Does Your IT Function Really Matter? Part IV

Re-Aligning IT’s Operating Model and Culture to Deliver Value

By Katie Hynan

We hope you have enjoyed our series on how to increase the value of the corporate IT function.  Our final article focuses on the critical need for IT to re-align its operating model and culture to deliver this value.

“Culture Eats Strategy for Breakfast”

We are all familiar with this famous phrase widely credited to management guru Peter Drucker.  Drucker believed that a company’s culture will prevent the successful implementation of its strategy if the two are not compatible or aligned. In our experiences working with IT, we have seen Drucker’s notion confirmed.  Further, we find that driving changes in operating model and culture in IT are quite difficult – perhaps more than in other functions – given the significant change required to move IT’s mindset from delivering technology to delivering business value.

In our previous articles, we talked about the need for IT to:

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 valued business partner

These changes are significant and, at their cores, require a fundamental shift in operating model and culture.  Unfortunately, neither are well understood and, importantly, are considered to be discrete and independent.

Operating Model and Culture—the Hardware and Software of IT

It is undeniable that operating model and culture are inextricably linked – just as hardware and software are – with the latter driving the former to operate as intended.

Commonly, we see organization transformations on a path to failure by limiting focus only on operating model (i.e., hardware) and, specifically, only one aspect thereof: organization structure.  Changing your operating model requires fundamental shifts in: the work you do (and do not do); the business processes used to manage work; how, when, and where people collaborate and interface to get the work done; how decisions are made; and what is viewed to gauge success or failure.

In the past 15 years, a well-respected body of IT knowledge known as IT Service Management (ITSM) has emerged, providing us an excellent guide to understanding the changes in operating model, beginning with fundamental changes to business process (e.g., ITIL) that IT functions must implement in order to provide value-added services.  Using ITSM as the basis for how IT ‘goes to market’ will enable the service management focus producing the outcomes business partners require by:

• Building deeper business partnerships
• Better aligning solutions with business capabilities and requirements
• Improving speed, agility, and end-to-end service delivery through redefined and efficient front-end processes
• Focusing attention on a targeted portfolio of competitively priced IT services
• Actively managing services over their lifecycle and retiring them when they no longer effectively deliver optimal business value

It is important to note that ITSM and ITIL are not blueprints or templates, but references and guides.  Each organization must tailor them to fit their respective business needs.

While changing IT’s operating model is requisite, it is also wholly insufficient to fundamentally shift how IT engages with and serves its business partners.  CIOs need to take a hard look at their organization’s culture to shape and shift the mindset, values and beliefs of their organizations to fully support a maniacal focus on value.  Specifically, IT leadership – starting with the CIO – needs to answer the following:

1. What do we as leaders pay attention to, measure and control? Is this aligned with and reinforcing of a focus on value, business partnership, shared ownership and ROI?  Do we “role model” and reinforce a business-first mindset vs. a technology-first mindset?
2. How do we react to critical incidents and organizational crises (of which IT sees many when the network goes down)? Are we role-modeling and reinforcing the fundamentals of good process management and working as a single-service function? Or do we reinforce old ways of working that reflect provincial behavior across traditional IT silos?
3. How do we allocate formal and informal rewards? Does this reinforce a high level of focus on value, service ownership and proactive (vs. firefighting) behaviors?
4. Who are we recruiting and promoting? Do these decisions put people in place who possess and demonstrate competencies and skills required to work in new ways, or do they reinforce old ways of working?
5. Are we expecting and reinforcing thinking and behaviors that demonstrate IT’s shared ownership of business results or reinforcing an old culture that threw technology “over the wall” after the project was completed?

Final Thoughts

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 the marketplace. Delivering on this expectation requires IT leaders to fundamentally transform the function, and the simple fact is that it is hard to do!  Our closing words of advice to both business and IT leaders:

1. IT really does matter, but only if the function and its leaders choose to transform themselves to focus on and deliver tangible business value
2. To accomplish this shift, fundamental changes in both mindset and skillset are necessary, and this must start with and be driven by the CIO. Patience, self-reflection, and investment are needed.
3. Don’t underestimate the importance and difficulty of shifting operating model and culture. Remember, they are inextricably linked and must be aligned in order to have any chance of successfully transforming the function.
4. Leadership fortitude is essential. Not everyone in IT can or will choose to make the journey to transform.  Hard choices must be made to ensure you have the right people in the right jobs to drive the sustain the change.  Also, business partners may not initially embrace the transformation as it may be perceived as representing loss of autonomy and control.  To overcome this resistance, help them understanding and focus on the value.

We hope you’ve enjoyed our series on IT transformation, and invite you to share your thoughts, perspectives and experiences on the topic.