Is your IT group struggling in the effort to become a strategic partner to the business?

I’ve been observing the efforts of CIOs and IT groups trying to transform their service delivery so that it addresses the strategic needs of the business stakeholders. It’s encouraging that this is happening. But I find that many struggle trying to achieve that partnering vision. Obviously, you can’t just communicate a change and then hope for the best. But that’s often what happens if the right structure isn’t put in place.

There’s an old maxim that if nothing changes, nothing changes. It’s applicable to situations where organizations try to achieve new objectives. Peter Drucker modernized the maxim, advising that “If you want something new, you have to stop doing something old.” And there’s the root cause of the problem in which IT is struggling to reassert itself as a leader in the organization. The organizational structure and philosophies and mindsets must change; otherwise they will hinder the change.  

Organizational structure is a powerful influence on planning, leading and controlling. The structure influences the ease or challenges in change and performance. It can enable being more responsive to change, being proactive rather than reactive. The organizational structure either allows and supports new ideas, new mindsets, new business models … or it gets in the way of achieving objectives.

Diagnosing the problem

Let’s first diagnose the problem so that you, as CIO, can act upon it and remove the impediment to achieving your goal of IT and the business partnering.

What’s at the core of business users’ dissatisfaction with IT? I can answer that question with one word: speed. As I’ve blogged before, business users are increasingly frustrated with the slow pace of the IT department to change according to the business needs.

But the business is also frustrated with the cost of IT services. Companies have been implementing new infrastructure through shared services and IT groups to reduce costs for many years. Cheaper computers and cloud computing, for example. But the fact is although these incremental tactics can change the unit cost of IT (for instance, the cost of storage or the cost of computers), they don’t change the speed. They don’t make IT more responsive to the business needs.

Every CIO and every third-party service provider understands this need to be more responsive. Yet most of them continue to attack this challenge by tinkering with technology tools and how they use the technology. But speed and responsiveness have very little to do with the actual technology; it has to do with the organization delivering the technology and the pace at which it can navigate across IT’s functional disciplines.

Diagnosis: not recognizing that it’s the organizational structure that slows down the speed. So companies keep applying the same techniques and organization structure to the problem of managing IT. As I said at the outset, if nothing changes in the organization, nothing changes in the speed.

Remedy: IT’s structure must change

The remedy for attacking the slow speed is to change the IT organizational structure from one based on functions (such as apps, security, servers, etc.) to one based on services.

When I observe companies that have successfully dealt with this issue, I find that they’ve implemented new organizational structures. Yes, they moved to an elastic cloud infrastructure. Yes, they standardized on software. And, yes, this has incrementally helped them get faster. But what really created a breakthrough is when they reorganized IT into service lines that focused on the specific service, not on the functional services.

This realignment of the organization into cross-functional teams allows the DevOps or as-a-service models to dramatically change the responsiveness with which they are able to apply technologies, the speed at which they are able to develop and maintain technologies, and the ability and satisfaction of the business to use those tools in a dynamic, changing marketplace.

Inconveniently, this is the most difficult thing to do. It’s much easier to buy new technology or migrate a workflow to a cloud environment than it is to change the way a company fundamentally organizes its shared services or IT group and align it by end-to-end business service expertise rather than by IT function.

Reorganizing the structure changes the status quo. It affects the existing management structure as well as the current incentive structures. Furthermore, since companies’ IT metrics have been designed from a functional perspective, reorganizing the structure necessitates building new metrics based on running IT from a business services perspective.

This level of change is very painful for businesses. But as long as nothing changes, nothing changes and companies will get the same unsatisfying results from incremental improvements to functions.