IT Organization Circa 2017

I’ve recently been working with a company where business-IT maturity is significantly lower than I typically see in my clients.  It’s a strange and sobering feeling – like stepping back about 20 years!  I don’t wish to embarrass anyone, so I’d best not say too much about the industry or the circumstances that led this company to have such low maturity, or that led them to be suddenly interested in cranking up the volume in their IT capabilities.  Suffice it to say that business conditions have recently changed, and are expected to continue changing over the foreseeable future, and this led them to hire a new, seasoned CIO.

Let me describe some of the characteristics of low business-IT maturity we see at this company.

• All “formal” IT spending is in the IT budget.  To the business, IT is a “free” resource – there is no business accountability for project spend or business return on IT-related investments.  This is a recipe that dooms IT to be viewed as a necessary overhead, and to mask the business value of investments in IT-enabled business change.
• There is a significant “non-formal” – i.e., shadow IT spend that is outside the IT budget.  Shadow IT typically occurs as a natural response to a void the IT organization has created – the business needs certain IT services or capabilities it is not getting from the “formal” IT structure, so it creates its own IT capabilities.  This may be OK, but it masks true IT spend, and typically impedes cost and leverage plays such as shared IT infrastructure, common tools and methods, and standardization.
• The business “places orders” on IT, and IT “takes orders” from the business.  As such, little, if any, process re-engineering is done, and given the highly siloed nature of the business (a common symptom of low business maturity), each silo wants to handle a process (such as order processing) in its own unique, idiosyncratic way.  This ultimately drives up IT costs and drives down value.
• As a result of the above, application packages are customized to a ridiculous degree – staying current with application package releases is impossible and support costs escalate.
• There is no consistent company-wide IT prioritization or portfolio management mechanism.  Demand volume always exceeds supply capacity.  To protect against this, the IT organization has grown its own silos that mirror the business silos.  Each IT silo has its own dedicated resources as a means to ensure that they can respond, at least at some level, to business demand.  The net result is that there’s always a significant amount of low value IT work to keep people busy, while potentially high value business opportunities lay fallow for want of IT supply capacity.
• There are no consistent project or program management methods, and nobody with a role of Information Architect, let alone Enterprise or Ecosystem Architect.  Contemporary practices such as SOA, or even simple middleware are a distant dream to those in IT that understand their potential.
• The IT staff is of reasonably high quality.  Many have been with the company a long time, so they really don’t know any different.  Some are more recent hires, though all from within the industry – and this is an industry I’d describe as one of the last bastions of what I’d call “IT blindness.”  The industry, by and large, has yet to recognize the potential of information and technology to completely reshape it, the way Wal-Mart’s supply chain and logistics leap in the 1990′s, or American Airlines foray into yield management in the mid 1980′s took their respective industries by storm, literally toppling some of their largest competitors and changing the discount retail and airline reservations businesses for ever more.

I’ll post another time about what this company might do to correct its sins of the past, and start gaining business advantage from IT, but challenge the reader to ask of your own company:

1. What is your level of busienss-IT maturity?
2. Are there any areas of IT blindness your company has?
3. Is all IT spending happening in those places that have the greatest leverage?
4. What are you doing to wring more value and competitive advantage from IT?

Filed under: IT Maturity