The Need For a New IT Operating Model: Why Now?

Takeaway: IT Must Learn to Leverage ‘Shadow IT’

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As companies seek to drive real business value through digital transformation, now is the time for IT organizations to change their operating model to increase speed of delivery, reduce costs and to target business priorities, according to Barry Brunsman, principal in KPMG's CIO advisory practice. Digital transformation, he explains, requires a connected enterprise based on the agile delivery of new capabilities that allow teams to move quickly and win in the marketplace, as well as an integrated front, middle and back office.

“This requires a new way of delivering IT,” says Brunsman. “The traditional form of technology-enabled business change, including years of implementation, doesn’t work in this environment.”

However, IT still has to consider how to provide solutions at scale, which is a complicated challenge, he adds. “On the one hand, you can invest in a couple of areas such as analytics or automation and build a backlog of opportunities to leverage against, with the idea that you will learn quickly from mistakes and continue to improve,” he says. “There is some truth to that, but that model won’t scale, it’s a small initiative.”

The IT organization needs to consider a model that allows them to both take advantage of quick wins as well as build institutional scale around new capabilities. “We really need the purposeful selection of opportunities as well as the ability to manage the delivery of those opportunities,” Brunsman says.

A new next-generation IT operating model, that breaks down technology silos and increases the use of agile methodologies, needs to be designed together with profound changes in capabilities. The bottom line is, IT needs to fundamentally change in order to be effective participants in digital business transformation.

“This used to be too big a bite that involved gigantic organizational change,” Brunsman says. “Now, IT needs to look at their capabilities and prioritize relative to what the business needs.” The idea of business and technology being distinct from one another is not the case anymore, he adds. “In general, business is often two or three steps ahead of IT capabilities.”

One classic example, he explains, is when the business announces data analytics as a corporate strategy item, but IT hasn’t been involved in the discussion. “The business has already started, and IT is getting left behind,” he says. A better strategy is to partner with the business: This requires that IT identify what is needed to build the analytics capability quickly and get to scale. “If IT can be that partner that helps the business navigate risk and move quickly, that brings them to the table in other areas as well,” he says.

This is an important mindset shift for IT, which in the past has put a negative spin on this kind of “shadow IT.” 

“IT has to put itself in a place to help enable the speed of change the business needs and have the conversation with business partners,” he says. “It has to about ‘help us help you.’ ”

The reality, Brunsman adds, is that business teams doing technology development “don’t know what they don’t know, which for IT, is a chance for a win-win.”

Does your IT operating model enable your business? To learn more about how to develop an effective IT strategy that works to achieve your business goals, click here.

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