CEO: is your IT function fit for digital?

row of PCs in officeBusinesses now operate in a digital age; an age where disruptive technologies such as social, mobile, cloud and analytics, are transforming the use of technology within the enterprise, reinventing how data and systems are provisioned, accessed and managed. And they are moving technology centre stage, to the forefront of the customer experience and interaction, driving innovation in products and services, enabling new business models and underpinning business transformation.

But digital is about a lot more than the technology; organisations need a clear vision, strong leadership and the right type of culture. Being open to new ideas, making decisions quickly, collaboration across functions, a willingness to try new things, and an acceptance of failure are all essential elements of the culture needed to be a successful digital business. So, yes digital is broader than technology but if your organisation does not have the right CIO, IT function and platform, and if its CEO and board are not engaged with technology then you are going to struggle in the digital age.

This is the second in a series of four articles that provide advice and guidance to CEOs and boards to help them assess whether they have the right IT foundations in place to be a successful digital business. The articles are based on my book, Disrupt IT, which defines a new model for IT that meets the needs of the digital business. The first article, CEO: do you have the right CIO for digital, covered the CIO role. This article deals with the IT function.

The disruptive technologies and the way in which they are being used to drive the digital transformation of business models, products and services are placing new demands on the IT function. And most are struggling to cope with these new demands. The digital business has to be agile; it needs to be able to respond quickly to changing market conditions, customer preferences or competitor activity. But the traditional IT function is not set up to be agile; it is weighed down by the baggage it has collected over the past 20-30 years when technologies such as social, mobile and cloud did not even exist and when the rest of the business had different needs and expectations of its IT team.

During this time the IT function had to provide even the most basic of services in-house as, in most cases, the available technologies and vendor offerings did not provide a viable, suitable or economic alternative. IT therefore acquired a range of resources, skills, processes and tools that it needed to build, maintain and support infrastructure, networks and applications. However, both technology and vendors have fundamentally changed since then; solutions that could previously only be provided and hosted by in-house IT can now be delivered as a service by vendors. The IT function no longer needs to be a technology and service provider; the digital business needs IT to be a partner that provides and manages its access to external services.

So how can you tell whether your organisation has an IT function that is fit for the digital age? Here are three questions that will help CEOs assess the whether they have an IT department that can meet the needs of a digital business.

  1. Are your IT resources focused on the new core competencies? IT departments are traditionally organised around competencies related to building, maintaining, and supporting infrastructure and applications, with large numbers of technically-focused, inward looking roles. In the digital age the IT function needs a different set of core competencies covering Architecture, Delivery Management, Data Management and Vendor Management. These competencies, whilst still primarily technical, are more business-focused and are centred on the areas where the IT function can add most value to the digital business. For example, designing and maintaining an architectural framework that supports the organisation’s strategy and business model, and which facilitates the ability to integrate multiple services and respond quickly to changes in business needs whilst still maintaining security, privacy and access to data, is a key requirement for the digital business. Architecture is therefore a competence that adds real value to the organisation. To be successful in the digital age all aspects of your IT function should reflect the new core competencies; from the way it is organised through to the resources it employs, the roles these resources perform and the skills and experience they need.
  2. Do you outsource everything that is not a core competency or a differentiator? Put more bluntly this question asks whether your IT function is still performing tasks that could easily be performed by partners. If an activity that sits outside the new core competencies can be provided by a third party without diminishing the organisation’s ability to differentiate, innovate or respond quickly to changes in its markets, then your IT function is not adding any value if it performs that activity itself. All such activities should be outsourced. The IT department does not need to be a service provider any more. Instead, it needs to be working alongside the rest of the organisation, helping to solve business problems and identifying opportunities to use technology to create value, grow revenue and create competitive advantage. But it cannot do this if the majority of its time and resources are allocated to maintaining and supporting the organisation’s existing systems and infrastructure.
  3. Are the retained IT staff embedded in the rest of the business? Whether to support the organisation’s ability to differentiate, innovate or respond quickly to opportunities or threats in its markets or because outsourcing is not a viable option, most IT functions will need to retain some resources and skills that sit outside the new core competencies. To maximise the contribution of these resources whilst at the same time not taking the time and attention of the CIO and the IT function away from their core areas of focus, all retained teams should be aligned with the business function that owns the service they are providing. And in this case alignment should be as broad as possible covering, for example, location, ways of working, setting objectives and incentives, and day-to-day management and communication. For services that are retained because they are a source of differentiation, innovation or agility, it is essential that the staff supporting these services have a close working relationship with the function that is driving the development and use of that service. Co-locating and embedding these resources will ensure they are exposed to the challenges, issues and opportunities of the relevant function on a daily basis, and will ensure they acquire and maintain the required level of knowledge they will need to help that function use technology to create value.

The digital business needs a different type of IT function; one that is an enabler instead of a gatekeeper, a proactive partner that is focused on using technology to add value instead of a reactive service provider focused on maintaining and supporting the organisation’s existing infrastructure and systems. Organisations that do not have the right type of IT function will find life in the digital world very difficult. Those that can answer yes to the three questions above can be confident that they have an IT function that is fit for the digital age.

Disrupt IT is available from Amazon in print and Kindle formats. Country links are listed below: UKUSAustraliaBrazilCanadaFranceGermanyIndiaItalyMexicoJapanSpain

Trackbacks

  1. […] article, CEO: do you have the right CIO for digital, covered the CIO role while the second article, CEO: is your IT function fit for digital, provides CEOs with guidance on assessing their IT function. This article deals with the […]

  2. […] CEO: do you have the right CIO for digital, covered the CIO role whilst the second article, CEO: is your IT function fit for digital, provides CEOs with guidance on assessing their IT function. The third article, CEO: can your IT […]

  3. […] age and so, to be a sustainable digital business, organisations need the right type of CIO, the right type of IT function and the right technology platform. The role of corporate IT is changing; CIOs need different skills […]

Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: