Within IT organizations, increasing numbers of technology-savvy stakeholders are leveraging the confluence of alternative sourcing options and new technologies to deliver customer value. However, these changes are also presenting a host of management challenges.
“The biggest impact on IT is that the rate of change is beyond its capacity to manage,” says Marc E. Snyder, Managing Director, CIO Advisory at global consultancy KPMG. “The traditional plan, build, and run model – as well as software development life cycle-driven application development methods – are too cumbersome. They prevent IT from being able to absorb and deploy all of the new technology.”
Snyder, who is the author of the recent KPMG report Next Generation Operating Models, says that a better approach is a “broker/integrate/orchestrate” model. This is designed to make IT more agile by transitioning from being a vertically integrated manufacturer of custom IT solutions, to a manager of a solutions ecosystem.
“The emphasis then shifts from building to deploying,” he says. “At the end of the day, the business is interested in acquiring a capability to improve an outcome – such as growth, profitability, customer satisfaction, etc. – and that should be IT’s focus as well.”
In this context, IT should be asking: what is the best way to provide the customer, the business, with a given capability? Snyder says it all depends on the context.
“The answer may be an off-the-shelf package, a SaaS-based solution, an application assembled by IT from standard components,” he says. “It may even be a more traditionally developed custom application, but that is typically the last choice, not the first.”
Stakeholders change the game
KPMG says that the increase in tech savvy stakeholders is changing how IT scopes and implements new technologies. Having more hands in the pie could be seen as something that would slow down processes, but Snyder disagrees.
“Actually, this should have the opposite effect,” he says. “A more tech savvy stakeholder is more aware of technology, and what it can and can’t do. This stakeholder is therefore in a much better position to articulate requirements, evaluate alternatives, make a selection, and in some cases even provision solutions.”
However, Snyder acknowledges that danger can arise if stakeholders don’t take into account how a new IT solution will integrate with existing data and systems, how it complies with policies and regulations, or how it fits into the firm-wide disaster recovery/business continuity plan. The solution is to educate stakeholders on these subjects. From there, it is possible to implement a governance framework and enterprise architecture that engages them.
“This framework should provide them with some freedom of operation that strikes a balance,” says Snyder. “It should give the business what it needs without increasing risks to unacceptable levels, or creating problems down the road through increasing complexity.”
There is significant opportunity in making sure that the IT department itself runs like a proper business. Snyder gives the example of how technology business management (TBM) and IT service management (ITSM) disciplines are evolving to run with an eye to delivering on business needs. This is a cultural shift, too, given that a rising number of CIOs are moving from the business side into IT, as opposed to being career IT people.
Change takes time
That said, the role of IT as something that brokers, integrates, and orchestrates – instead of just planning, building and running – will not change overnight.
“The reality is that organizations will operate hybrid models for some time,” says Snyder. “At the same time, most new investments will follow the broker, integrate, and orchestrate model.”
Larger organizations with more invested in legacy portfolios will likely take longer to shift out. Industries where IT plays a bigger role in an enterprise’s products and services, and where it represents a competitive advantage, will move more quickly. There could also be cultural resistance given that the cloud, big data, Web collaboration, and consumerization can be threatening to some IT departments.
“If IT is feeling threatened it is most likely because they are failing to give their customers what they need,” says Snyder. “More progressive IT leaders understand that they are not in the technology business, they are in the customer satisfaction business.”
Once IT accepts this, then they ideally become open to alternatives, with the mission becoming how to best serve customers, and how to get a new capability into their hands as quickly and as effectively as possible. But will IT necessarily become a great source of innovation? Maybe not.
“I don’t hold out a lot of hope that most IT organizations are all of a sudden going to become fountains of innovation,” says Snyder. “Having said that, since most innovation is enabled by technology, they can play a critical role in building a firm’s innovation capacity.”
“If IT is feeling threatened it is most likely because they are failing to give their customers what they need,”
Snyder says they can do this by devoting resources to experimenting with emerging technologies, developing strong relationships with their strategic vendors, and getting briefed on what they have going on in their labs. Unfortunately, the values that an organization places on IT, such as agility, speed, innovation, and performance, are often stymied by a lack of transparency.
“Without transparency you don’t really understand your costs at a granular level,” says Snyder. “You don’t know how efficient or effective you are. You don’t know if you are getting the most value from your investments, or even if you are investing in the right things. You can’t make fact-based decisions, and can’t pivot quickly when things change.”
But transparency can also meet with internal resistance.
“Some of it can be very ugly, which is why there is reluctance on the part of some to do this,” Snyder says. “But with transparency eventually you get smart IT, and smart IT delivers value and competitive advantage.”
One risk that seems inherent in the KPMG report is that new technologies seem to herald in a whole new era of management. Vendor relationships have to be managed, as do customer business relationships, and relationships within internal departments – all in support of ongoing service management, and often with fewer IT staff.
“In many cases you are changing the organization,” says Snyder. “Over time the number of programmers, analysts, systems administrators, etc. will fall. Not everyone can be re-skilled, or even wants to be re-skilled. Automation can be helpful in some cases, but not all. In the end it is really more about changing the structure of the IT organization.”