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Why You Need to Rethink Your IT Operating Model

Digitization is now a central part of every company's strategy, but CIOs and their teams will scupper any and all efforts if they don't have the right operating model in place

The current wave of digitization disrupting the world’s companies is broader than past efforts. Management teams are taking advantage of new capabilities available to them, such as big data, the internet of things, machine learning, and social and mobile technologies to enhance or transform products, channels, and their internal operations.

As digitization progresses, the boundaries between products, the channels through which they’re sold, and the company’s operations begin to blur, with many companies focusing on creating a more integrated, customer-centric perspective across the firm as a whole.

But all this activity and ambition raises numerous challenges for the IT function, as teams across the company – sometimes with scant experience of technology or dealing with the vendors that produce it – begin to experiment.

The Challenges Facing IT Teams

IT teams must be on top of three trends that are reshaping how their companies manage and exploit technology and, crucially, must also understand how they should work with colleagues to make it as easy as possible to realize the benefits and minimize the risks.

  1. Demands to exploit tech more quickly: Almost two thirds – 63% – of business leaders say their company is too slow to exploit technology opportunities.

    The pace of change driven by digitization will only increase as new generations of fast moving competitors emerge and customers come to expect ever more rapid updates to products and services enabled by technology.

  2. Heightened volatility: Digitization opportunities disappear as quickly as they arise, so business plans are constantly in flux.

    IT teams should switch away from multiyear technology planning and “road-mapping” to relying on the concepts of “test and learn” and working with minimum viable products.

  3. Blurred technology responsibilities: IT leaders used to insist that, “there were no technology projects, only business projects.” Today the opposite is becoming true as almost all business projects are at base technology projects.

    As a result, business strategy and IT strategy are becoming synonymous, and business leaders are more willing and able to move forward with digital initiatives by themselves.

How to Create an Operating Model Fit for the Digital Era

To meet these challenges head on, forward-thinking IT managers are making IT more adaptive. An adaptive IT function helps the rest of the business respond more quickly – instead of slowing it down – changes direction as demands change, and flexes between different modes of business collaboration based on context.

CEB’s work with hundreds of IT teams produced the operating model below which combines the most innovative approaches to operating model redesign that we’ve seen (see chart 1).


Key features of the IT operating model for the digital era

Chart 1: Key features of the IT operating model for the digital era  Source: CEB analysis

  1. Products over Projects: Priorities and budgets are set for business capabilities and products, not projects.
  2. Adaptive Business Engagement: Business engagement approach flexes based on business context.
  3. Agile, DevOps, Continuous Delivery: Integrated delivery, engineering and support boost responsiveness and output.
  4. Customer-Centric Design: Customer journey mapping is used to guide design.
  5. Applications Building Blocks: APIs, platforms, data, and reusable services reduce effort and accelerate delivery.
  6. Cloud-based Scalable Infrastructure: IT automation and cloud platforms cuts time to scale.
  7. Strategy over Governance, Management over Operations: Central groups refocus on facilitating strategy, innovation, change and enterprise data.
  8. Data Strategy Over Ownership: Coherent strategy and guidelines around data allow for rapid exploitation by distributed teams.
  9. Adaptive Skills and Mindset: Staff become technically versatile, collaborative, and open to innovation.

Click on chart to expand


 

More On…

  • Digital Enterprise 2020

    These resources will help you understand the future role of digitization at your firm, and the implications for the corporate IT team.

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