I have spent a lot of time in the #CIOChat discussing digital transformation. But can the IT organizational design and IT internal business processes impede digital transformation? Can IT, itself, become an obstacle to responding to the waves of digital disruption that are coming? This is the question that I recently asked CIOs.
Do IT processes get in the way?
CIOs say that poor processes and organizational misalignment can get in the way. They say both represent barriers to success when transformational work is built upon them. This, of course, is frequently the case and may explain why so many digital transformations fail.
Given this, CIOs suggest that IT processes defined by engineers who don’t understand the business are a bad idea. In general, they believe it is problematic when IT processes do not have the business in mind. CIOs say processes should as a goal always support business goals and value. They say anything else is a waste and for that matter, a business problem.
Some CIOs even question what is an IT process? They asked shouldn’t processes all be business processes? These CIOs say that there shouldn’t be IT processes, only business processes that deliver measurable value through the combination of people, process and technology. One CIO, however, countered by saying functional units operate on unique internal processes. This CIO claimed an oil refinery has refinery processes and an accounting department has accounting processes.
CIOs, nevertheless, agree that IT products and service delivery must support the quest for business agility. For this reason, IT organizations need to be designed around agile processes. They need as well to employ business analysts and enterprise architects. CIOs suggest, importantly, technology is transitional—it shouldn’t be static.
CIOs claim that IT leaders need to be careful to recognize the difference between an IT department run correctly and an IT department that is broken. One CIO said here that their favorite mantra is that technology is not the destination, it’s the vehicle and you are always in trouble when this is not the case.
Overall CIOs believe that poorly designed processes regardless of type get in the way of digital transformation. Sometimes, CIOs say IT organizations can reinforce bad processes by not working with business partners to seek improvements. It is all too common for IT to look at something new that is designed and implemented perfectly and measure it against something old and poorly done.
Where do IT processes slow down digital transformation?
A lack of business alignment across IT functions, say CIOs, is a starting point. Where there isn’t common vision, decisions and forward progress, things can get muddled or at least significantly delayed. This is why CIOs believe it is important to balance leadership vision and corporate governance. Bad processes, they believe, are just bad regardless of whether they are IT or business processes. With this said, CIO suggest appropriate checkpoints can ensure there is appropriate governance.
Clearly, when processes are isolated, siloed, or not aligned to business goals, there is the problem. CIOs say the first sign of this occurs when IT becomes perceived by the rest of the business as the people that say “no.” CIOs suggest that well-functioning organizations balance governance that supports digital experience and governance that slows it down business improvement unnecessarily. They suggest the latter is far too common. CIOs say that some of this can come from executive over-exuberance. But they say it is critical to understand digital transformation is not solely about technology.
Additionally, CIOs say that staff reward systems can inhibit business progress. This is especially the case when there is a prevalence of my stuff thinking. In other words, the concept of “my stuff” vs. “my team’s stuff” vs. “the company’s stuff.” Fixing these attitude fosters the collaboration needed for real business transformation.
Meanwhile, process latency in legal and regulatory compliance can slows progress as well. Key stakeholders must be engaged before project work starts. Another problem is IT resource alignment. This all by itself can slow things down. Pragmatically, it can be challenging for CIOs as continuous improvement/process redesign competes with resource pools for delivering new business value. CIOs recommend, therefore, starting small but persistently moving the needle.
Do CIOs need to rethink IT business processes to enable digital transformation?
CIOs said absolutely. Digital transformation by nature is disruptive, if you are not rethinking processes, you are establishing business roadblocks. CIOs need to do the things that will allow them to support modern business demands. They need to support fast adoption and release of products, markets and lines of business.
CIOs say that IT leaders need visibility and authority in the organization to align IT and business processes. This is one of the reasons a CIO should report to the CEO and thereby, have a seat at the table. A lot of this goes back to the notion of IT leadership running IT with a similar strategy to the CEO running the business.
At the same time, CIOs say that business processes invariably involve people, skills, projects and infrastructure. CIOs need to provide a platform where IT processes are transparent and support change enablers. If IT responds to the rest of the business correctly, silos won’t happen, common vision will exist, and the correct people will be treated like customers. And most importantly, communications will occur naturally.
CIOs believe that their platforms need to be flexible and let the business adapt while mitigating data risks as much as possible. Too much/too little control creates chaos. CIOs need to encourage and help their business partners rethink processes. Transformation, however, accomplished, must not occur with an organization by simply piling complexity on top of existing complexity. Some CIOs even talked about the half-life for corporate IT assets/processes. Often IT organizations simply pile onto existing complexity year after year. Processes related to the design and delivery of technology services in support of business outcomes need to be iteratively leaner and faster to support just-in-time-to-market and demand pressure. This is an inherent part of running an IT organization. IT processes should be on the same transformation time table as everything else.
Does service management need to be rethought?
CIOs say that almost any solution can be used in the best way for the job. CIOs think many service management strategies can apply when fit properly to demand. And while some CIOs think service management processes need rethinking, they say this doesn’t mean they aren’t valid.
CIOs believe that a good IT management framework can be helpful but should never become too rigid. Otherwise, they become less relevant. They just be need to updated continually in the language of ITIL Version 3. CIOs, in general, believe that service management matters. They say that having service management well-defined is even more important these days. CIOs believe, however, that service management must include outcomes and measures that the business cares about. Service management, also, must support customer-centric outcomes.
While ITIL can seem cumbersome, CIOs say in many contexts they are vital for organizations serious about improvement. These CIOs say even if all you do is use the ITSM outline to capture functional risks and communicate options, this is a step forward. There is value in integrating or distribute IT process details like tasks, durations and perquisites, and required resources to business units.
Does the approach to responding to business initiatives need rethinking?
CIOs say it depends. CIOs suggest, in an ideal world, IT is in the business and their response needs to be mirrored in budgeting and organizational vision and goals. The CIO’s job should be to find the best options within the context of the business opportunity. They need to not just respond to the initiatives, but instead be an integral part of them.
A common problem for IT organization is waste and rework before delivery even starts. For many CIOs, this is the low hanging fruit. Joanna Young (former CIO of Michigan State University) said here that she has yet to find an IT organization that isn’t spending too much time on estimating, planning and resourcing. She calls this process “IT Tetris.” At the same time, Joanna believes if a CIO is responding to business initiatives today, they are too late.
In today’s world, CIO should be at the table when the initiative is being dreamed up. They should be helping to shape it with solutions that best accomplish business goals. Saying this a different way, if the approach is sitting down, gathering requirements, and designing a solution then the approach needs to be rethought. The focus should from waterfall project creation move to product creation.
CIOs are clear that the IT value stream needs to be aligned to the business. And it needs to have supporting processes defined that do not hinder business transformation. Without this CIOs will find their tenure fall short of its potential.