they must prioritize incentives that lead to these results.
6. Engage Employees
Creating a strong relationship between the organization and the employees is often an HR objective. A highly engaged employee may be more productive and committed to the organization’s vision and goals.
IT managers and CIOs must also recognize the need for cross-functional teamwork to deliver IT services more effectively. They still need to connect with HR teams to ensure they can run IT services efficiently, especially when situations like Covid-19 force employees to work from home often. Employee engagement will undoubtedly contribute to the effectiveness of IT teams.
Related: How to Assess and Monitor Employee Engagement
7. Build an IT governance model that supports the business
Job number one is keeping IT staff productive, empowered, and engaged. Lack of preparation will have repercussions on the whole company. CIOs need to form an emergency IT governance committee. Governance models are useful for providing oversight during typical business operations. If you are having difficulty creating an appropriate IT governance model, you may consider consulting an experienced and reputable nearshore software development company that operates in the United States and other neighboring countries.
You need to support your staff, ensure their safety and develop a contingency plan for important responsibilities. Once the initial stage of crisis management and communication is over, you need to establish defined roles and responsibilities within IT to facilitate the organization’s ability to respond quickly.
For technology leaders and executives to be effective in their profession, they must understand fundamental business ideas. Always strive to figure out what business principles they can understand and how to collaborate effectively with company leaders. If key leaders understand the business, they can help the business successfully by understanding the difficulties and concerns of the business in line with the vision and purpose of the business.
IT managers will be able to create a sustainable IT organization model that aligns with business plans if they have a solid understanding of business ideas, especially in the age of digital transformation.