by Beth Stackpole

Restructuring IT for the digital age

Apr 29, 201911 mins
Digital TransformationIT LeadershipIT Strategy

IT leaders are remodeling IT and morphing culture to increase agility and emphasize customer centricity in the wake of digital business.

scaffolding building wall restructuring it remodel rebuild copy
Credit: metamorworks / Roberto / Getty Images

As Novant Health ramps up its digital health agenda, its IT organization might look a little foreign to the average CIO. Rather than the traditional structure that aligns IT practitioners to specific functional areas like human resources or supply chain, technologists like programmers and systems architects are a shared resource pool that floats between projects based on need.

Perhaps the biggest change is team makeup: Practicing clinicians, including pharmacists and physicians, are embedded with programmers and infrastructure specialists to serve as product owners that drive future offerings and services. “It would behoove most technology leaders to start thinking about leading on digital products by organizing like a product team,” says Angela Yochem, executive vice president and chief digital and technology officer for the healthcare provider made up of 15 hospitals and more than 600 physician practices.

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Yochem’s definition of a modern IT structure includes team members who are representative of customers or the people engaging customers. For example, a consumer banking IT team should include a teller or bank manager, she contends, and a retail enterprise should enlist a store manager as part of an IT delivery team. “Being a business leader means understanding the customer, and you can’t do that if all you’re doing is wearing an IT hat,” she explains. “You have to create a team that includes some unconventional players.”

As CIOs take the reins on digital transformation, many, like Yochem, are remodeling their IT organizations to reflect a greater emphasis on customer centricity and to increase an agile response to shifting business needs. The pressure on IT leaders to evolve their organizations for the era of digital business comes straight from the top: According to the 2019 State of the CIO survey, CEO’s top priority for CIOs is to lead business and digital transformation initiatives, cited by 38 percent of respondents. In addition, 88 percent of respondents to the survey believe CIOs are more involved with leading digital transformation efforts than any of their business counterparts.

As part of that dynamic, 81 percent of CIOs are embracing an expanded role, taking on new responsibilities in areas such as data analytics (64%), operations (43%), business development (38%), and customer service (32%), the 2019 State of the CIO research found. CIOs, 91 percent of whom see their role as becoming more digital and innovation focused, are also increasingly being tasked with creating new revenue-generating initiatives around products and services, which warrants a different approach to IT organizational structure and staffing.

“The whole concept of traditional IT is fast expiring,” says Satya Jayadev, vice president and CIO at Skyworks. “When you think about traditional IT, you think about operations, ERP, infrastructure management, and custom development. Today, there’s a paradigm shift in the business’ expectations of IT. They look at IT as more of an advisor or technology enabler of innovation. It’s more about how to infuse technology to solve my problem.”

Business-savvy IT

Eight months into his tenure at Skyworks, Jayadev has taken a number of steps to reinvent the firm’s 110-person IT organization. While the team still maintains ownership of architecture strategy, most of the IT organization’s operational responsibilities — management of firewalls, networks, and storage — have been subbed out to managed service providers and orchestrated based on service level agreements (SLAs), he says. Another big shift is the creation of high performance teams that include business relationship managers, who have as much deep-rooted business knowledge as they do technical domain expertise, and who currently outnumber the ranks of traditional technologists. These business relationship managers are embedded in different functional areas such as supply chain, finance, or operations and play a critical role in day-to-day collaboration and decision making.

“Our core IT leaders are more business savvy than tech savvy,” Jayadev says. “If you walk into a meeting, you can’t differentiate between who is business and who is IT because everyone is speaking the same language.”

At Novant Health, IT restructuring is as much about promoting customer centricity and creating greater synergy with the business functions as it is about increasing the organization’s agility. Traditional IT organizations are architected around a solution — for example, an HR IT team or a supply chain IT group — and that structure hampers the ability to quickly switch gears to pursue new markets or digital business opportunities, Yochem says. “The problem with old-school IT is it can’t flex or pivot quickly enough — it’s not optimized for change, but for stability,” she explains.

To inject more agility into IT, Yochem has fashioned the organization in the style of a tech company product team, complete with UX specialists and engineers responsible for journey mapping and third-party partnerships. Separate from the product delivery teams are competency areas in disciplines such as quality assurance (QA) and testing, which can be deployed and redeployed across the various product delivery teams and initiatives as needed — a model that aids in scalability and greatly minimizes, or eliminates, the quintessential IT backlog.

Novant Health’s IT organization has also moved away from an old-school pipeline where technology projects are ranked against each other to an investment portfolio approach, in which projects are prioritized based on potential outcomes. “A product-centric approach allows us to manage the evolution of internal and external facing products over time optimally,” she explains. “It lets us shift investment faster than we could before.”

Rounding out Novant Health’s new IT structure is experimentation services, designed to ensure faster adoption of new technologies while giving the company an ability to invest in emerging solutions to keep it on the fast track. The experimentation services, modeled much like a standard “as-a-service” model, allows the health organization to understand where opportunities may exist — for example, the recent exploration of a video-on-demand service for virtual care delivery — while ultimately allowing it to change priorities with minimal resource and budget repercussions, Yochem says.

With the media industry facing major digital disruption, AE Networks is also on a mission to redesign its IT organization to break down silos, increase agility, and enable a more customer-centric focus. Under the direction of Chief Technology Officer Ishit Vachhrajani, the IT organization now comprises three vertical business technology areas that fully own delivery of solutions and partnerships in sales and marketing, content and corporate systems, and enterprise media solutions. Those three vertical business technology groups are supported by a single, horizontal cloud and DevOps team that has oversight of the full IT stack, including cloud architecture, enterprise-facing products, and business intelligence.

“The business technology partners’ role is to understand the trends and build deeper relationships with the business and they’re supported by the horizontal team which has deep expertise in technology,” explains Vachhrajani, adding that the shared team structure also encourages cross-training and the ability to redeploy assets to deliver services more quickly.

Culture and mindset shifts

Beyond any new organizational structure, a mindset change and cultural shift are also essential for reorienting IT for the digital business era. Traditionally, IT has measured its success based on whether a particular application went live on its target date or if it was launched within budget — today, it’s about the business outcomes you are trying to achieve, Vachhrajani says. “The benefit realization is not about making sure you go live with a product or solution, but rather that you are achieving key business goals such as productivity or cost savings,” he explains.

In fact, the single most important role IT plays in an organization’s digital transformation is facilitating innovation by identifying which parts of the business could be digitally transformed, according to 32 percent of respondents to the 2019 State of the CIO survey. Moreover, 59 percent of survey respondents lean on IT as a strategic advisor to help proactively identify business opportunities and make technology recommendations. This is in contrast to 26 percent of respondents who rely on IT primarily to identify emerging technologies that could accelerate digital transformation.

At AE Networks, Vachhrajani has formed a dedicated change management practice to underscore the new mindset and cultural shifts. The traditional user requirement process has been replaced with business requirement sessions designed to engage business stakeholders in a fun environment like attending a movie or ballgame so the time spent planning and strategizing doesn’t feel boring and onerous, he says. There are also five cross-functional teams (culture, communications, fun, rewards and recognition, and education) staffed by people from every level of the IT organization to promote the changes and buoy the new culture. In addition, every new project, be it a global sales system or content management initiative, is supported by its own branding effort, including creative content. “A one-minute video about a new product offering is going to resonate more than a three-page user guide,” Vachhrajani explains.

La-Z-Boy also sees cultural change as instrumental to recalibrating IT for digital transformation. For this organization, which is still steeped in traditional IT organizational structure and practices, the current focus is on building an agile mind set. “We are developing a culture that allows people to take educated risks and to fail fast,” says David Behen, the company’s vice president and CIO. “It’s not as easy as it sounds.” To do so, Behen has instituted a new role of business relationship manager and is sketching out what the IT skill set of the future looks like without trying to intimidate current staff.

As companies move forward with IT transformation, they should know there isn’t one mold for building an organization primed for digital business. Depending on the industry or the individual organization, there will be a need for different structures and different skill sets, notes Rohinee Mohindroo, a veteran CIO and currently co-founder of dyjit.

One consistent practice, however, is the need to institute fluidity in terms of how the work gets done. Traditional silos and handoffs need to be replaced with processes that allow for greater agility and scalability, and the lines between IT and traditional functions such as HR and legal need to blur as well, Mohindroo says.

“It’s not just IT that needs to change — all the supporting functions around IT need to evolve,” she says. “You can’t advance the IT organization in skills and talent management if your HR team isn’t up to it, and you can’t do things from a data and artificial intelligence (AI) perspective if the legal team isn’t up to par. The lines between IT and traditional functions within an organization need to get a lot more fluid as well.”

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