What are the key challenges that nowadays every CIO or IT leadership team face for succeeding in their own organization into their organization in order to bring value and effectively support the corporate strategy and needs?
Challenge #1: Business Strategy is fast changing and IT must understand what the Business Strategy is and how to support it in timely fashion.
A number of key business drivers have shifted the emphasis in business terms and therefore in the way that IT must respond, such as:
- mergers and acquisitions which require a growing challenge of integrating disparate businesses
- e-business which has introduce new ways of working
- outsourcing and the new complexities and issues that this brings forward
- users that are becoming increasingly informed, demanding and selective
- parties involved which have been extended from internal users to external partners and suppliers
- deregulation of the new economies
However, even if business is the key driver for IT; it is astonishing to notice how many IT department employees do not know what their company business strategy is, beyond few high level statements. They have no idea of context they move in and no sense of how the strategy has been shaped by the competitive landscape.
This is very similar to what Richard Feynman faces when took over leadership of a team of mathematicians working on critical research for “the bomb”. He founds that the team, due strict to confidentiality policies, had no knowledge of what it was working on as a whole; each member of the team was given a problem, and each took some three months to solve it. Feynman insisted he get permission to tell his team what it was working on and after the team members were aware of this, their productivity increased to three problems a month!
Knowing the context provides motivation as well as a mechanism to make more informed choices. This business context and directions must be understood quickly, indeed the great challenge for IT managers today is to move around in the globalized world of the economy in which the rules and dynamics are in perpetual and quick evolution.
Challenge #2: Information technology is becoming more and more a source of competitive advantage and an enabler for innovation and new business models.
As Nicholas Carr states in his famous article “IT Doesn’t Matter”, what makes a resource truly strategic (meaning to be the basis for a sustained competitive advantage) is not ubiquity but scarcity; you only gain an edge over rivals by doing something that they can’t do. The core functions of IT (data storage, data processing, and data transport) have become available and affordable to all; they have begun to transform them from potentially strategic resources into commodities; they are becoming costs of doing business that must be paid by all but provide distinction to none. This means that while the world becomes more digitally transformed and connected, companies need to reduce the percentage of budget spent on keeping the lights-on and shift spending to the top business priorities; it’s no longer sufficient to simply keep the company up and running.
In order to remain relevant in this new environment, organizations must be able to implement the latest technologies quickly, and ensure that what they implement is engineered to work with the entire technology stack.
Consequently IT Departments need to evolve from an organization structure which supports the business units in automating their processes and channels into an innovation task force which can propose systems and technologies which should enable new business models or products/services. Although CIOs were traditionally hired to focus on operations and cost reduction, the need for an organization to drive innovation has created a critical new role for CIOs which is more focused on innovation and growth. CIOs are uniquely positioned to develop and drive innovation, influence cultural change, and deliver the innovation strategy.
In a nutshell the role of the CIO must evolve from being the Chief Information Officer to being the Chief Innovation Officer. In doing this IT Strategy play a key role in properly planning the systems evolution in order to keep into consideration emerging trends and technologies and also manage strategic principles (like flexibility, manageability….) which ensure for unplanned model to be accommodated in the future.
Reducing IT complexity to free-up time and budget for proposing innovation is only part of the solution; indeed many IT organizations have been culturally attuned to resist to new ideas rather than to embrace innovation. True innovation requires the opposite mind-set and a cultural step-change which is able to shape a new organizational and operation model.
Challenge #3: Compared to other company organization departments, IT department has more challenges because it have to interface with each of those different business functions providing solution which harmonize different, and sometimes competing objectives and needs
Let us consider a business comprising of a number of distinct organization units: Product Development, Manufacturing & Logistics, Sales & Marketing, Customer Services, Finance, Human Resources, and Information Technology. Of these, the ﬁrst four have business-speciﬁc goals as their objectives and so different needs which usually require different or contradicting solutions. The remaining three departments offer services to the business as a whole, however although every other function is dependent on them, the Finance and HR services are consistent across the organization and they can therefore organize themselves to best suit delivery of that services.
IT department faces the most difﬁcult challenge because it have to manage heterogeneous needs and expectations, but also harmonize them in a common and effective picture (which is the IT architecture) guaranteeing synergies, reuse and cost optimization while satisfying different business unit objectives. While it might be relatively straightforward to articulate elements of vision in each of these business units the issue of cross-alignment complicates the picture for IT. In fact each of these departments not only works in their own particular way (process and governance) but also has some systems requirements which should uniquely organized to best meet their local challenges.
Challenge #4: As the internal and external business environment evolves a certain amount of shift is experienced in the system landscape that must be managed by IT department in order to avoid building an unmanageable architecture and wasting of resources.
Obviously continuous and fast pacing support to business evolution, research for innovation and business units contradictions and competition imply building an IT architecture where the intentional or unintentional duplication of functions and information across multiple systems occurs. Apart functional overlapping and waste of resources this situation can lead also to a lack of information timeliness, data inconsistencies, and possible data corruptions.
There are a number of reasons why this shift can occur:
- legacy applications are replaced by package solutions whose function overlaps existing systems
- niches of the whole organization (for instance international ofﬁces) may have alternate methods of operation (due to internal or external political forces or judicial or geographic reasons)
- determining and strictly apply how function and information should be split between systems can be difﬁcult in the real world
- the greater the degree of technological difference the more likely that duplication will occur
The shift not only reflects in the technical architecture landscape but also in the correct usage of IT resources to follow these changes. As multiple IT projects compete for limited resources, whether financial, human, or physical, a lack of visibility into the status of both projects and resources can result in delays and poor overall utilization. This situation is frequently exacerbated when resource conflicts involve multiple departments, or when there are cross-project dependencies in complex business programs.
Challenge #5: The role of IT Organization is changing from being a Provider of ICT solutions to be a Broker and Orchestrator between the customer and Cloud services.
On top of the previous “traditional” challenge, an additional one is emerging in the latest years which is changing the way how IT departments works and this reflect not only on IT architecture but also on the delivery paradigms and operating model. Outsourcing, SOA and Cloud Computing together are enabling the proliferation of services which can be produced and consumed everywhere. Successfully using such services created by others and ensuring that they work in real life (meaning that they work not only separately, but also integrated together) are complicated tasks which require IT departments to manage data integration issues, integrity problems and the need for strong relationship management external parties. Service Oriented Architecture has modified IT architecture and governance approaches and now Cloud Computing is changing consolidated patterns of sourcing and in general the role of IT in the organization. This trend will continue also in the future when IT organizations will transform their role from being a “Service Provider” to be a “Broker and Orchestrator” between the service consumers (internal end-users or customers) and service providers (outsourcers, cloud-based vendors,….), adding value to services and delivering new services built and delivered on top of other ones.
Even if the previous list of IT challenges is not exhaustive; they highlight some basic points that has driven me in structuring a consistent methodology with the aim of transforming the perception of IT strategy from a luxury (or worst a waste of time and resources) to a common practice useful to face these challenges either in big but even in small and medium enterprises.
Indeed today defining an IT strategy seems to be a complicated and unrepeatable effort, leaving the final result of this “strategic thinking” to the expertise of the professionals without a straightforward and structured approach, tools and techniques that can be easily and recurrently applied to the changing context.
On the other side many frameworks, approaches and models have been proposed so far by many companies, organizations and associations, in many cases they resemble each other and in many cases they are too generic, they do not provide enough operational details on how to proceed and they lack tangible tools and techniques.
For this purpose we need to address some key principles:
- to make IT strategy concrete, taking the best from existing frameworks (like TOGAF, Zachman,..) and translate them in terms of actionable tools, techniques, templates approach and methodologies
- to make IT strategy agile, in order to consider this as a really useful effort for iterative planning and fine tuning, avoiding wasting of plenty of initial assessment and analysis without any later follow-up
- to make IT strategy comprehensive defining an overall framework which include not just only IT architecture but also IT spending and sourcing as an integral part of plans and investment that a CIO has to look at, in particular in these days were external providers (such outsourcers and cloud service providers) are becoming more and more important
- to make IT strategy affordable also for small and midsize IT organizations, providing a lightweight and incremental framework and approach
- to transform IT strategy as an engine of proactive proposal of innovation from IT department to the business departments
In a nutshell we want to make IT Strategy an easy practice.
This methodology is composed by four main components:
- a Framework which define how the different concepts correlate each other
- a Data Model which identify key information to collect and their relationships
- an Approach which will guide through all steps and tips required to perform analysis and support decisions
- an optional Companion Software Tool (that you can download from our website http://frankitecture.wordpress.com) that factorize all this best practices and can be used as a supportive tool for building your own IT strategy
Using these four components you will be able to autonomously develop an executable IT strategy which allows to articulate business strategy defining context specific and measurable objectives, define a clear target IT architecture and IT Operating model, plan actions and initiatives with clear due dates and adjust them continuously to environmental changes.
Read more on this topic from my eBook…or stay tuned for new posts.