Tuesday, October 10, 2017

IT Must Adapt or Die: This Story Brought to You by the Third Party Providers Trying to Make You Irrelevant.

Five years ago, less than 25% of business leaders rated their organization’s IT function effective at delivering the capabilities they needed. Today the number hasn’t changed. IT functions have strived tirelessly to understand demand, set priorities, deliver effectively, and capture value, yet the results still disappoint. Business and IT leaders alike feel they should be getting more—more efficiency, more innovation, more value—from technology. Unasked QuestionsAmong all the talk of engagement, alignment, and “being part of the business,” one assumption is never challenged—that for information technology to grow in strategic importance, so must the IT function. But what if this is not the case? What if a dedicated, standalone IT function is no longer the best option and the function’s resources and responsibilities were better located elsewhere?

Lets face it traditional IT is under assault.  Frankly if you can't compete with these threats then you deserve to lose the battle.  Look at the change in who can provide value to your organization without any involvement from IT.  Today third party providers can create shadow IT footprints all over your organization.  There's little to stop them when they are providing more value to your customer then you are.  There are a tremendous number of consultants out there who will attempt to prepare you to compete against these firms.  In order for anyone to be successful though I have posted the five greatest shifts your IT organization must make in order to stay competitive and continue to provide value to your customer.  
Evolution 1: Data/Information Over Process – The rise of technology delivered as a service, or the cloud, will significantly reduce sources of competitive advantage from information technology. In theory, a start-up could use the cloud to obtain the same functionality, scale, and quality as an industry leader. Thus reducing barriers to entry which will certainly even the playing field.   Differentiation will lie in how IT manages change, integrates its service portfolio, and critically, exploits the information the services generate.The nature of demand for information technology also is changing. Most employees are now knowledge workers. Social media is becoming vital for customer and internal communication, and data volumes continue to rise. As a result, in the business areas that drive growth—innovation, marketing, sales, customer service—up to According to Marty Pine (Marty Pine is a recognized thought leader and an internationally known Global Business Services Professional who has worked as a senior executive in customer, provider and advisor companies.) 80% of IT enablement opportunities relate to business intelligence, collaboration, or the customer interface. At the heart of each of these opportunities is the need to capture, integrate, and interpret information, both structured and unstructured.
Evolution 2: Eliminate the IT Silo and Embed in the Business – Traditional corporate structure is on its last leg. All corporate functions have the same problems: their capabilities overlap; they do not control the outcomes they enable; and after many cuts, they are struggling to find the next big efficiency. And for organizations growing in emerging markets, no corporate function has the scale or expertise to provide sufficient local support.The IT function shares these problems. It has skills in strategy, program management, business process design, and sourcing. All are valuable, but none are needed solely for delivering technology, and so they can all exist elsewhere.  I have discussed this before when defining organizations as vertically managed.  There is no visibility across the value stream because firms are not set up to execute that way.  Creating an IT organization which can 

Second, no amount of alignment and partnership changes the fact that the IT function enables business outcomes that someone else controls. Much value has disappeared down the hole that this situation creates. Finally, cost pressures mean many CIOs face the unwelcome choice of cutting delivery resources needed to “build things right,” or management resources that ensure IT “builds the right things.”
The need for efficiency and joint accountability for execution and outcome will change the IT function’s delivery model and organizational location. Technology will be consumed as part of business services as the IT function merges into a business shared services group alongside other corporate functions.
Evolution 3: Rogue IT – Externalization of applications development, infrastructure operations, and back-office processes continues, gradually eroding the “factory” side of the IT function. The pace will accelerate as the cloud enables the externalization of up to 80% of application lifetime spend. As this occurs, internal roles will shift from being technology providers to technology brokers.
Evolution 4: Greater Business Partner Responsibility – Technologies for collaboration, business intelligence, and customer interface all require experimentation and iteration, use non-linear, user-driven workflows, and offer value from diversity across the organization. None of this is easy for a central function to fulfill.A generation of business leaders and end users is emerging with greater technology knowledge and confidence. They see advanced, user-friendly technology as an everyday occurrence, and can recite stories of companies gaining industry leadership through technology. At the same time that business leaders’ expectations, and their ability to articulate those expectations, are quickly rising, the cloud gives them access to unprecedented technology scale and expertise. The fact that cloud services cannot be extensively customized levels the playing field; business units cannot customize cloud applications but neither can the IT function.Together, these trends point to a greater role for business partners in areas where the value of differentiation outweighs the need integration. This is not a return to local control of IT resources, rather it is a shift in responsibility for technology decision making.
Evolution 5: Diminished Standalone IT Role – As IT roles migrate to business services, evolve into business roles, or are externalized, the scope of the IT function will diminish and its headcount fall by 75% or more. Strategy, architecture, risk, program management, user support, and relationship management will exist at the business services level, not within the IT function. The CIO position will expand to lead this broader group or shrink to manage technology procurement and integration. Roles remaining in the IT function will organize around build and run, and adoptan agile operating model to allow rapid value delivery and resource mobility.Organizations that do not make these shifts will be left behind as they struggle to effectively exploit technology and manage an inefficient IT function and an underperforming corporate center. For IT leaders too,the shifts present risk and opportunity. Those who do not adapt face a much diminished role in a group with little strategic impact. But the opportunityis also significant. Leading a business shared services organization offersnew levels of resource and accountability for business outcomes. Another option is a leadership role in a newly empowered business unit that thriveson exploiting technology for competitive advantage.

These five shifts should move your group to one which can compete with third party providers. Research consistently shows that in most companies strategic intent is not clearly articulated, and this leads to a disconnect between strategic goals and daily activities. The better an organization communicates strategy in clear, actionable, and measurable terms, the more successfully the Lean transformation can focus on driving change where it matters most. There are many perspectives and approaches to strategy, but it all comes down to a few simple questions. How does an organization define and differentiate itself in such a way that customers prefer it over their competitors? What are the activities the organization must engage in to achieve this status? And how do they sustain competitive advantage over time, as their competitors constantly try to capture market share? More important, in our opinion, than the details of an organization’s strategy at any point in time is how well everyone in the organization understands the strategic intent, and how this understanding guides their daily thoughts, behaviors, and decisions.

1 comment:

  1. Excellent article Patrick!

    You articulate many useful evolutionary shifts to remain relevant. To remain relevant, transform your IT group into a rapid response team, enable your IT group to become the solutions provider of choice, and empower business teams to safely satisfy their IT needs.

    IT becomes responsive and relevant when they enable business users to safely and efficiently fulfill their IT needs. The team can sense business opportunity, adapt, and respond in a timely manner.

    When IT efficiently supports the long tail of user strategy and priorities, teams build solutions using composable building blocks, and low cost development, deployment, and maintenance cost structure is available. Another useful strategy for enterprise organizations, deliver infrastructure, process, and tooling that consistently and automatically enforces compliance and governance policies.

    I look forward to reviewing your other postings.


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