How Does the Role of IT within an Organization Need to Change? (Trends and Insights)

Written by Martin Sykes and Paul Lidbetter, this post is a prelude to an article they will publish following the World Cloud Forum in June, 2014.

Dissatisfaction with IT Effectiveness

The McKinsey 2013 survey of business and IT executives found that the top technology priority was to improve business effectiveness and information availability.

However, as leaders become more aware of the critical strategic role of IT, the survey found that leaders are also becoming less satisfied with how effective IT is within their organizations, with just 13% of respondents being completely or very effective at introducing new technologies faster or more effectively than competitors, compared with 22% last year.

The overall focus for many was to increase spending and capabilities on analytics and innovation while reducing spending on infrastructure.

Shift in Leadership for Solutions

Driven by the growing demand for business digitization, mobile and on-line services, and a need to increase business impact, some line-of-business groups are taking local leadership for some application development and service procurement activities, thereby acquiring and running pockets of their own services and devices. This trend is sweeping away the long evaluation cycles for new technologies and large solution deployments of traditional IT organizations.

The services being acquired by line-of-business IT are coming from the cloud, where design and deployment are no longer challenges for the organization. Now, ensuring adoption, change management and operational oversight become key to realizing the value.

Based on this dynamic environment and the fast growing delivery of product and associated solutions through cloud channels, is the age of the big refresh project coming to end? How does the role of IT within an organization need to change? This is the theme of a paper I have been writing with a colleague recently, that will be published later this year. Here are a few thoughts from that paper that relate specifically to value realization.

Changing Models for Acquisition and Deployment

There have been some significant changes in how people can acquire and deploy services and devices that challenge the traditional dominance of the IT department. The trends are:

Faster technology cycles, which are now changing within the year, results in business change being always behind the curve and hence the question 'is this still the right investment?' must be asked more frequently. If an organization cannot continually ask this question across its portfolio then not only will opportunities for growth, innovation and differentiation be missed but valuable assets will be wasted, losing competitive advantage.

Faster solution service cycles, with business solutions delivered over cloud services updating in some cases every month place pressure on organizations to decide how (or even whether) to adopt the new functionality as it becomes available. IDC believes that 82% of all net-new software firms will provide their software as cloud services.

Business agility is demonstrated every day as business groups buy services online or bring their own devices to work to rapidly take advantage of new opportunities. Business leaders would probably not talk in these terms, but the reality is they are trying to repeatedly achieve faster delivery of value on investments before competitors achieve competitive parity.

Focusing IT on Value Management

The bulk of traditional IT seems irrelevant to those outside the IT organization in the light of these trends. And yet this is just the start of the change that IT departments will need to adapt to.

EVERY year will beat the previous on the number of service releases until we reach the point where EVERY service changes at least once EVERY year and through cloud subscriptions lands on EVERY device for EVERY one of our users without the IT department having to do anything.

A value management culture becomes the new cornerstone to create the IT-Business foundation for the future to deliver repeated capability improvements for continuous competitive advantage. The portfolio of business investments in IT need to be managed by the value they will deliver, and no longer by the investment profile or internal resource constraints.

Value management drives new approaches to portfolio management as well as a culture change at the top. We believe that to be successful organizations will manage a value portfolio (as opposed to aninvestment portfolio) for IT to achieve faster business value cycles, with business intelligence supporting governance processes to identify the business capabilities with the greatest value potential.

Creating a More Pervasive Role for IT

As well as impacting the role of IT in the organization, such a change to managing value also drives the change to a more pervasive role for IT and a more value focused mind set for the organization as a whole.

As organizations move towards  a Value Management/Adoption focus versus a Business Justification/Deployment mind set the message 'we delivered on time and budget' is assumed, the 'we co-delivered measured value to the business and customers' is the future focus. Project Management Offices (PMOs) will change from just tracking the cost of programs and projects delivered to the value realized in the business, with PMs including adoption and realization of value measures in the project scope.

We are not in the business of predictions, but we can say what we are seeing our leading customers do in response to the challenges we have described. Some of these changes are quite disruptive to the existing approaches IT departments have taken, especially where they have outsourced all of IT provision.

Managing Portfolios: Commodity and Proprietary

IT leaders are managing two portfolios, one with technologies and applications that have become commoditized and can be run at the lowest cost for a standard service, and one where the technology is providing business differentiation.

With the trend over the last 20 years to outsource IT provision there has also been a trend to focus on IT mainly as a commodity. Outsourcing organizations have had a hard time balancing the low costs required of them with the occasional requests for new projects and differentiating capabilities. We are now seeing a clearer separation in the IT strategic planning process of these portfolios and of the sourcing strategies for each portfolio.

Addressing Increased Security Risks

With the growth of cloud, mobile, big data and social computing we are seeing organizations make critical information available to ever more people on more devices. This significantly increases the surface area for data loss, or theft. IT remains the central body that must have a firm handle on identity and security policies. It is also the organization that can provide secure access to shared information services, through internal APIs, to allow business units to create their own applications and modernize their own business processes.

Delivering Value

Value is a core component of many business cases, but when approval is received and the project commences the project manager is typically focused on delivering to time and cost. The value component is lost.

In leading organizations the project and program managers are now tasked with delivering the value described in the business case, resulting in a trend for shorter projects with better definition of the change processes and adoption metrics for users of business capabilities enabled by the IT systems.

As more solutions are delivered from the cloud, with no IT deployment project, there is also a need for IT staff to focus on change management and user adoption techniques to ensure the user community is able to get value from the new features regularly appearing in the on-line solutions.