Does Your IT Function Really Matter? Part II

Re-equipping the IT function to deliver greater value

By Katie Hynan  

CEOs need and expect more value from their IT functions given the central role of information technology in how a company plays and wins in its respective marketplace.  IT organizations are expected to enable profitable growth, innovation, and the cost-effective management of IT risk to realize a higher return on their company’s information technology investment.  Delivering on this expectation requires the IT function to become a truly strategic business partner and not just a reliable utility and dependable service provider.

Delivering on this expectation requires IT to fundamentally transforms itself.  We believe CEOs should require their IT functions to take the following five actions to transform and enable value in the company:

1. Re-establish the IT function’s relevance and value to the business
2. Re-equip the IT function to work in new ways to deliver greater value
3. Re-position the IT function from an order-taker to a highly collaborative business partner
4. Re-align the function’s operating model to deliver on its value promise
5. Re-cast the IT function’s culture to enable successful transformation

Our first article in this series shared perspectives on what CEOs should expect of IT in terms of re-establishing its relevance and value.  In this article, we share our perspectives on what IT must do to re-equip the function to work in new ways.

Working in New Ways Requires a Shift in Mindset and Skill Set

Our work with CEOs makes it abundantly clear: they believe IT needs to make a fundamental shift both mindset and skill set in order to deliver more value:

These shifts are significant and require fundamentally new and different organizational and workforce capabilities across 9 key dimensions:

FROM “UTILITY AND COST” TO “VALUE AND DIFFERENTIATION”:

Traditional IT functions think and act like your local Power and Light company—they deliver requisite IT to keep the business running.  They focus on reliably delivering requisite applications and infrastructure technologies and tools at an acceptable (and questionably competitive) cost but are routinely under fire from their internal customers regarding the value that is received from these basic utilities in return for how much they pay for them (for example, a functioning laptop). IT tends to focus conversations with customers on IT costs to serve, while the customer often wants to discuss value received for monies spent. This leads to frustration for both parties and is frequently the genesis for customers “going around” IT to identify information technology they have determined will improve their business performance (i.e., “Shadow IT”).

By contrast, high-performing IT functions engage in fundamentally different conversations with their customers, helping them understand when, where, and how information technology can be used to enable value within the organization (meaning, better performance and differentiation in the marketplace). These conversations happen because the function has developed strong capabilities in the following areas:

These capabilities enable organizations to:

• Understand, anticipate, and shape how information technology is used to enable expected financial, operational, and customer performance results
• Offer a relevant and comprehensive suite of information technology services (not tools) that clearly address current and future business needs and priorities and enable differentiated market, customer, and operational performance
• Take full accountability for providing these services across their lifecycles to deliver promised business value in terms of business impact, cost, reliability and functionality

FROM “FUNCTIONAL OWNERSHIP” TO “SHARED OWNERSHIP FOR IT STRATEGY”:

We are still amazed to see IT functions developing a company’s IT strategy and technology roadmap with little to no input from their internal customers.  While this may have been sufficient to provide IT utilities, it is wholly insufficient to develop an IT strategy that can truly deliver value through investments that enable growth, profitability, innovation, and the cost-effective management of IT risk.

High-performing IT functions develop and apply deep capabilities in the areas of:

These capabilities enable organizations to fully engage their customers in:

• Understanding when, where, and why the company should invest in information technology to enable the business to achieve its strategic goals
• Co-developing IT strategies that are rooted in business strategy and the efficient use of financial and human capital to fully realize the benefits from investments
• Regularly reviewing IT investment ROI and adapting the IT strategy to ensure expected returns are achieved

FROM “TOOLS AND PROJECTS” TO “SOLUTIONS THAT DRIVE DESIRED BUSINESS OUTCOMES”:

Traditional IT functions focus on providing tools (vs. business solutions) to their customers. While certain tools are essential to running the business, they alone are insufficient in meeting customers growing needs and expectations, particularly given the level of investment in IT.   This frequently occurs as a result of IT not fully understanding, or helping the customer to understand, their business needs and moving too quickly to implement technology that is not fully fit for purpose. Traditional IT functions also define “success” as delivering an IT project on schedule and budget. Their work is done once the install and roll out is complete, right? We’d bet their customers beg to differ.

Value-enabling IT functions develop strong capabilities in the areas of:

These capabilities enable the function to:

• Fully understand how business processes should perform and how they can be technology-enabled to deliver greater value in the organization.
• Apply their technical prowess in key domains like supply chain, manufacturing, business intelligence, and customer experience to identify technology solutions that exactly meet business needs and,
• Manage the implementation, use, and maintenance of these solutions over their lifecycle to ensure they deliver on their promise of value

Don’t Underestimate the Investment Required to Make these Shifts

Business and IT leaders should not underestimate the investment required to make these shifts, nor the change management required to make them stick.  Some employees will not be able to make the desired shifts, requiring leadership to make difficult talent decisions. Wholesale change may be required in key segments of the workforce, particularly in the areas of business engagement, enterprise and solutions architecture, and service delivery.  Re-equipping the current workforce will most likely require significant investment in a learning and development infrastructure that builds and maintains desired capabilities. In our most recent work with a multinational technology company, we helped them implement an “IT University” that provided development targeted at specific roles deemed most critical to delivering on their IT strategy, as well as general development that all IT employees and contractors could access to acquire and maintain required knowledge and skills.

In our next article, we will explore Business Partnership – one of the most critical capabilities required for IT functions to deliver on their promise of value. We will share our perspectives and experiences on business relationship management within the IT function, as well as tangible actions to re-position the IT function from an order taker to a highly collaborative business partner.