There have been a lot of conversations around the subject of alignment (or more misalignment) between IT and ‘the business’. This article presents ideas with a view to taking IT and business to the next level involving re-purposing, realigning and redistribution of some key capabilities.
What went wrong with the insourced IT model?
It seemed to work for many years, but now the traditional IT in-sourced model falls short of business expectations. Let’s reflect on some of the failings:
Failings
Causes
Remedies
Too much focus on keeping the lights on to the detriment of change initiatives
Scarce internal resources diverted from business change initiatives to put fires out
• More outsourcing of business-as-usual IT
Insufficient internal capabilities to support new technology and digital opportunities
Legacy systems necessitate retaining legacy skills
• Divest legacy applications support • Retain and build functional capabilities
Growing deficit in business and IT Alignment
Poor integration between business and IT
• Bring business and IT together (collaboration and/or unification)
Not communicating in business language
Lack of exposure to the business and lack of communication skills
• Spend more time in the business
Lack of transparency fails to reveal true costs of IT
Failure to attribute IT costs to services
• Clearly articulate whole-of-life costs of IT
Whilst elements of the in-sourced model have been successful, others haven’t. Similarly, organisations have met with patchy success in applying centralised, centre-led, federated and distributed implementations. Maybe now would be a good time to move on ? Particular aspects of the in-sourced model that need to change include:
Reduce or eliminate (outsource) internal IT commodity services
Strengthen value-added capabilities including vendor management and service integration to improve effectiveness of outsourced service performance management
Relocate business-intimate service to the business
Strengthen capabilities around enterprise architecture, portfolio management and cyber-security
Replace or migrate legacy applications to the cloud and externalise maintenance and support
Establish consultancy and advisory services around new and emerging technologies.
The value proposition should reflect ‘customer intimacy’ with the mantra ‘IT working for the business’ being adopted.
Organisations seeking to establish or maintain competitive advantage (e.g. banks) might opt for a hybrid model where capabilities including applications development might well be retained as in-house services. Likewise, Spatial and GIS skills might be retained by government agencies although there are abundant opportunities to amalgamate such ‘shared services’ to reduce duplication and costs.
Setting the Scenefor Crossing the ICT/Digital Divide
I’m about to tread on potentially hallowed ground when I pose the question: “Is there really any difference between ICT and Digital? For this I offer no apology. Do you need an ICT Strategy, a Digital Strategy or both? Or, are they indeed one and the same? Must organisations insist on having a feud between marketing, customer service and ICT to determine who gets to the front seat on the road to digital?
‘Digital’ has polarised much of the ICT establishment from traditional systems engineers, to waterfall analysts/developers, through to strategists and architects. Yes, I use the term ‘engineers’ provocatively but not to incite another squabble (at his time)!
Being Digital, according to Mckinsey [1], “requires being open to re-examining your entire way of doing business and understanding where the new frontiers of value are”. Perhaps this suggests that being Digital is not really about technology at all? That being the case, there is undoubtedly a dilemma that still needs to be resolved.
Exploring the depth of ‘Digital’
In his book “The Digital Transformation Playbook: Rethink Your Business for the Digital Age[2]”, David L Rodgers introduces “the Five domains of Digital Transformation”, being Customers, Competition, Value, Innovation and Data. This, in itself suggests that ‘Digital’ is more than just ICT. The more you delve into it, the more you become aware that it is the association with business, i.e. Digital Business that starts to define its true scope.
Now, when you refer to Digital you can relate to business disruption and new business models, to building customer networks, and developing a data strategy. It is concerned with creating customer value (i.e. establishing a customer value proposition) and mapping the customers’ ‘path to purchase’. There is even possibly stronger correlation with marketing than there is with ICT!
The term ‘Digital Technologies’ has also become fashionable. In November 2019, Gartner highlighted ‘5 Digital Technology Trends for 2020’[3]. Does this create another potential wedge between the ICT and Digital camps? This article also suggests that “CIOs must understand how people interact with and experience digital technology along with understanding the technology itself”. Surely not another hat for CIOs to wear?
Noun, or Adjective I In an article by Mark Smalley “The Difference Between Digital Transformation & IT Transformation” he [4]points out that ‘IT or ICT’ is a noun (i.e. such as a person, place, or thing)”. It can include IT/ICT people, data centres, networks and equipment including hardware, software, data, and applications. He continues to say, ‘Digital’ is an adjective in the sense that it describes a person, place, or thing. If you accept this, it could be that the two terms are in fact complimentary with Digital describing both the ICT and the Business environments in which they coexist.
In the ICT context, Digital describes the blend of people, PCs, laptops, tablets and smartphones, data, applications and network. When aligned with business, (as in Digital Business), it refers to the processes and self-service that have been enabled by IT and the automation of the customer experience. I suggest that it only becomes an issue when people start to use ‘Digital’ as a noun and substitute it for the term ‘ICT or IT’.
Below is a nice little illustration of the rift between ICT and ‘the business’. The term ‘the business’ is regretful, but it further emphasises the extent of the problem. The dilemma also brings to mind parallels with the perceived differences between the natives of Mars and Venus[1].
If only we could see our way to finding the common ground, we’d be so much better off. How often have you heard words to the effect of “isn’t IT supposed to be part of the business”? Have you noticed though, that when it does come together, how effective and empowering it is?
Just as there is growing reason to outsource commodity ICT services to optimise ICT costs/performance, there is value in unifying business and ICT teams to optimise business effectiveness. To start off with, there has to be an admission of responsibility on both sides.
From ICT’s perspective we’ve almost perfected the art of exasperating the business fraternity. Contributing factors include:
Over-use of jargon as the preferred language of communication, in an endeavour to baffle, confuse, frustrate and above all to maintain distance.
Putting up barriers (often unintentionally) to thwart attempts by the business to pursue innovative solutions.
Using restrictive practices to enforce compliance with over-engineered architectures and security regimes.
Using inadequate User Acceptance Testing (UAT) as the ultimate disclaimer whenever things go wrong.
Persistent use of incomprehensible diagrams on the premise that ‘a picture paints a thousand words’, even when it may require a thousand minutes to explain it.
Yes, ICT has needs to carry its fair share of responsibility. So, what about the business. Could it be that the business is also culpable? Consider:
The all too frequent tendency to be blinded by ICT salespeople with their promises of universal remedies, glossy brochures, and the lure of bottomless coffee mugs.
The obsession with the ‘cloud’ as being the answer to all frustrations if you only disregard matters of security, data privacy, sovereignty, and integration.
The view that applications are an ICT problem and that most of them should be replaced by cheaper equivalents (i.e. SAP with MYOB or Xero, whilst retaining the functionality and scalability of a big ERP).
That by only recognising the initial ‘project’ activities for your business, you can ignore the true total costs of ownership, or even better -to pass them off to ICT.
That by constantly prioritising local business priorities ahead of ‘whole of enterprise’ interests, deflecting the latter to be ICT’s problem.
Yes, maybe the business needs to shoulder some share of responsibility. So, if our intention is to look for genuine improvements, what steps might we take to equalise the situation?
Define a Partnering Charter
Let’s agree on a working charter that clearly set’s out protocols for an effective ‘business partner-like’ approach to ICT. This should incorporate a set of shared goals, KPIs and a clear breakdown of responsibilities (i.e. RACI matrix[1]).
Establish combined ‘Product’ Teams
Assess multi modal approaches and form Product Teams based on targeted growth and improvement areas in the business. Key ICT resources and specialists will work alongside Business Product Leaders and SMEs using iterative, agile and design thinking approaches.
Emphasise outputs and outcomes
ICT people tend to dwell on inputs and processes that are designed to produce outputs and outcomes. The reality is that people are really only interested in the end results and how these might affect them. Much like I’m sure that recent experiences of home schooling under COVID-19 has convinced most of us we just want our kids to have a good education without us needing to review all of the subjects in depth. By focusing on outcomes, Requests for Tender/Proposals can focus on critical requirements specification, leaving vendors to inject value into the transaction.
ICT best practice is like good accounting practice
Its probably taken 40+ years to cultivate good practice in ICT around Service Management, Enterprise Architecture, project management and governance etc. That follows years of systems unreliability, poor business/ICT alignment, project failures and inadequate return on ICT Investments. Don’t sacrifice quality for naïve enthusiasm. Unless good practice is followed, we can expect to return to those bad old days.
The business must take ownership
These are essential components of your business. It is vital that data is clean, accurate and reliable for your business to function properly. Likewise, applications codify your business processes that increasingly determine the effectiveness of your customers’ experience (CX). It makes sense for ‘the business’ to own and control these assets and the whole of life investments in them, including benefits realisation.
Do what’s right for the organisation as a whole
This should be reflected in the Partnering Charter to provide ICT and the business with an obligation to test for best value whenever decisions may have implications enterprise-wide.
So, ‘the Rift’ is probably a classic example of the unspoken ‘elephant in the room’. Why? Well, ICT doesn’t want to be seen to provoke the business and for the business, an unhealthy relationship with ICT sort of validates their view that external vendors do it better. As an independent advisor on ICT matters, I’m happy to set out the challenge to organisations to change their attitudes and make this work – for business sake!
About the Author
Tony Welsh started his ICT career in the UK in retail banking. He moved as a Senior Consultant with LBMS (London) to join KPMG in New Zealand and subsequently to the position of ICT Director (CIO) at Wellington City Council. He moved with his family to Australia in late 1999 to commence as GM Information Services (CIO) for Queensland Rail and he subsequently spent 6 years as CIO for Brisbane City Council (BCC) the then largest Council in the Southern Hemisphere. Tony most recently completed 16 months as the Interim CIO for Ipswich City Council in Queensland.
CIOco is available for short and long term engagements and for advisory services and we can be contacted on +61 407 025 750 or at Tony.Welsh@CIOco.com.au or via our website at https://CIOco.com.au
Ten Core Attributes of a typical CIO – A CIO’s Perspective
The illustration below (in my mind) depicts people above technology, connected to a network, with the CIO being strategically placed at the centre of his/her Management team. I liken the maturing of the modern-day ICT team to the emergence of those people out of the technology quagmire that has damaged the relationship between ICT and the Business, almost beyond repair.
In this blog I’ll present ten core attributes that underpin the role of an effective CIO – one of the essential ingredients in the ICT to Digital Playbook. These attributes or traits will typically be complimented by a variety of skills and capabilities depending on the nature of a CIO’s role as well as the characteristics of the individuals in that role. Nonetheless, those core attributes establish a fundamental blueprint to lead an organisation through this challenging transition.
