A featured contribution from Leadership Perspectives, a curated forum for enterprise technology leaders, nominated by our subscribers and vetted by the CIOApplications Editorial Board.
2020 ushered in yet another definitive shift in the role of the top technology leaders in organizations. It is a brave new reopening world that chief information officers will have to quickly and effectively adapt to in order to ensure the survival, renewal, and regrowth of their organizations. Whether or not the CIO wants to or is ready to, their role is now critical to the business strategy of almost every organization.
Pursuing end-to-end IT modernization
The technologies that support digital business activities span the entire IT landscape; companies can no longer draw clear lines between front- and back-end information-systems management. The sheer volume of technologies, processes and decisions required to build and maintain digital applications and operations means companies can’t afford to work in the same old ways. Business executives and technology professionals seeking to modernize their IT approach must focus on three core tasks:
● Define the modernized organization structure
● Define the target IT state
● Decide what changes to make across people, process and systems
Organization design & hierarchy
The center of gravity of the IT organization is shifting toward the business units. Consequently, organizations are moving to extend their operational and application core with additional resources that can engage business units and help shape demand by their combined IT and business insights. IT must retain the technical capability to uphold its delivery and performance commitments. At the same time, it should develop the business relationship manager (BRM) capability to ensure that it’s offering the right solutions and services at the cost and quality levels agreed on with internal stakeholders.
According to Gartner’s model of an engaging IT organization, these organizations provide IT services and proactively engage with business units to shape IT demand from a business perspective. This model especially can be adapted to fit aspects of a traditional organization – such as the business unit, geographic locations and company structure. For example, a midsized enterprise (MSE) that operates in two different locations may elect to have two service management and strategy teams supported by one common organization.
In terms of size, the engaging IT organization provides an additional layer of engagement with the rest of the organization. Therefore, an engaging organization is generally expected to need additional resources, compared with other models of IT organizations. However, in terms of overall staffing, the service management and Office of the CIO (OCIO) roles, as shown, typically amount to less than 25 percent of the IT organization.
In this step, it is most important for the IT organization to partner with the business. In end-to-end modernization, business and IT leaders come together to define the target state of IT for the entire organization. They set realistic priorities for modernization and define categories of business capabilities where processes, products and actions can be digitized or otherwise improved through the use of technology.
According to a survey conducted by McKinsey, IT organizations that actively collaborate with the rest of the business to shape an overall strategy that effectively employs technology tend to perform better in a number of ways, including provision of core services and the creation of a healthy organizational culture.
(“Partnering to shape the future—IT’s new imperative,” McKinsey Global Business Technology Survey, May 2016.)
Decide which changes to make across the technology landscape: Systems, people and processes
With information about the desired target state in hand, IT leaders can consider how and whether to make specific changes to elements of the IT architecture to help the business attain its goals. As a first step, the IT team should take inventory of existing applications and other technologies and identify those that can be improved, consolidated with other applications or other technologies, or decommissioned. Next, they must discuss the organizational- and operating-model changes that may be required to support business efforts long term. IT leaders, business-unit heads and critical stakeholders from adjacent business units must consider each core business capability and determine which processes, products and activities would most benefit from modernization.
Determine the sequencing and scope of change
IT and business-unit leaders can create a clear roadmap for modernization by having two- and three-year sequences of updates planned and identifying measurable outcomes. It’s important to have clear business priorities and know how those will affect the scope and urgency of IT projects. The team will need to identify technical interdependencies between business initiatives and quantify the cost and effort associated with each systems change. These insights can be used to outline the potential sequencing and scope for modernization. For end-to-end modernization efforts to succeed, top management must be clear about the spending required, and must sign off on budget requirements before any work begins. This calls for leaders to commit time and effort to budgeting and resource allocation.
Signs of a modern IT organization
Both the IT organization and the CIO role are evolving. By adopting the practices above, IT can become a modern organization that continues to lead the way to a digital future. Look for the following signs to ensure you are leading an effective modern IT organization:
● You seek to enable instead of control
● You focus on the end user
● You collaborate with the business to digitize processes
● You enable remote work as a priority
● Business invites you to the table during the ideation stage of new product development
● You have predictable, secure operations
● You have clear lines of communication with business stakeholders
● Your DevOps release velocity is steadily increasing year after year
● Firefighting and unplanned work is limited and takes only a small fraction of management’s time
Conclusion
An incremental approach to systems upgrades may work for companies that believe they will be bought out or are in industries that aren’t anticipating substantial technology changes. For most companies, however, this will not be the case. Technologies and processes are only becoming more sophisticated as companies explore digital business opportunities. Therefore, IT organizations cannot continue to implement system changes piecemeal. Instead, they must think systematically about how to incorporate digital technologies and faster processes while still supporting the business day-to-day. Companies that don’t make these changes run the risk of falling behind competitors and impeding future progress.
