Next Generation IT Operating Models – Part Two: Integrate

As organizations tackle the challenges of digital transformation, substantial technology enablement is a must. But while customer-facing point solutions such as mobile apps and social media help achieve short-term gains, sustainable competitive value and business value comes by going much farther: That is, fully integrating across the front, middle and back offices to create a truly digital and connected enterprise.

In Part One of this two-part series on Next Generation IT Operating Models, we discussed the importance of IT acting as a broker to harness and deliver digital capabilities and solutions from multiple sources, migrate to continuous delivery practices and facilitate linkages to evolving ecosystem. As companies continue their digital transformation journey, detailed in KPMG’s new report, The future of IT: Next generation IT operating models — Part two: Integrate, the integration with existing systems and data will become the key to unlocking business value, by providing a seamless customer experience as well as a holistic view of customer data.

“I think there’s a big recognition that IT has to meet business needs through a connected enterprise, so that the data flows, the customer experience flows and the supply chain systems can fill orders properly,” says Marc Snyder, ‎managing director with KPMG in the U.S. “You can’t simply put a coat of paint on the front-end systems; they need to be connected all the way to the front, middle and back office to enable the entire enterprise to deliver the promised customer experience.”                                                           

Additional important issues in an integration include things like preserving architectural integrity, identity and access management, legal and regulatory compliance. Snyder explains: “It’s really about IT professionals looking holistically at their portfolio of systems to be sure external solutions are connected appropriately, enterprise standards are abided by and the solutions are cost-effectively supportable.”                     

Architecting for Optimal Integration                                                           

Today, in a digital era where speed and agility are key drivers and participating in ecosystem is an increasing source of competitive differentiation, there is a shift towards API programming interfaces that are less expensive the set up and maintain, and allow more nimble responses by the business. “It creates a much easier environment for other parties to connect to the organization,” says Snyder. These open, adaptable, and modular architectures are optimized around speed, scalability, and reliability to facilitate innovation.

A major step to enable the integration role includes modernizing existing core applications to reduce integration barriers and complexity — this facilitates the use of new open architecture for new development and integration of capabilities based on agile methods and continuous delivery practices. Finally, a center of excellence should be organized to educate and advise development teams across the enterprise on integration methods, tools, and best practices.                                                                                                    

Key Players for the Integrate Role                                                           

In all three roles in the Next Generation IT Operating Model — broker, integrate and orchestrate — new positions and skills are required, while others need to evolve. Key players in the “integrate” role include business analysts and developers who remove core systems as barriers to innovation and develop an API repository and governance; integration specialists and data engineers who promote the use of standardized methodologies and tools; and, perhaps most importantly, integration architects who create an open, flexible architecture that facilitates innovation and integration.                       

“Architecture is being seen as an increasingly more essential capability, as more and more external solutions are considered and acquired,” says Snyder. “There is an increasing emphasis on architecture, and according to the Harvey Nash / KPMG 2017 CIO survey, it’s one of the most difficult skills to find now.”

Snyder adds that cybersecurity is also an increasingly important part of the “integrate” role. “It’s one of those things that in the past only garnered attention when major breaches hit the newspaper headlines,” he says. “This is changing and cybersecurity is starting to take a major role as an essential consideration up front and as solutions are integrated.”

Important Steps Toward Integration Success            

Changing the IT operating model is an enormous challenge for organizations that is complicated by the need to support existing applications and infrastructure during the long journey of transformation. That means IT will spend time operating with a hybrid model as legacy applications are retired, modernized or replaced and as on premises solutions are migrated to the cloud. Over time, existing skill sets need to be upgraded or acquired, and stakeholders adjust to new approaches.                                               

As a first step, according to the KPMG report, organizations should begin by assessing current staffing and skills against the requirements of the Integrate role and conduct a gap analysis. Key questions to ask include:

• How can your existing IT staff be developed to take on new roles and what           skills/training will they need?
• How can IT create opportunities to recruit internal candidates from the                   business?
• How will your talent management capabilities have to change to ensure that    you have access to the needed skills both internally and externally?
• How can you satisfy the most immediate needs while you build your                    capabilities?

The second step is to assess your core systems and integration capabilities. Do you have in place the expertise, resources and committed funding to evaluate and modernize core systems with an emphasis on integration with innovative new capabilities? Key questions to ask here are:                       

• How will emerging technologies integrate with existing infrastructure and               applications?
• How will you acquire the expertise in agile methods, API development, and           integration architecture?
• How can you develop strategic relationships with your vendors, partners and      independent developers?

The responsibility falls firmly on the CIO to drive the change in the operating model in their organization, Snyder says, including shifting the organizational mentality around architecting for agility — with an understanding that it might cost more initially, but in the long run will be less expensive and have the right plug and play mechanisms. “It’s a matter of survival for them and their organization,” he says.