A new Corporate IT Model
“In three to five years everyone will work in IT.”
The state of corporate IT today
Companies used to use technology to run their businesses, now technology is their business.
Companies used to sell a product, now they sell data, connectivity, or customer experience.
Companies used to know who their competitors were, now their competitors are coming at them from all directions.
Companies used to be all about manufacturing, supply chain, design, or R&D. Now they are all about the customer, and the customer wants access to their phone, their watch, their voice, and their car.
Once everything was analogue, now everything is Digital. IT is growing more critical to the business and more complex to inhabit, as IT simultaneously battles cybersecurity threats, increasing business demands and challenges.
The majority of companies have now embraced multi-cloud environments. According to research, over 85 per cent of enterprises have reported that they now run a multi-cloud environment.
IT’s two biggest problems, Service Delivery and Business partnership have not changed over the last 30 years.
Having a centralised, one-stop IT shop is what is preventing companies from being innovative, agile, customer-focused, and digitally transformed.
Some companies are moving toward distributed networks of technical expertise and knowledge throughout their organizations.
With the extreme focus on enterprise digital transformation, most companies today are in a state of technology flux. At the same time, IT organizations are faced with a host of tactical challenges - from defending against increasingly sophisticated cybersecurity threats to incorporating the proliferation of cloud computing offerings and evolving IT delivery models.
State of the CIO survey
A recent survey of CIOs and their organizations has revealed:
45% of CIOs are focused primarily on implementing new systems and architectures, leading change efforts and aligning IT with business goals.
52% of those surveyed said that alignment with business goals is a key focus.
35% of the IT leaders surveyed said they spend their time cultivating the IT-business partnership.
CIOs who maintain strong partnerships with business leaders preserve IT's influence, regardless of whether they control the actual spending.
The relationship between business and IT continues to be of primary importance.
The majority of companies have now embraced multi-cloud environments. According to research, over 85 per cent of enterprises have reported that they now run a multi-cloud environment.
CIOs say the most significant business initiatives will be increasing operational efficiency, improving customer experience, and transforming existing business processes. The technologies driving spending will be cloud computing, security and risk management tools, and big data and analytics systems. And that's just a start.
The percentage of CIOs who report that they're spending time managing IT crises rose from 19 per cent last year to 27 per cent this year.
CIOs are experiencing a sharp rise in their attention to security management with cybersecurity the main focus due to back-to-back years of high-profile breaches and headline-worthy hacks, corporate boards are focusing on cybersecurity as a financial, operational, and reputational risk.
What these stats tell us is that nothing has really changed in the last 20 years. CIOs remain operationally focused, still trying to build a partnership with the business which continues doing Shadow IT (building their own IT solutions.)
And what do CEOs want?
40% of IT leaders polled said CEOs are looking for IT to complete a major enterprise project.
32% said the priority is to have IT help reach a corporate revenue goal.
29% said the mandate is to upgrade IT and data security.
Problems that are plaguing IT today
1. IT management and staff stress is rampant
Traditional management practices mean that the IT executive management experience is typically poor, team members look to assign blame for failures, they lack trust and do not have mutual accountability or shared leadership. They are constantly managing change with little opportunity to recover and relax before the next change is upon them. Add to this, a lack of tight inter-team integration causing poor workflows, high error rates, delayed delivery times and use of overlapping and redundant processes and standards – all these combined, result in relentlessly high executive team (and staff) stress levels.
After the CEO, CIOs probably have more responsibilities than anyone else in an organisation, taking charge of the company-wide technology strategy whilst simultaneously driving business change and delivering growth.
Unsurprisingly then, things don’t always run as smoothly as one might hope. Much like their job, a successful CIO is one that is willing to evolve alongside the role. The technical landscape is forever changing and as a CIO you need to be able to keep up to date with emerging technologies.
2. Continued lack of business focus
The most common complaint about IT and a major source of stress is that IT is not business focussed or business-friendly. There are two causes of this: 1, most IT staff simply do not have business training, business experience or knowledge and are therefore largely incapable of appreciating what the business does or what its priorities are. They also fail to understand that IT does not pay their salaries, the business does; and they also fail to appreciate that IT is a business service and support function, that it does not generate corporate revenues, rather it is a business cost. 2, IT does not recognize that business needs are always priority one and that IT needs are priority two. This is a key lesson that many IT managers and their staff need to learn. High-Performance IT trains the IT executive that their everyday priorities are business first, IT staff second and technology third.
3. Lack of business trust and partnership
IT often complains that the business does not follow IT process or deliver what’s been agreed and that the business constantly expects unplanned work to be delivered in short, unrealistic timeframes. On the other side of the coin, the business does not trust that IT will deliver as promised, often able to cite a litany of letdowns. The real issue here is that IT is not part of the business planning process. (IT thinks it should be the other way around.) High-Performance IT embeds an IT person into the business planning process (yes – Mohammed must go to the mountain) so that business intentions and requirements are known about early. Under High-Performance IT this person is called a Business Liaison Officer – an IT middle or senior manager that joins business planning meetings as an observer and all going well as a contributor. Sold the right way, most business units see the sense in this.
High-Performance IT manages the business relationship as a joint venture. It recognises that delivering faster results is held back by the need for arm’s-length formality, where IT “negotiates” service-level agreements while requiring its business “customers” to “sign off on requirements and specifications,” as against informal conversations that start with, “What are you trying to accomplish and how can we help you?”
At one time I called the formal approach “best practice.” but not anymore. IT is better placed and better served by getting into bed with the business and fostering strong informal and formal relationships, with the objective of avoiding the need to negotiate everything. Why? Because firstly the customer is always right and secondly negotiation is for people sitting on opposite sides of the table. If IT talks to the business as a partner and is aware of business needs early enough, then there is plenty of room for compromise and mutually beneficial outcomes.
And the communication skills a CIO demonstrates help the IT team understand the value of thinking in a more connected way with the business. This is crucial because business stakeholders — who have the funding purse these days — are tired of IT telling them what technologies to use. Instead of IT telling them upfront which technologies will meet their needs, they prefer that the IT team listen to them about the technology that they believe will support their needs and deliver value.
4. Business drive
CIOs today are expected to be business leaders, not just IT-focused professionals. You need to come up with visionary plans and goals that can make your organisation thrive. While remaining focused on technology is still a necessity of the job, CIOs are now being challenged to use IT strategies and solutions to drive business innovation and transformation. Strategic business is now an essential part of the CIO role and in order to be successful, a CIO needs to embrace it without hesitation. IT has become influential and proactive in the workplace due to smart CIOs presenting a business plan of how tech can help organisations do better than their competitors.
5. Budget overruns
I have yet to encounter an IT department that has control of its budget, by that I mean that all expenses are within budget constraints – no overruns. High-Performance IT uses a funding model where IT pays for business unit shared services, (spreading this cost to business units based on the number of desktops or user seats) and the business units fund capital and operational costs of new projects with adjustment to the IT budget for on-going project-related costs. (e.g., depreciation and maintenance.)
High-Performance IT carries out a detailed equipment, services, and agreements audit, that is, everything that comprises an IT budget. The budget is remade based on the audit results and Workload Management processes that manage cost allocations are implemented at the same time.
6. Low customer and staff satisfaction levels
The biggest problem with low customer satisfaction levels is that users lose faith in IT’s ability to provide quality solutions, to fix problems in a timely manner causing in some cases the users to stop reporting problems altogether. This encourages users to try to find their own IT solutions (shadow IT) and fix their own problems (e.g., abuse and misuse of application data fields). High-Performance IT uses Service Desk Workload Management information and regular customer surveys as a source of information as to how well IT is performing.
The problems with low staff satisfaction levels are reduced personal accountability for work, higher than normal incidences of wilful blindness and increased staff turnover with associated loss of IT memory. High-Performance IT fixes these issues by surveying the staff, making the executive team accountable for publishing then addressing the survey results, bringing all staff training up to date and finally with the introduction of progressive people leadership practices such as psychological safety, open communication, and team member engagement.
7. Service delivery issues
Most Service Delivery issues centre around incorrect billing, late delivery times, failed installations, the need for rework, out of date standards and constant maintenance. These issues are basically due to the use of redundant or poor processes (or no process at all) and a failing or failed Service Desk Workload Management process - namely Gating, Work Management and Work Classification. High-Performance IT completely reworks the Service Desk Workload Management process and implements absolute rules for its management and engagement.
8. Traditional management and organizational structure
IT management has not evolved, it is still predominantly Traditional in nature, with its behaviours aimed at producing a degree of predictability and order to consistently produce the short-term results expected by various parties and stakeholders.
The diagram above is a Traditional hierarchal IT Organization model with the CIO as the department head and an executive management team made up of IT managers who each manage a specific IT function.
This model has some significant failings.
This model in practice, due to its structure, strongly influences management practices, communications and inter-team working relationships. This model also reinforces a technology first and customers second attitude with little consideration of IT staff needs. The model has the following noteworthy problems.
It is a Traditional management model.
The CIO has an increased focus on operational matters and less on strategic business needs.
It promotes IT functions as silos.
Communication lines tend to follow the hierarchical lines of the model.
The IT management executive does not have a departmental/macro view of performance and productivity. It enforces IT team operational boundaries; it blinkers IT managers so that they predominantly see only their IT function.
Shared work activities are much more chaotic due to siloed operations.
Staff and customer satisfaction levels are predominantly lower.
IT functional integration, the single most important thing that makes IT work – is chaotic.
Staff have a transactional approach to work, that is – they are task orientated.
The hierarchy of decision-makers, executives, managers, and employees worked well when the companies operated in relative isolation from the rest of the world and simply manufactured physical products. By contrast, today increasingly companies have become globalized, they not only produce physical products but also sell ideas, which encounters disadvantages when using Traditional management approaches.
Because the Traditional organization has many layers of management, many people need time to weigh up and coordinate issues, it takes a long time to make decisions, therefore many managers may feel their opinions are being ignored. Moreover, in terms of interpersonal communication, senior management messages easily get distorted as directives move through the traditional hierarchy. This is because each manager may interpret the words in different ways, by the time the message reaches employees, the message may be different from the original intention.
Furthermore, in terms of manager competence, in Traditional management models, authority is assigned to the position rather than the individual, which requires constant checking of the effectiveness of individuals in various positions to see if they have the actual ability to fulfil the job. In addition, Traditional management pays most of its attention to a company’s goals and objectives, emphasising increasing sales or profits to please the shareholders, which can lead the company to neglect social responsibilities and business sustainable development.
Traditional management is about control, rules, regulations, boundaries and the source of all new business and ways of working. Traditional managers can be blind to work and employment issues and slow to react to change. Regrettably, employees have learned that the way their managers act is what the path to success looks like, so they model it. Traditional management does not individualize the needs of subordinates or focus on their personal development. Traditional managers exchange things of value with subordinates to advance their own and their subordinates’ agendas. Traditional managers are influential because it is in the best interest of subordinates for them to do what the manager wants.
The structure of the Traditional IT organization is like the military system, which is hierarchical, organized, and disciplined. The power flows vertically and downward, the employees are organized by department and are managed according to a chain of command. Each department has its own rules, the manager of the department is responsible and reports to the senior manager above. Every employee strictly follows the business strategies, has their own job description and accountability to their superior making Traditional IT organizational structures fixed and rigid.
To understand how we got here, it helps to remember why IT departments came into being. Originally known as the “computer department,” they originated in support of corporate accounting departments as a strictly back-office function, this is why the IT Manager originally reported to the Head of Finance and not to the CEO, with the latter change not occurring until the 1990s.
A new Corporate IT Model - Hybrid IT
High-Performance IT specifies a Hybrid IT Model as an evolutionary model split along the lines of– IT Shared Services (Centralised) and– Business Unit IT (Decentralised). The Hybrid IT model creates a network of Business Unit IT pools of technical expertise and knowledge. This enables faster decision-making, greater visibility, and shared ownership. And no handoffs to slow down work. The Hybrid IT model is designed to form a strong Partnership or Joint Venture with the Business Units.
All Business Unit IT work is controlled by a Business Unit IT Framework that defines:
Project Management Processes.
Applications Development Methodologies.
Intranet Administration.
Process Standards (such as CMM level 2 Documentation Management) and related documentation.
It’s important to note that this doesn’t mean anybody can do anything when it comes to technology. Decentralizing technology also requires some centralization. Under the model, guardrails are put in place so enforce that everybody uses the same:
Security protocols.
Architecture.
Standards.
Software-programming languages and that everyone conforms to a prescribed Architectural blueprint when building digital products and solutions. But within these guardrails, employees have the scope to do whatever is necessary to get the job done.
Hybrid IT recognises Shadow IT
The model, underpinned by Cloud computing, recognises and incorporates Business Unit ‘Shadow IT’ allowing business units to act independently within a common Business Unit IT Framework based on Cloud services.
‘Shadow IT’ is simply business built and deployed IT solutions that cause a myriad of support and integration problems for IT. Shadow IT is made up of islands of automation, often built on shabby foundations with IT called in to fix things when they go wrong. A classic example of this is business applications built on large numbers of spreadsheets, simple databases, or cheap, poorly supported applications because the business need was so great it could not wait for an IT solution.
However, ‘Shadow IT’ unfailingly does what the business wants, the business doesn’t have to wait for an IT governance process to give a green light, it simply gets what it needs now. The High-Performance IT model that Hybrid IT is based upon, views these free business sources of outsourced application teams - that have great business analysts - as opportunities. High-Performance IT manages these business teams by extending the IT Architecture over them to cover their activities, providing support and guidance to the ‘Shadow IT’ developers. In this way Hybrid IT recognises that ‘Shadow IT’ is here to stay and incorporates it into a new IT management model, namely Hybrid IT.
‘Shadow IT’ has been happening by stealth for 30 years and there are good reasons why it has survived:
Business Units have nearly always been more successful than IT in specifying and interpreting their IT requirements to solve business problems.
A segregated IT with its processes for managing business requests has always been seen as a roadblock that reduces the agility, speed, and flexibility that customers demand.
The wait times for new work from IT can be very lengthy.
IT employs technical staff who do not have business training or understanding. This lengthens the Applications Development timeframes and is also the primary reason for mismatched Business expectations.
With Cloud computing comes the opportunity to formalise ‘Shadow IT’ which is what the Hybrid IT Model does.
1. Centralized - IT Shared Services
Hybrid IT splits IT into two parts, 1. Centralized IT Shared Services and 2. Decentralized Business Unit IT Services with the latter controlled by a common Business Unit IT Framework. Centralized services are those services that are shared by all Business Units. Under Hybrid IT these services remain centralized and are managed in accordance with the High-Performance IT Performance and Productivity model. These services are:
1. Security.
2. Service Desk:
a. In-House, or
b. Managed Services Provider.
3. Architecture:
a. Technology.
b. Technical.
c. Data.
d. Standards.
e. Hardware/Software Catalogue.
4. Business Unit IT support:
a. Project Management Process.
b. Applications Development Methodologies.
c. Intranet Administration.
d. Process.
e. Business Unit IT Training.
5. Data Centre:
a. In-House, or
b. Managed Cloud Services.
This model has some significant benefits
The model is based upon the High-Performance IT organizational structure where the CIO employs either a High-Performance or Transformational leadership style.
The IT Teams are High-Performance teams.
The model recognises that the business is in a better position to specify and build Applications. Added to this, the business can do its own hardware installs – both these activities are controlled by an overarching IT Architecture.
The model is all about performance and productivity excellence, placing customers’ needs first, IT staff needs second and technology third.
It provides the IT executive with a departmental macro view of performance, allowing IT managers to share productivity outcomes, failures, and successes.
Staff and customer satisfaction levels are considerably higher.
Under the Hybrid IT model, the CIO is a High-Performance or Transformational leader. Although the concept of Transformational Leadership can apply to every industry, it’s increasingly important in IT as companies embrace digital transformation as Transformational management is geared to support major change. Adapting to rapidly changing technology requires innovation and strong leadership to stay ahead of the curve and remain competitive. Add to this the need to inspire and motivate employees is an important puzzle piece when planning out digital transformation, as success depends on everyone buying into and embracing growth and change.
When it comes to the CIO, it’s always been an unwritten rule that whoever holds the mantle will be tech-savvy. However, as the role of the CIO has evolved, it’s no longer a job reserved for just those who have a professional background in IT. Today, it’s not unheard of for a team of tech professionals to be led by someone that isn’t technically inclined; and the need for a CIO to be business savvy has become increasingly important in recent years. However, a CIO that is technologically adept is one that is always going to stand out from the crowd; using IT strategies and solutions to drive business innovation and transformation.
Straddling the line between business and technology isn’t without its challenges but, the CIO who can embrace both responsibilities and bring a sense of balance to the role is one who will create value within the company and become one of the key driving forces behind business success.
While CIOs understand the need to balance operational demands and risks with strategy and transformation, they're looking forward to a near future when they can finally turn more of their attention to innovation and business results.
2. Decentralized Business Unit IT - Management and Organization
Business Unit management is typically based on the Traditional Management model with Traditional team structures in place. The Business Unit IT Team can be managed as either a Traditional or a High-Performance Team.
Business Unit IT Framework - Services
1. Hardware/Software purchase and installation. (Common Hardware/Software Catalogue)
2. Applications Development. (Common Build, Support, Libraries, Toolkits)
3. Intranet Publication. (Process, How to Guidelines, Documentation)
This model has some significant benefits
It recognises that the business is in a better position to specify and build Applications. Added to this, the business can do its own hardware installs – both these activities are controlled by an overarching IT Architecture.
Staff and customer satisfaction levels are considerably higher.
It facilitates companies that want to move toward distributed networks of tech expertise and knowledge throughout their organizations.
Marketing is leading the way
In 33% of surveyed companies, marketing has its own technology budget. Most CIOs are involved in purchasing decisions about marketing technology at some level. But they play a bigger role at companies where IT is considered a business partner or leader than they do when IT is viewed as a cost centre or service provider: 71% of respondents from companies where IT is viewed as a business partner or leader said they're involved with approving marketing technology purchases, and 64 per cent said they're involved in making the final vendor selection. Moreover, 60% of those CIOs report that their relationship with marketing has become more collaborative in the past three years, compared with 44% of respondents at companies where IT is considered a service provider and 35% at companies where IT is thought of as a cost centre.
Fortunately, there is a better way. I have worked with several companies that are moving to get rid of their IT departments, instead making IT part of every business unit. At these companies, the leadership team is working from a design premise to realize value from IT as opposed to one focused on managing IT. While this might seem subtle, it represents a profound shift.
Of course, if you have your own data centres, on-site servers, and software, you will need specialists to centrally manage all of this. This was the original objective of the IT department. But with cloud computing and other technology innovations, having hardware or software physically on the premises is no longer necessary.
Moreover, how we build software today has radically changed, too. For example, low-code/no-code software development platforms allow employees to drag and drop application components, connect them together and create mobile or web apps without programming skills. It’s another function of the old IT department that is no longer necessary.
The massive schism between the business and IT camps is what IT has always tried desperately not to let exist or develop – yet it persists, and its very nature has not changed.
This autonomy/accountability combination gives employees a strong sense of ownership and motivation. Business Unit teams have the resources they need, and while this can sometimes result in redundancy, nobody has to wait for the IT department to approve their request.
The Hybrid IT Model allows Centralized IT to change its focus from Operational to being more Strategic. An example of this is a shift in IT resources as shown in the diagram below. The triangle on the left represents Traditional IT resource deployment and the triangle on the right shows how Hybrid IT Centralized IT resources are deployed.
Finally, you need to consider the mindset of the people working in an IT department. Most aren’t doing it because they love manufacturing or insurance or banking. They are doing it because they love tech. In that way, the separate IT department only reinforces that mindset, exacerbating the culture gap. There’s technology and then there’s the business. But that has it all wrong: These days, the business is the technology, and the technology is the business.