Why It’s Time for IT to Reinvent Itself

Why It's Time for IT to Reinvent Itself

 

More IT departments are moving to reinvent themselves, but experts advise the changes must be strategic and holistic.  Such a strategy, they say, will ultimately deliver better IT results and better business results.

The IT departments that are still trying to figure out how to handle the increase in citizen developers and non-tech senior leaders becoming more involved in their operations need to think about how they can be more collaborative while leaving behind outdated practices. If not, they could be considered outdated themselves by the organization.

That may be a hard pill for IT to swallow. After all, IT has been a trailblazer for a long time – how could it ever be considered outdated?

But as more organizations come to understand that digital must be a core part of their strategy, it will transform the way that senior leaders look at IT. That means that if IT doesn’t transform the way it looks at itself, it won’t be competitive and could lead to its reinvention being put into other hands.

In a recent report, McKinsey & Co. finds that digitization is changing the demands on IT in several ways, including a need for increasingly sophisticated technology, greater IT-delivery performance across-the-board and being prepared “for much greater business engagement from senior management.”

This increasing interest by higher-ups is driven by the fact that “the value at stake is much greater than before: up to 40% percent of revenue, 20 percent of costs, and sometimes the business’s very survival,” says the report from Henrik Andersson and Philip Tuddenham.

Charlene Li, who is a leadership and technology expert, says the writing is clearly on the wall and IT needs to be part of the solution.

“I know there has been pushback from IT. They say, ‘Oh, now we’ve got all these people (senior leaders) showing up and asking stupid questions. Or, they say: ‘You’ve trusted us all this time. And now you’re acting like you don’t trust us?’” she says.

At this point, Li says it’s critical that senior leaders understand how uncomfortable IT may be with the changes being made, and “silos” need to be put aside so everyone in an organization can better understand the core mission and why it’s important to focus on aligning IT with other departments.

“Alignment doesn’t just happen overnight,” she says. “Your senior leadership team has to be ready to listen to everyone or it’s not going to happen. Digital transformation isn’t going to happen.”

The rise of citizen developers

Another challenge for IT today is the rise of citizen developers. While non-IT employees tweak existing technology to come up with solutions to fit their needs, IT complains that it creates more headaches for them. But citizen developers complain they can’t wait for IT to find a solution to their problems months from now and IT must deliver faster responses – or be prepared for citizen developers to find their own way.

Again, Li says that IT needs to understand that there must be changes and new collaborations, such as understanding that citizen developers are here to stay. “The one-size-fits all days for IT are over,” she says.

In addition, these citizen developers must be part of any conversation on strategy being held by senior leaders, she says. The challenge will be meeting the conflicting needs within the organization, providing flexibility and aligning various players to meet the organization’s strategy, she says.

The McKinsey report agrees with Li that there can be no “blanket template or approach” in a digital transformation, as various organizations will require different strategies.

Still, it does provide a blueprint for organizations, outlining critical elements that are necessary if IT is to adapt to the new digital world. Among those guidelines:

  • Get everyone on the same page. There needs to be a clear, central agreement on the priorities for capturing value from digital. One way to do that is through a digital center of excellence that sets a fact-based digital strategy and handles competing priorities across various business units. Li says these centers can work as long as they’re strategic with senior-level involvement.
  • Recruit new IT talent. While some organizations may believe that they can’t compete with leading technology companies or startups, the report cites a global retailer that opened a rebranded development center in Silicon Valley to do just that. By promoting a start-up culture and acquiring start-ups, it showed a commitment to a new way of doing business.
  • Have a flexible workforce. If demand shoots up, is the organization ready? Organizations need to have vendor contracts in place that allow them to get more people on board without a lengthy bidding process. In addition, organizations need to have ways to quickly tap into specialized talent if necessary.
  • Set up building blocks. When IT can create and use stable services such as pricing and customer data to add to innovative components, it helps deliver more rapidly on “unpredictable requirements.”
  • Keep the infrastructure lean.  Growing consumer demand requires lean infrastructure operations and an elastic, cloud-based infrastructure. Without those elements, rapid time to market and scaling will falter.
  • Limit data pollution. To maintain high-quality data, consider a joint business-IT program that evaluates priority data, data quality and solutions for data pollution. The report says that one bank undertaking such action identified $800 million in potential benefits from improving its data. 

One of the challenges in undertaking an IT overhaul is that any company is going to want to see benefits quickly, but that can be tough when looking at the huge changes most organizations require to accomplish the reinvention, the authors say.

That’s why the most successful transformations take a two-speed approach, “creating a new, high-speed IT function that sits alongside the legacy IT function,” they say.

Under such an approach, the high-speed IT function zeros in on a couple of high-value business targets, which takes about 18 months. Then, it can be scaled to the rest of IT, they explain.

 

 

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