IT Organization Circa 2017 – 5 Year Countdown (Part 2)


countdownIn Part 1 of this post I pointed out why I’d named this blog “IT Organization Circa 2017″ and why I’d picked 2017. I then offered some musings about the nature and shape of the IT Organization Circa 2017.

I set this up by examining the major disruptive forces acting on the IT organization today:

The bottom line is that many IT organizations are at risk of being disintermediated – victims of the inextricable forces mentioned above.

“You cost too much and add too little value!”

is the familiar cry – but one that is more about the IT organization than it is about information technology.

The End of the IT Organization?

My view of the next five years is that in extreme cases, the IT organization as we know it will be gone – supplanted by a constantly shifting landscape of outsource providers, consultants, cloud solutions and “shadow quasi-IT groups” embedded in business units and taking care of local business needs. I can safely predict this because it’s already happened. In fact, when I started my IT career in 1970, working for International Computers Limited, (ICL) one of our major national accounts was British retailer Marks & Spencer. At that time, Marks & Spencer had no computers or IT department, even though they were highly computerized. Founder Michael Marks believed the firm should stick to what it knew – retailing – and hire experts to do the things it needed but did not know how to do. Consistent with that philosophy, ICL ran all Marks and Spencer’s computing. Nowadays, we call that “core competence.” As an aside, contrast that with another great British retailer and food manufacturer, J. Lyons & Co. who in the early 1950s had developed their own computer, the LEO, which eventually became part of my employer, ICL!

Already today, many companies around the globe have slashed the size of their IT organizations – some by 80-90%, taking advantage of global sourcing options and shifting the headache of running an IT shop to one or more outsourcing partners. There has, of course, been some backlash, and a small proportion of these outsourced IT shops bring their work back in house. In some cases, this is part of a long term strategy – pass your IT capabilities over to an outsourcer (or several) for a few years to have them “fix it” then bring those capabilities back in house. But even with the ebb and flow of the outsourcing movement, the trend is clear.  As companies become more networked and try to become more agile, they are less inclined to sustain large internal IT groups.

Similarly, the value proposition for cloud computing and the rapidly growing base of ‘software as a service’ is just too compelling, and the general satisfaction with internal IT capabilities too underwhelming. Why make huge capital investments in core systems, and carry the depreciation, maintenance and operational costs when I can ‘rent’ these and ‘pay by the drink’? Just as application packages have tended to supplant custom software development, software as a service is tending to supplant applications packages. As more computing moves to mobile, costly application packages become relatively inexpensive (or at least, value priced) “apps.” And the key issue with emerging computing models such as cloud and mobile is that they do not necessarily depend upon a permanent, in-house IT department.

The Ebb and Flow of Centralization and Decentralization

Organizational models tend to go through cycles of centralization and decentralization. There is always a tension inherent in finding the proper balance between the efficiency and scale of centralized, shared capability models and the responsiveness and customer-intimacy of decentralized models. This tension is never resolved – it is simply held in some sort of uncomfortable balance until the forces on one side outweigh the forces on the other side. This imbalance is often triggered by changing market conditions or by other disruptive forces such as new technologies.

The Mainframe Era – Centralization Rides High!

We’ve seen this through many cycles of technology shifts and their impact on IT organizational models. Back in the early days of the mainframe computer (early 1960s) virtually all IT professionals either worked for vendors/solution providers or worked in a centralized IT group.  (Back then it was typically called Data Processing.)

The Minicomputer Era – Departmental Computing Catches On!

With the advent of the minicomputer in the mid-1960’s, so-called “department computing” came of age, sometimes with the blessing of central IT groups, but often behind their backs.

Enter the Personal Computer – Departmental Computing Evolves into Decentralization of IT

As minicomputers gave way to personal computers and with IBM‘s launch of the IBM PC in the early 1980’s, the genie was further out of the bottle and the swing to what was euphemistically referred to as “distributed computing” was all but unstoppable. IT was becoming decentralized!

Inevitably, cracks in the distributed computing wall quickly appeared as users tackled issues such as mainframe connectivity and enterprise data management, and wrestled with the practical realities of back-up, security, integrity and privacy.

The Realities and Complexity of Enterprise Computing Surface – Centralization of IT Makes a Comeback – Sort Of!

By the early 1990’s the pendulum had begun to swing back to centralization. It seemed on the face of it that the old guard of the central IT group had returned in force.  But look under the covers, and what you see is not simply a return to the monolithic central IT group.  The new IT operating models had novel features such as:

  • Business-IT governance boards that moved ownership of prioritization and, in the best cases, value realization out to the business.
  • Business relationship managers bridging between the IT organization and business groups.
  • Business and Enterprise Architects focused on Business Operating Models and process management.
  • Sourcing and Vendor Management Groups.
  • Security and Privacy Groups reporting to senior business executives, embracing IT but not limited to it.

In other words, the centralized IT model of the early 1960’s had given way to a hybrid model that sought a more even-handed balance between local and global computing models. With the ascendance of cloud and mobile computing and the rise of global sourcing, I believe we are on our way to a new generation of computing model.

The Emerging IT Operating Model

I think it’s important to think of an IT Operating Model as an enterprise-wide construct – i.e., an IT organization is but one component. Many more IT functions are being distributed and dispersed – witness the so-called rise of Bring Your Own Device (BYOD). Here, functions that were performed by a central IT group are being performed by the business individual.  And this move towards ‘self-service’ and ‘business embedded’ functions will only expand with emerging technology. As such, we can think about IT Operating Model components as comprising centralized, decentralized and hybrid components. These might fall along the following lines:

Centralized Capabilities: Shared IT Services; Value Proposition = Standardization, Operational Excellence

  • Enterprise Architecture
  • Enterprise Shared Infrastructure
  • Enterprise Shared Solutions
  • Security and Privacy
  • Sourcing and Vendor Management

Decentralized Capabilities: Business-dedicated IT Services; Value Proposition = Customer Intimacy, Innovation)

  • Business Architecture
  • Local and Departmental Solutions
  • Business Analytics

Hybrid Capabilities: Networked IT Services, Communities of Practice; Value Proposition = Integration, Shared Learning

  • Business-IT governance/value realization boards
  • Innovation Centers
  • Organizational Development and Change Leadership Centers
  • Business Relationship and Sourcing Management
  • Data Visualization
  • Integration
  • Process Management

Why This Is Good News for the IT Profession

I will explore some of the implications of this shift for the IT profession in a future post, but by and large, given the many ways that I’ve seen IT professionals trapped in the past by their employers, I’d say the changes we are experiencing, while painful, will be beneficial at many levels.

 

countdown5 IT Organization Circa 2017 – 5-Year-Countdown – Part 1

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Reflections on “Zen and the Art of Motorcycle Maintenance” 38 Years Later – Part 1


(Note: This will be the first in a multi-part post).

I took the 25th Anniversary Edition of Zen and the Art of Motorcycle Maintenance (ZAMM), by Robert M. Pirsig, on a recent vacation – courtesy of my Kindle.  I think this was my 4th or 5th reading over the last 36 years or so!  When it was first published in 1974, I picked the book up several times with a view to buying it, usually in airport bookshops (I did a lot more travel back then!) But after flipping through a few pages, I’d put it back on the shelf.  Although I’d heard the positive buzz about the book, it just did not do it for me.  I think I eventually broke down (poor choice of words intentional – Pirsig had a mental breakdown, and poorly maintained motorcycles are prone to physical breakdown!) and bought the book in 1976.

ZAMM was among the few books I’ve ever read that changed my worldview and actually shaped my behaviors.  On the most recent reading, I had the added bonus of Pirsig’s clarifications on the original edition.  With the Kindle edition, I also had the ability to easily bookmark and make my own notes (and to see what other Kindle readers had highlighted).  This series of posts is a result of the latest reading, with the benefits of my bookmarks and highlights.

A Search for the Meaning of Quality

For those that have not read the book, Wikipedia describes ZAMM as follows:

The book describes, in first person, a 17-day journey on his motorcycle from Minnesota to California by the author (though he is not identified in the book) and his son Chris, joined for the first nine days by close friends John and Sylvia Sutherland. The trip is punctuated by numerous philosophical discussions, referred to as Chautauquas by the author, on topics including epistemology, ethical emotivism and the philosophy of science.

Many of these discussions are tied together by the story of the narrator’s own past self, who is referred to in the third person as Phaedrus (after Plato’s dialogue). Phaedrus, a teacher of creative and technical writing at a small college, became engrossed in the question of what defines good writing, and what in general defines good, or “quality”. His philosophical investigations eventually drove him insane, and he was subjected to electroconvulsive therapy which permanently changed his personality.

Towards the end of the book, Phaedrus’s personality begins to re-emerge and the narrator is reconciled with his past.”

Largely autobiographical, ZAMM is by no means great writing and certainly not a great story (though quite readable!)  If you’re looking for an exciting tale of a 17-day motorcycle odyssey, you will be disappointed – the trip is simply a back story to the author’s reflections on quality and philosophy.  Nor is ZAMM only for motorcycle buffs.  But if you’re interested in philosophy, or have struggled with the notion of quality, ZAMM provides a truly profound and illuminating read!

Classic vs. Romantic – Implications for IT Professionals

In ZAMM, among many other philosophical issues, Pirsig addresses the concepts of “classic” and “romantic” worldviews.  As a University Professor, it was his struggle to reconcile these competing perspectives that literally drove him insane.

Pirsig describes a classic approach as rational, analytical and ordered – one which attempts to be objective rather than subjective. He describes the romantic approach as focused on feelings, emotions, and sensations –  a view that is subjective and personal rather than objective.

From my experience from 40 years in IT, people who gravitate towards the IT profession tend towards a “classic” attitude to the world around them.  Meanwhile, extracting value from the use of IT demands an approach that balances the classic and romantic – what John Naisbitt, author of the #1 New York Times bestseller Megatrends referred to as “high tech/high touch.”

Given that so few of us are equally adept with both classic and romantic approaches, we have to ensure that both disciplines are brought to the table.  This can be achieved either through exceptional talent that naturally brings this balance (rare indeed!) or more typically through cross-functional (or more importantly, cross-discipline) teams.  This is, I believe, why roles such as business relationship manager are so crucial to the business-IT interface.  This role, in its own way, emphasizes the romantic view, and represents an important counterbalance to the classic disciplines needed to run and maintain computer systems.  I think this romantic bias common to business relationship managers also sheds light on why people in this role often feel like outsiders in their own IT organizations.

ZAMM and ‘Design Thinking’

I’d also observe that this classic-romantic balanced approach is embodied in the “design thinking” movement, popularized by Tim Brown and Ideo and exemplified by companies as diverse as Apple, Proctor & Gamble, Herman Miller and GE.

I will pick up the connections between ZAMM and Design Thinking in a subsequent post.

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What’s Really Meant By Business-IT Engagement and How Do You Achieve It?


This is another post triggered by a reader’s question emailed to me.  Here’s his question (some details have been omitted to preserve anonymity).

I was searching for information around Business-IT engagement but have yet to really come across anything with substance.  I’m looking to better connect with the business unit managers to formulate an IT strategy. The unit managers have a track record of operating in their own silos, often making IT decisions without talking to IT which has ultimately cost the company money.  I was thinking about putting a plan together to engage. Structured via, face-to-face, email, social media, newsletter and even survey. Ultimately, from start to finish, I build the picture and connect and portray the message that IT is an enabler and there is benefit in engaging.  I wondered if you knew of anything which may help me?”

This is an interesting question and a common challenge.

What Do We Mean by Business-IT Engagement?

A little research into the term “Business-IT engagement” found a reference to “Employee Engagement“, which Wikipedia defines as:

An ‘engaged employee’ is one who is fully involved in, and enthusiastic about their work, and thus will act in a way that furthers their organization’s interests. According to Scarlett Surveys, ‘Employee Engagement is a measurable degree of an employee’s positive or negative emotional attachment to their job, colleagues and organization that profoundly influences their willingness to learn and perform at work’. Thus engagement is distinctively different from employee satisfaction, motivation and organisational culture.”

I don’t think it’s an unreasonable stretch to derive from this a definition of business-IT engagement:

Business-IT Engagement exists when business unit leaders are fully involved in, and enthusiastic about their IT capabilities, and thus will act in a way that furthers the business value of those capabilities.  Business-IT Engagement is a measurable degree of a business executive’s positive or negative emotional attachment to their IT capabilities, IT colleagues and IT organization that profoundly influences their willingness to participate in the use of IT for business value.”

IT Engagement Model

I also found an IT Engagement Model from our friends at the Center for Information Systems Research:

The IT engagement model is defined as the system of governance mechanisms that brings together key stakeholders to ensure that projects achieve both local and company-wide objectives. The model consists of three general components:

  • Company-wide IT Governance – decision rights and accountability of company level and business unit level stakeholders to define company-wide objectives and encourage desirable behavior in the use of IT
  • Project management – a formalized project management process, with clear deliverables and regular well-defined checkpoints, that encourages disciplined, predicatable behaviour for project teams.
  • Linking mechanisms – processes and decision-making bodies that connect project-level activities to the overall IT governance.

The Linking Mechanisms are further explained in the following graphic:

I find this to be a pretty comprehensive and easily understood way to define some of the major aspects of Business-IT engagement.

Key Business-IT Engagement Factors

The other key factors I pointed my reader to include:

  • The experience your unit managers have with IT – do they trust IT? Has IT served them reliably? Is there transparency into how IT charges?  Is the business value of IT recognized and celebrated?
  • How engaged are business and IT leadership with each other? Does the CIO sit on the Management Committee? Is there an effective business-IT governance board and related processes and structures?
  • The skills of those in the business-IT interface role (Business Relationship Managers, or BRM’s) – how well do they understand the business? Do they have good relationship skills? Are they co-located with the business unit leaders and sit in on business management meetings? Do they perform a business management role, or are they simply seen as technical people taking care of IT?  Are they primarily responsible for Demand Management?

To the balance of his question, I asked:

  • Are you really trying to formulate an IT strategy? Or is it going to be a business-IT strategy. (If I’m a business unit leader, why should I care about or want to be involved in an IT strategy – it sounds rather internal to IT to me, so I’d probably want to stay out of it – I’m busy enough as it is!)
  • Do you really understand the business problems and how IT can contribute to solving them? If you do, what’s the best way to “market” those ideas, and to whom should you be marketing them?
  • What are the cultural norms in the business – do ideas drift down from the top, or do they percolate up from the edges – the ‘front lines’?

Outside-in Versus Inside-out Thinking and Acting

Finally, I was troubled by an aspect of the language my reader used in his question:

I build the picture and connect and portray the message that IT is an enabler and there is benefit in engaging”

This is what I call Inside-out thinking – “We (IT) are good and can help you so you should engage with us!”  I think my reader might be on a better path to engagement if he can identify the specific business issues and needs and communicate how IT might contribute to addressing those issues and needs.

Don’t Engage – Empower!

Just as I was finalizing this post, Zemanta did its usual thing of suggesting links and related articles.  (I really like Zemanta – it’s been one of my little blogging secrets for a while!)  Among its suggestions for articles was Don’t Engage Employees, Empower Them!  I think that is an important dimension to Business-IT engagement – especially in this age of IT consumerization.   Too many IT leaders see there role as ‘protecting the business from the perils of IT.’  Empowering them – for example, Bring Your Own Device (BYOD) can be a powerful way of bringing the business into the business-IT dialog and engaging them in strategic and tactical dialog and decision making.

Graphic courtesy of People Insight and licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License.

 

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To Whom Should Business Relationship Managers Report?


I recently received this question from a reader:

We are evaluating a strategy to centralize IT and implement Business Relationship Management (BRM) roles as part of the centralization. Where do you typically see the BRM’s reporting into in a centralized IT organization? Should they report directly in to the CIO, or can they be effective a level or two below the CIO?”

Rule #1 – Reporting Lines Are Weak Determinants of Success for the BRM Role

I have found reporting relationships to be a very weak determinant of success for the Business Relationship Manager (BRM) role. Far more important are the competencies (especially business knowledge and relationship skills) of the BRM and the maturity of the business executives they partner with.

Rule #2 – Heft Matters!

Notwithstanding Rule #1, the “heft” of the BRM role – the weight and implied authority it carries does matter.  There’s a couple of reasons for this:

  1. BRM’s are often on a CIO succession path (either explicitly or implicitly) – i.e., have the skills and wherewithal to be a CIO down the road, and the BRM role may be seen as a developmental step.  This has implications for who you chose to fill BRM roles, and for their career paths.
  2. The story a CIO tells the business executives when establishing the BRM role is along the lines of, “I am giving you one of my senior staff members to help surface, shape and manage IT demand so that you get the highest possible value from IT investments and assets. In return for this ‘gift’ I expect you to treat this BRM as a member of your management team.”

As a result, the most common reporting relationship for successful BRM’s is directly to the CIO.  In some cases, the BRM has a dotted line relationship to the senior business executive for the unit they represent.  In other cases, the BRM role is solid line to the senior business executive and dotted line to the CIO.

Rule #3 – Context Matters!

There are many other contextual factors to consider here, including:

  • What is the scope of the BRM role – is it primarily demand management (shaping, surfacing and managing business demand for IT)?  Or does the role include supply management, service management or other responsibilities?
  • Do the BRM’s act as Project or Program Managers for major initiatives?
  • Do the BRM’s sit on any governance bodies, such as Portfolio Management or Service Management?
  • How do BRM’s engage with the supply side?  How do they engage with Enterprise Architects?
  • How mature is IT supply?
  • Howe mature is business demand?

BRM’s Can Be ‘Game Changers’!

The BRM role is a tough one to get right, but from my experience, well worth the effort!  An effective BRM can:

  1. Elevate business maturity
  2. Ensure that IT resources are being focused on the highest potential value activities and initiatives
  3. Ensure that those initiatives capture the highest possible value

 

Graphic courtesy of Linda Galindo

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Leveraging the Cloud to Accelerate IT Renewal


(Note:  This post was originally written for the Cloud Commons).

This is the first in a multi-part post on what I’m referring to as “IT Renewal.”  Some people call this “IT Transformation” or “IT Transition”. Others don’t name it – they just do it as a natural part of how they run and continuously improve the ‘business of IT.’

The Convergence of Consumer IT and Business IT

Information and technology are becoming ever more central to what a company (or government, or any organization) does and how it does it. IT for the consumer world (think iPhones, iPads, Kindles, Facebook, eBay, and so on) and IT for the business world are converging. After all, business people are consumers, their customers are consumers, and how we navigate our personal lives spills over into our business lives and vice versa. And as the new workers join the workforce, they do so with an IT literacy and a set of expectations about how they will work, collaborate and communicate.

These consumer devices and services not only allow us to do our work in different ways (think mobile, for example), they also allow us to do different types of work (think sentiment analysis – what are our customers, prospects, competitors, et al saying about us? Or location-based marketing. Or participating in communities of interest or practice.)

The Changing Roles of the Corporate IT Organization

The convergence of business and consumer worlds is beginning to have a dramatic impact on corporate IT. Imagine the following scenario.

Mary, a sales and marketing Vice President, approaches her IT organization with a request to implement a CRM solution. “Yes – we can do that. It will take about 2 years to do, but we can’t get to it until next year. And it will cost about $20 Million, give or take 30%.”  Mary then sees an ad for ‘CRM in the cloud’ and calls the vendor. “Yes, we can get you started today. It’s probably best to start with a pilot group, which we can do for $40 per user per month. We can then bring the cost per user down as you scale up the number of users. And you get a 30-day free trial to make sure our solution fits your needs.”

So, what’s Mary going to do? She’s been charged with driving up sales and she’s convinced that a CRM solution is a key tool to do so. Easy choice, right? She goes ahead with the cloud solution. Variations on this scenario are playing out every day. The more visionary IT leaders are partnering with the Mary’s in their companies, and helping them chose the right vendor and deal with issues such as privacy, security, data ownership and so on. The less visionary leaders are in denial – the cloud is a passing fad. Mary’s going ahead with the Cloud solution anyway. The only question is, does she do it behind Corporate IT’s back, or with their blessing, help and guidance?

The Need for IT Renewal

In the previous paragraph, I used the labels ‘more visionary’ and ‘less visionary’. I could have use the terms ‘renewed’ and ‘un-renewed.’ Or, ‘transformed’ and ‘un-transformed’. Progressive IT leadership is working at repositioning the IT organization as a business enabler – no matter how and where IT capabilities are sourced. In many respects, the core IT roles are shifting towards Enterprise Architect and Integrator, rather than manager of data centers and server farms, developers of systems and software and managers of projects. This shift is what I’m referring to as ‘IT Renewal.’

The Cloud is Both a Driver – and an Enabler of IT Renewal

So, the key roles of an IT organization are being changed by the inevitable emergence of the Cloud as an option in the delivery of IT services. Can the IT organization also leverage the Cloud to enable and drive IT Renewal?

The answer is, I believe, a resounding, ‘yes’. And doing so is essential for getting ahead of the curve for all the Mary’s in our companies. When Mary comes to us, the first answer should be, “Yes, Mary – we can help you deploy a CRM solution. We’ve been investigating Cloud solutions for this type of need, and I think there are some very attractive options we can get you started with almost immediately and without massive capital outlays.” Even better, we approached Mary before she approached us, and told her about the potential for a low cost, relatively easy way to boost sales with a CRM capability.

Leverage the Cloud for Things You Can’t Do

I’ve been participating in a series of CIO Forums across the US, sponsored by Microsoft Windows Azure. It’s been a fascinating experience!  Much of the discussion in our panel Q&A’s has been around the challenge of moving legacy systems to the Cloud. While this might be an interesting cost reduction play, the best cases I’m seeing out there are about using the Cloud for things you can’t easily do today (such as helping Mary lift sales with a Cloud-based CRM!) And that is where I believe the path to IT renewal can begin, or, for those who are already on that path, can be accelerated. More in the next post in this series.

 

 

 

 

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The Decline and Fall of the IT Organization?


With apologies to Ed Yourdon for my plagiarism of his original the book title, published back in 1993, “The Decline and Fall of the American Programmer“.  (Though I don’t recall if Ed gave apologies to Gibbon for first using this line!)

For a blog entitled “IT Organization 2017″ and for a management consultant who has had a very satisfying professional career consulting to IT organizations, the title of this post may seem both extreme and inappropriate.  However, I use the title not just as a controversial ‘hook’ to attract readership, but as a sincere expression of what I think is happening today – and will continue to do so.  The traditional role of the IT organization is on the decline and will never return to the importance and business value impact it had over the last 50 years.  The good news is, there is a crucial new role emerging – and for IT leaders that can envision and lead the new possibilities, I believe there’s a bright new future – perhaps brighter than the traditional IT leadership role.

So, Who Screwed Up the IT Organization?

I’m not sure this is anyone’s ‘fault’ per se, or could have been avoided.  Rather it is a natural by product of technological evolution.  Back in the late 1800’s, many corporations employed Chief Electrical Officers.  Nick Carr gets into this nicely in his aptly named book, “The Big Switch.”

A hundred years ago, companies stopped generating their own power with steam engines and dynamos and plugged into the newly built electric grid. The cheap power pumped out by electric utilities didn’t just change how businesses operate. It set off a chain reaction of economic and social transformations that brought the modern world into existence. Today, a similar revolution is under way. Hooked up to the Internet’s global computing grid, massive information-processing plants have begun pumping data and software code into our homes and businesses. This time, it’s computing that’s turning into a utility.”

The shift from electricity as a highly specialized resource to commodity took about a decade as standards such as voltage, alternating current, plug and socket configurations, and so on were settled.  Once the standards existed, businesses could simply plug into a grid – electricity became a commodity, and the Chief Electrical Officers become extinct as the Dodo.

An Historical Perspective

The first commercial mainframe computers, the LEO were created in 1951 by J. Lyons and Company, a British catering and food manufacturing firm.  The idea of a food and catering company today designing and building it’s own computer is unthinkable!  I remember in the late 1960’s, businesses such as Massachusetts General Hospital were creating their own programming languages, data base software and teleprocessing monitors – activities that would be considered wholly irresponsible today.  I wonder if 15 years from now we will look back at the turn of this century and be bemused by the fact that typical companies of any size at all maintained IT organizations – in some cases, thousands of IT professionals – writing programs, tending help desks, and so forth.

So, What’s Happening to the IT Organization?

For many years the annual surveys of top CIO issues list business-IT alignment. It’s a noble and challenging goal – and it’s no longer the right goal! A combination of technology advances, advances in standards and architectures (mostly prompted by the Internet revolution) and the increasing IT literacy across the business means that the challenge has moved beyond Business-IT Alignment to Business-IT Convergence.

From Business-IT Alignment to Convergence

Let’s drill further into this convergence phenomenon. Today, many IT activities, including project management, information analysis, application configuration are devolving into Business Units while others are consolidating with support functions such as HR, Finance, etc.  Helping to drive this is the rapid consumerization of IT devices and services, with iPhone’s, iPads, Android devices and the like becoming an important window into business systems and information.  Further driving this is the increasing ‘IT Savvy’ and confidence with IT that business executives, line managers and workers (especially, knowledge workers) increasingly feel.  This is in part generational – people entering the workforce with high IT literacy, and in part a byproduct of people’s engagement through social media, e-commerce and so on.

From Owning to Sourcing IT Capabilities

The last decade or so has seen a shift from owning all needed IT capabilities (data centers, server farms, software teams, application development groups, desktop support, etc.) to sourcing these capabilities externally.  Today, traditional functional outsourcing is being continuously expanded, and now often includes Business Process outsourcing as well as the outsourcing of compute power, data storage, IT infrastructure, applications and platforms through the rapid rise of Cloud Computing.

Information is Becoming both Strategic and Implicit

Information is becoming an increasingly strategic asset.  There is compelling research data showing how companies are successfully embracing and competing on business analytics.  At the same time, data is also becoming implicit to business management and operations – increasingly representing what the business manages and how it manages. In many respects, the context for IT today is becoming less about IT and more about information – the ability to capture, integrate, interpret, predict, and act is increasingly the holy grail of competitive advantage – and that belongs in the business – not in a separate specialist group.

So, Where Do IT Capabilities Belong?

Now, I’m on dangerous ground, because the answer depends – on the nature of the business, IT savvyness of business managers and knowledge workers, and their vision for how they want to deploy and manage information and IT.  But, I’d argue that many IT capabilities belong in business operations.  For example:

  • Business Process Management
  • Business Analytics
  • Project Management
  • Satisfying Business Unit application needs

Other IT capabilities belong in the governance of the business.  This might include, for example:

  • Enterprise Architecture
  • IT Strategy
  • Portfolio and Program Management

And finally, some IT capabilities should be centrally coordinated and shared. Examples here include:

  • Common and shared IT Infrastructure
  • Enterprise Applications

So, What Are the Implications for IT Leadership and the IT Professional?

I will save that for a follow-up post, but suffice it to say that most companies and their IT organizations are not quite ready for the shift I’m espousing (and, indeed, predicting).  And, I think it is the clear responsibility of IT leadership to help lead this revolution – ensuring that it is orderly and safe – ensuring that the business and IT professionals are fully prepared and able to take advantage of business-IT convergence.

Please join me in the next post on this topic – and in the meantime, please weigh in with your perspectives and observations.

Painting by Joseph-Noël Sylvestre: The Sack of Rome by the Barbarians in 410

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Do You Have IT Organizational Clarity – Part 3


This picks up on Part 1 and Part 2 in this series on IT Organizational Clarity.

In Part 1, I discussed the importance of IT Organizational Clarity, the symptoms when clarity is compromised, and the challenges of trying to address those symptoms rather than the root causes that lead to compromised clarity.  Part 1 closed with a discussion of the two key dimensions along which IT Organizational Clarity can be tackled – scope (units of IT Capability) and meaningful and assessable characteristics for evaluating and improving IT Capabilities.

In Part 2, I discussed ways to define IT Capabilities and provided guidelines on the manageable number of IT Capabilities and appropriate depth of decomposition.  In this post, I will describe three different types of IT Capability.

Not All IT Capabilities Are Born Equal

It is helpful to classify IT Capabilities into one of three different types, as illustrated in the graphic above.

Value Chain Capabilities

At the core are those capabilities that take inputs, add value, and deliver outputs to a customer or end consumer (in the world of IT, these tend to be services and products).  Think of these Value Chain Capabilities as those that the end customer appreciates (hopefully!) and is willing to pay money for.

For example, as a business user, I may have a business problem I’d like IT help to solve.  That problem (or opportunity) is the input to a Value Chain.  The first Capability that will approach that problem adds value by analyzing the problem, identifying and proposing a solution.  As the business user, I appreciate that value has been added – drilling into my stated problem and offering (and perhaps demonstrating via a prototype) one or more proposed solutions.  The next Capability in the Value Chain might take the chosen solution and develop and deploy that solution.  Again, as the business user, value has been clearly added – taking a proposed solution and delivering it.  The final Capability where value can be added is supporting and maintaining that solution – again, a recognizable way of adding value for me, the customer.

Ultimately, as the business user or consumer, these are the only Capabilities I care about and am willing to pay for (directly or indirectly) because of the value they add for me.  Unfortunately, while these Value Chain Capabilities are necessary, they are not sufficient.

Enabling Capabilities

Value Chain Capabilities typically draw upon other Capabilities that enable them.  Think of these as Shared Services that are common to other Capabilities, or to other instances of problems/solutions working their way through the Value Chain.  Examples of IT Services that might enable the Value Chain Capabilities include Project Management, IT Operations, and IT Supply.

Alignment and Governance Capabilities

Value Chain Capabilities also typically depend upon other Capabilities that ensure that the work they are doing is aligned and governed to ensure they are operating effectively and in the interests of the enterprise.  For example, determining which business problems will be addressed, which solutions will be selected, how staff and resources will be allocated are all important control that Value Chain Capabilities will be subject to.

Why These Distinctions Matter to IT Organizational Clarity

The distinctions between Value Chain, Enabling and Alignment/Governance Capabilities are significant:

  1. Different types of IT Capability tend to be optimized towards different value propositions, with implications for how they are organized.  For example, Enabling Capabilities tend to be optimized for Operational Excellence (as shared services, they need to deliver predictable, consistent, quality services at the lowest possible cost).  Value Chain Capabilities tend to be organized for Customer Intimacy, delivering what specific customers want; anticipating customer needs.  Alignment and Governance Capabilities tend to be more about decision-making – rather than delivering services, they make decisions or provide decision-making frameworks – think Enterprise Architecture and the mechanisms and structures that support it as Alignment and Governance Capabilities.  As such, these tend to be networked, linking stakeholders and decision makers, and optimized to maximize the business value delivered or enabled by IT Investments..
  2. Some types of IT Capability lend themselves to alternate sourcing more than others.  For example, Aligning and Governance Capabilities lend themselves the least to straight outsourcing approaches (do you want to pass decision rights to an external vendor?)
  3. Different types of IT Capability lend themselves to different funding models.  For example, Value Chain Capabilities lend themselves to direct business funding, whereas Enabling Capabilities lend themselves better to indirect funding models (e.g., overhead charge).

IT Capability Model Example

As an illustration, below is a ‘normative’ IT Capability Model.

The Fractal Nature of IT Capabilities

Note, that as you decompose any IT Capability, you will generally find that the decompositions will have a similar structure – a primary Value Chain, drawing upon underlying Enabling Capabilities and influenced by Alignment and Governance Capabilities.

For example, Manage Business-IT Portfolio & Programs might decompose into the following sub-Capabilities:

In the following post, we will look at the assessable characteristics of any IT Capability as a means of determining Capability Maturity and determining how to increase maturity and thereby improve performance.

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Account Teams and Business-IT Relationship Management


I’ve posted quite frequently on this blog about the role of the Business-IT Relationship Manager. It’s a key role – crucial, in fact, at mid-levels of Business-IT maturity.  It’s a role that typically does not work well at lower maturity, yet is essential to reaching higher maturity. It’s also a role that is hard to get right!  But went you get it right, it can contribute significantly to business value realization from IT assets and investments.

An Account Teaming Approach to Relationship Management

I’ve found myself re-immersed in the Relationship Management (RM) domain lately.  I’m working on a significant RM development program with one current client, and helping another client fine tune their IT Operating Model.

With the first client, I got involved in a benchmarking exercise, going back to two former clients where I had led extensive RM training a few years back.  The purpose of the benchmarking was to find out how their RM approach had evolved, what was working well, and where they still had challenges.  In both cases, the clients had converged on an Account Management Teaming approach – essentially, a set of business unit-facing account teams comprising a very senior Relationship Manager (rarely called that, by the way), a Solutions Manager and an Enterprise Architect.

In the client where we are fine tuning the IT Operating Model, one such account team had formed fairly naturally.  Nobody told them to organize that way.  One of the RM’s met with a business architect and a solution manager and decided they needed to set time aside to meet and talk and strategize in order to present a cleaner, simpler face to the business client.  They wanted to be more deliberate and proactive in shaping business demand rather than simply respond to it.  They saw the formation of the account team as a sort of experiment.  They did not ask permission – just went ahead and tried it.  (I’d describe this as a fairly sophisticated client in an information intensive industry, with an exceptional quality of IT leadership and management.)

This Seems to be Working – Let’s Generalize It!

I met recently with the account team and other architects, RM’s and solution managers to talk about how to generalize the model and duplicate it for the other business units and their RM’s.  We analyzed what had changed as a result of the account team approach – both from the perspective of the individual IT roles, and from the business client’s perspective.  It was an impressive story with impressive results.

So, how to ‘codify’ the approach and generalize it?  The responses from the account team members were surprising and distressing on the one hand, yet obvious and comforting on the other.  Their counsel was, “Don’t try to codify this too much.  It won’t work!”  and, “Remember, we formed into a team because we wanted to, not because we were told to!”

Not So Fast, Tonto!

The business-IT interface is an extremely complex space.  The Account Teaming approach works because it is organic, and was emergent.  It works because the team members have mutual trust and respect.  It is the role of the team that is important and brings the magic, not the roles of the team members.  They talk about “having each others backs covered.”  About the fact that the client executives know that they can talk to any of the team and reach the whole team at the same time.  About the fact that any business-IT conversation quickly and automatically gains the perspectives of enterprise architecture, solution delivery and relationship management.  The business executives don’t need to be concerned about who to call for what.  Nor do they have to sit down with five IT folk to get anything done!

The Power of Self-Organization

Ralph D. Stacey, in his great book, “The Chaos Frontier” defines Self-Organization as:

A process in which the components of a system in effect spontaneously communicate with each other and abruptly cooperate in coordinated and concerted common behavior.”

I believe that viewing organizational spaces such as the business-IT interface as a complex system, operating at the ‘edge of chaos’ (scientifically speaking) reveals the insights that:

  1. Variety, randomness, paradox, information, and interconnection are sources of creativity.
  2. Organization is a natural, spontaneous act – to force otherwise is not sustainable or effective.
  3. Systems have a capacity to self-organize to great effect – given the opportunity to do so.

The danger feared by the Account Team was that as an organizational consultant, I would take the model and create organizational charters, role descriptions, competency models, and so on, and in so doing squeeze the life out of the account team concept.  And I use the word “life” deliberately.  Everything we know about complex emergent behavior tells us that for life forms such as this type of account team to really work, they have to behave like living organisms – with porous boundaries, guided by a common sense of mission and purpose, a ‘genetic code’ if you will, not sealed off from their world by hard boundaries and deterministic rules.

Image courtesy of The Savvy CIO

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IT Organizational Implications of Cloud Computing


First off, let me make myself clear.  I firmly believe that Cloud Computing, in its various forms, is real, absolutely inevitable and will completely revolutionize the form and role of the IT Organization.  Some readers will look at that sentence and laugh – it’s like saying “day will pass into night.”  Obvious, beyond dispute, devoid of insight.  Others will also laugh at my opening proclamation – only in their case, because my assertion is completely ridiculous to them – beyond belief.  Of course, to many businesses, especially smaller and medium sized, Cloud Computing is already real, and has been for some time.  So, feel free to debate me (comments and opposing views highly welcome!) but I will stick with my beliefs on this.

For IT Leaders, the Cloud Changes Everything!

For me, the big question is, what does the migration to Cloud Computing mean for today’s IT organization?  What structural changes are necessary to successfully leverage Cloud Computing capabilities?  How quickly should you be moving IT services to the Cloud?  How does the Cloud impact the IT Service Portfolio and the capabilities needed to deliver those services?  What are the implications for IT competencies?  How does business-IT governance change in a Cloud Computing world?

I think these are important questions whose answers are not yet totally clear.  As I reflect back on the shift from mainframe to client-server computing, many IT organizations were less than stellar at anticipating needed changes.  As a result, they experienced more bumps and potholes in that journey than was necessary.  For example, for all that had been learned about back-up and recovery in a mainframe world, the onset of client-server computing created gaping holes in the IT organization’s ability to cope with data protection and loss at the Personal Computer level.  The same was true for the evolution from client-server to the web – many of the controls put in place for client-server computing were ineffective (and some even counter-productive) as more work moved to the Internet.

Which Aspects of Cloud Computing Could Bite Your IT Organization?

In the next few posts I will explore some of IT organizational implications of Cloud Computing.  Aspects we will examine will include:

  • Mobility implications – both for the business user and the IT professional charged with enabling that user.
  • The distinctions between Infrastructure as a Service, Applications as a Service, Platform as a Service, Development as a Service and Business Process Services and how these impact IT organizations.
  • The distinctions between Public, Private and Community Clouds and their implications for IT.
  • Accounting implications, including funding and budgeting.
  • Implications for Business-IT Governance.
  • Security and Privacy.
  • Implications for the work teams and flow of work involved in requirements analysis to solutioning.
  • Impact on Enterprise Architecture.
  • Implications for IT Services and Service Management.

Please weigh in – let us know your experiences, issues and concerns about the shift to the Cloud.  Do you agree with my assessment that this shift is inevitable?  How fast do you see it happening?  What does it mean for you personally, and for your career?

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IT Leadership – Caught between Two Realities?


It’s always been tough being an IT leader.  The “Career Is Over” distortion of the CIO acronym is humorous because of the real world challenges associated with the CIO job.  I think that today is an especially challenging time for IT leaders.  I say that because these jobs are typically caught somewhere between two very different realities – realities we might refer to as “1.0” and “2.0”.

IT Reality 1.0

Reality 1.0 holds that IT must be managed.  It is difficult and complex – fraught with crucial technical details.  Mastering these details requires teams of technical experts, following rigorous processes and procedures.  Issues that mere mortals don’t often think about – things such as back up and recovery, security and privacy, regulatory compliance, business continuity – must be planned for and managed by IT specialists who have been properly trained and certified in these disciplines.

Reality 1.0 holds that IT should be owned, and certainly, must be controlled internally.  It holds that business users must be protected – both from themselves and from the raft of vendors and consultants, all trying to sell them stuff that could cost them money (at the very least) and might even get them in trouble.

Reality 1.0 holds that qualified IT resources are scarce and costly.  They take time to develop and cannot be ramped up or down quickly.  Therefore, long term planning and concerns about scaling are constantly on the IT professional’s mind.

Reality 1.0 is obsessed with risk avoidance.  Constantly aware of many of the horror stories that are told around the IT campfires (and sometimes involved in either perpetrating or recovering from such horrors), IT leaders work to prevent the many risks associated with IT.

Given resource and risk issues with IT, Reality 1.0 deploys sophisticated tools and governance processes to filter the many opportunities for IT-enablement and weed out all but the key initiatives that justify the the investment and risks.

Reality 1.0 perceives the world of IT as relatively closed and proprietary.  Therefore, it is obsessed with IT architectures and standards – with figuring out how to weave together point solutions into capabilities that meet enterprise needs.

Reality 1.0 is about large projects and solutions – multi-month, sometimes multi-year initiatives designed to last for years.

Reality 1.0 separates the world into ‘development’ and ‘production.’  The move from one to the other is like the move through an airlock – from a dangerous and polluted free-for-all into the safe, secure and sterile data center.

IT Reality 2.0

Reality 2.0, by contrast, holds that IT is simple, ubiquitous and inherently safe.  Almost anyone can be creative and productive with IT – all they need is an Internet connection and a device equipped with a web browser.  If the user knows nothing, they can simply leverage what is already on the web – and learn as they do so.  If they know a little, and are adventurous, they can do much more than passively leverage what is already there – they can “mash up” new capabilities from existing ones to solve new problems.  They can learn as they go, become even more adventurous and creative – perhaps even commercialize what they have created.  Over time they will become even more skilled – creating more sophisticated solutions – or leveraging ‘crowdsourcing‘ to engage others to help them create the solutions they need.

Reality 2.0 does not care about IT ownership or control – they care about results.

Reality 2.0 sees the world as a sea of opportunities and solutions to be tried and exploited.

Reality 2.0 sees IT resources as ubiquitous – found with a click of the mouse, engaged with a few more clicks, and paid only when they’ve delivered.  Resources are paid for as they are needed – no long term commitments or overhead payments to worry about or justify.

Reality 2.0 is about risk management – moving incrementally and organically, managing risks as they are recognized.

Reality 2.0 has no time for bureaucratic processes such as governance committees and cost justification rigmaroles.  It sees any opportunity as worthy of a quick experiment to see if its real – it believes that in the time it takes to create a business case or wait for the next governance committee meeting, the idea can be tested and validated or eliminated – let the proof of the pudding be in the eating, so to speak, not in the political machinations of investment review bodies.

Reality 2.0 perceives the world of IT as essentially open.  Things in its world naturally fit together.  Therefore, things can be built in small incremental steps – evolving in the light of experience and changing needs.  Things can also be built as discrete point solutions – and yet still can be fitted together if need be.

Reality 2.0 is about small projects and solutions – created in days or weeks and designed for just as long as they are effective.

Reality 2.0 sees development and production as living side-by-side in some virtual place in the sky – while I’m working on its creation, it’s in development.  Once it’s working, I declare it ‘production’ and it is so.

The Best of Times, The Worst of Times…

If IT Reality 1.0 accurately reflected today’s world – as it did for most of the last 50 years or so – life would be ok for IT leaders.  Both they and their business consumers would understand their respective roles and would work together for the mutual good.  If Reality 2.0 accurately reflected the world – as it might do in the next 50 years or so, life would ok for IT leaders.  While their roles and those of their business consumers would be very different from those typical today, again they’d be on common ground.

The really big challenge today is that the reality today is neither 1.0 or 2.0 – it is in transition.  And in the immortal words of William Gibson, “The future is already here, it’s just unevenly distributed.”  This ‘uneven distribution’ of IT Realities 1.0 and 2.0 is going to represent both a curse and an opportunity to IT leaders.  For the progressives, it’s a wonderful opportunity to shift IT into overdrive.  For the laggards, I fear that it’s going to make their lives more and more miserable!

Do you live in this dichotomy?  How quickly is reality 1.0 being replaced by reality 2.0?  Are these realities coexisting?  What are you doing to accelerate or impede the shift?

Image courtesy of Rumple at Flickr

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