As digital transformation starts impacting every industry, the IT department is being recast from a mere operations function into the application engine of the new digital business. The pressure is on IT to deliver the new digital services and applications that will keep customers engaged and the business competitive, and to do so quickly and at low marginal cost. In this new world, a competitive business is a data-driven business, and the CIO is in the spotlight as organisations require the processes and analytics to stay ahead of the curve.
We’ve heard plenty about ‘born on the cloud’ startups with agile IT models that would lead us to believe that this shift is well underway. But the average IT department out there, encumbered by outmoded data centre processes and ways of thinking, still has a long way to go. It’s stuck in maintenance mode, and not delivering back to the business at the pace demanded of it.
It doesn’t help that in many organisations the adoption of cloud models has led to a haphazard evolution of enterprise IT, compounding existing legacy issues. Shadow IT is more prevalent than most CIOs care to admit or believe, but the problem goes deeper. Fragmentation of IT resources often leads to a perverse cycle of stagnation that is difficult to break or even notice. It soon promotes the view of IT as a barrier, not a partner, to getting things done.
The lines of business quickly adapt to circumventing the CIO to deploy tactical solutions, resulting in information silos and applications that don’t fit the enterprise architecture, and adding to unneeded complexity. Indeed, by forging ahead with technology implementations without the input of IT, business leaders actually create new issues that see new capabilities fail to deliver on their potential.
Beyond increasing operational costs, this lack of cohesion prevents the business – crucially – from harnessing data or unlocking insights that can be put to work by managers or employees. This in turn stunts internal collaboration in an age where data-driven collaboration is fundamental to speed and agility. IT leaders are effectively standing with one foot in the past and one in the future – torn between the need to deliver functional efficiency and the need to deliver digital transformation as a partner to the business.
We know that this problem is not new, but it’s worth reminding ourselves of its prevalence and scale. A recent State of the CIO survey by CIO magazine noted how, in 2014, CIOs predicted that IT would directly control an average of 66% of technology spending in their companies within three years. Two years later, CIOs report that they control an average of only 57 percent of spending.
The biggest risk for the IT department? Beyond being viewed as a drag to agility, it’s being consigned to irrelevance – just at a time when the opportunity for the CIO to add value to the business has never been bigger. It is precisely now that the CIO’s perspective and expertise are most needed as businesses grapple with how to engage with a digital world.
Breaking the stalemate will require different steps in every organisation, but there are some general principles. Firstly, as cloud becomes the central operational model for the agile enterprise, it will bring a shake-up to the structure and purpose of the IT department. This will mean internal opposition, but CIOs need to understand what that opposition looks like and how to reframe the conversation not around what’s being lost, but what is to be gained. CIOs need to articulate to their teams what it means for IT to change from reactive responder to proactive innovator.
Secondly, CIOs need to have a clearer and more continuous line of sight into the business to understand its requirements. New models of cloud-based IT consumption operate as part of a ‘fail fast’ business environment that demands continuous adaptation and reinvention. Managers don’t have the appetite to fund big projects, and they’re keeping a keen eye on costs. IT needs to invest in a roadmap that will address business requirements while articulating an enterprise cloud strategy to the business that is aligned with its objectives.
Last but not least, CIOs need to see the opportunity for IT (and themselves) and embrace the challenge. The profound changes impacting business—from big data and mobile to the blending of enterprise and personal technologies—spell a bright future for smart and bold CIOs who can translate these forces into business value. Digitisation is placing fresh demands on CIOs’ organisational strategy and leadership. This is their time to lead.
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