Rising customer expectations fueled by the consumerization of IT has led to a digital arms race by companies to put the customer first by developing new business models, re-engineering business processes, employing social media and using analytics to increase customer engagement and roll out personalized new products and services.
Many of the initial solutions were driven by marketing, often bypassing IT to work directly with solution vendors. This led to reports of the CIO becoming irrelevant or superseded by the Chief Digital Officer (CDO) or Chief Marketing Officer (CMO).
Without a doubt, the CIO and IT will play a pivotal role in transforming their organizations into fully digital enterprises … but not without transforming the IT function. Digital transformation is a huge opportunity for CIOs but it starts with IT transformation – and time is running out.
Begin by transforming the IT operating model
The IT organization has an important role to play in digital business transformation, but not in its traditional capacity as a builder and operator of custom solutions aimed at improving the productivity of people and the efficiency of processes. Instead, IT must deliver value by enabling growth and directly impacting business outcomes. Furthermore, the pace of change is much faster with time-to-value as a key metric. The old plan/build/run model of IT development and delivery is not capable of meeting the demands for innovation, flexibility, and faster delivery cycles that are the hallmark of digital businesses.
If IT is going to meet the challenge brought on by digital disruption, a new operating model is required that can leverage emerging technologies and sourcing alternatives to satisfy these new stakeholder expectations.
This operating model is built around new capabilities to help the business rapidly and confidently identify and acquire IT-enabled solutions that deliver high quality and optimal business value at competitive costs. This next-generation IT operating model encompasses three new ways to think about the role of the IT function: broker, integrate, and orchestrate.
Broker, integrate, orchestrate
Rather than a builder, IT functions as a broker bringing buyers, e.g., customers and stakeholders, together with sellers, e.g., service providers, to solve a business problem. IT brings its knowledge of the market, technologies, and vendors together with its deep understanding of its stakeholders’ needs to help the business select the right solution and to also proactively bring IT-enabled innovation opportunities to their attention.
As IT brokers solutions from multiple sources, its focus shifts from building to integrating the internally or externally sourced services with each other and with existing data and services to make them usable. Additional points of integration include architectural integrity, identity and access management, security, legal and regulatory compliance, disaster recovery, and business continuity compliance to name a few.
In a world where services are multi-sourced and the supply chain becomes complex, IT’s responsibility changes from primarily delivering services to the end-to-end performance of services. In its third role IT orchestrates the delivery of services and ensures that performance, cost, and quality are meeting or exceeding expectations and the business is getting value. IT’s role is to make this complexity invisible to the business.
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CIOs have a short window of opportunity to take the leadership position in this transformation and maintain influence over technology acquisition, deployment, and spending. Running IT as a business is an essential element for disciplined execution of the Broker/Integrate/Orchestrate operating model. If IT is not perceived as being a transparent, credible, and reliable provider of services at competitive prices, then it is doubtful it will succeed in making the transformation.
Cloud technology has matured to the point where cloud-based alternatives, either public, private, or hybrid, are viable for most situations. CIOs need to embrace the cloud and implement a cloud governance framework and defined process for leveraging the speed, agility, and cost benefits inherent in cloud technologies.
The business is looking for IT not just to support innovation but also to be a source of innovation. With the consumerization of IT, many IT organizations have found themselves behind their users in adopting new technologies. IT needs to invest in research and development capabilities to evaluate emerging technologies and support joint pilots and POCs with the business. IT needs to get ahead of its customers and lead, not follow when it comes to exploiting technology.
Finally, IT will need to develop core competencies around sourcing and vendor management, marketing, pricing, and customer service to name a few. This will require a coordinated approach to talent acquisition as well as an investment in training to develop internal candidates. Make talent management a high priority to beat the clock in this race!