In today’s complex digital world, the journey toward successful IT transformation from slow, legacy technologies, processes, and skills to digital technologies, agile processes, and skills that move at the speed of business is a must.
However, many IT transformation initiatives are hardly, well, transformative. Instead, many companies looking to develop valuable digital capabilities find themselves hampered by inflexible architectures, lagging and unnecessarily expensive legacy IT systems and outdated, sluggish processes.
According to KPMG’s whitepaper, 11 Lessons for IT Transformation Success, true IT transformation consists of a “comprehensive change to an IT organization that cuts across its processes, technologies, culture, and sourcing and delivery models to enable continuous step-change improvements in business capabilities supported by significantly stronger IT capabilities at lower unit costs.”
Barry Brunsman, principal in KPMG's CIO Advisory practice, emphasizes that IT transformation is, at its core, all about an IT strategy that supports a business strategy: “It’s about designing capabilities, sourcing, performance management and other elements of an IT operating model to achieve those objectives,” he says. Overall, IT is moving from being a low-cost provider of technological services to a value driver in the business, adds KPMG US CIO Advisory Lead, Denis Berry: “Business is more sophisticated today and the creative CIO must now align with what drives business value.”
So what predicts IT transformation success versus failure? The KPMG whitepaper, 11 Lessons for IT Transformation Success offers a distinct action plan to help organizations get it right, as well as how they can avoid the pitfalls of transformation efforts.
Support from the C-suite is a transformation must-have
The influence of IT leaders in the C-suite is growing, according to the Harvey Nash/KPMG 2016 survey, The Creative CIO. Fully one-third of CIOs report to the CEO, for example, while more than half sit on the executive board or senior leadership committee. That level of clout will be essential as the IT organization seeks to motivate C-suite interest in IT transformation. 11 Lessons for IT Transformation Success emphasizes the need for CIOs to help clearly articulate a business case for action that definitively links transformation to business priorities and describes the benefits of change as well as the implications of sticking with the status quo.
The ability to get into that game-changing conversation with C-suite leaders, says Berry, depends on the CIO’s leadership credibility and the abilities of his/her team. “If I am an IT shop and perceived as not being sufficient at delivery, or if I have a bumpy relationship with key business leaders, the chance I have to be part of the conversation is severely handicapped,” he says. This is essential to keep in mind because the disruptive nature of IT transformation means the leadership team must be fully on board and committed to the transformation program with a “stay the course” mentality.
Transformation: More just an operating chart
IT transformation requires a plan and a roadmap that align issues of people, processes and technology across both business areas and the IT organization, finds the KPMG whitepaper. In addition, sponsoring executives must balance the transformational program as well as day-to-day priorities — understanding concerns and issues while confidently managing the organization’s effort as well as partners and vendors. But that goes far beyond simply defining a new organizational chart, cautions Brunsman.
“The new IT operating model is more than just an organizational chart,” he says. “It’s about what services you are going to provide, what processes you are using to enable the capabilities the IT organization needs to serve what the business wants.” The organizational structure will fall naturally into place once those questions are answered, he explains: “That’s really the last thing that gets defined.”
Adequate governance, planning, resources and monitoring
No matter where an organization is along the IT transformation journey, it soon becomes clear that the skillset required will be different than what the organization had before, says Berry. “This is especially difficult for large organizations, where the ability to retrain and swap out may be hindered,” he says. The bottom line, however, is that the goal should be to boost the organization’s abilities in order to truly transform the business.
For example, assuring strong governance is often neglected in practice in many transformational programs, but this can result in a failure to keep the right areas accountable and keep program execution on pace. This is true regarding inadequate risk management or monitoring, as well. Without it, an organization may quickly find itself with costly errors, business disruption and a loss of the confidence of key stakeholders.
In addition, planning and execution teams need to have experience in the realm of transformation — so they can use leverage previous lessons learned to help execute success. Finally, many organizations underestimate the sheer time and cost necessary to achieve a successful IT transformation. There needs to be an honest assessment of all the costs and resources needed to get it done, as well as contingency plans that take all challenges and accommodations into account.
Meeting today’s transformation challenges
Overall, there are a number of challenges that are common to many efforts at IT transformation, says Berry, and IT organizations often struggle with the idea that if they had their druthers, they would have started their transformation effort to meet demand that is already there, he continues. “Often, the urgency for change has piled up, where the organization is already at the spot where they need to execute, but then they worry that it can’t be done,” he says.
But it is proper leadership, from the CIO and other leaders, that can truly take a company down the road towards transformation, says Brunsman. “You need the right leadership to bring the right mindset out of people, to get over the attitude of ‘We’ve never done it this way,’ or ‘This can’t be done.’ It’s easy to fall into endless low-value discussions that don’t move the ball forward.”