The IT group's dual roles—delivering essential IT to run transactions and differentiated IT to enable evolving business models—has created competing priorities.
Delivering new IT capabilities: What process is best for delivering new IT capabilities? The answer depends on whether the company is struggling with a known-known problem (essential IT) or with a known-unknown or an unknown-unknown problem (differentiated IT). The difference between solving these two types of problems is vast and requires separate, distinct types of IT processes. And since both essential IT problems and differentiated problems must be solved now, IT needs both processes.
When the problem is known, the function needs a traditional process for gathering requirements, creating the design and rolling out the solution. Often this work happens over a long timeframe—from six to 12 months, typically.
When the problem has an unknown component, a much more iterative approach is needed. With it, the IT function basically designs the end goal in a short amount of time (perhaps two weeks), and then, over a much longer timeframe (perhaps 12 weeks), works with the user, gathers feedback and ensures that the business value is realized.
Then the process starts over again. This work is ongoing, never-ending and repeated every few weeks in a continuing cycle of rapidly delivering new capabilities.
Building the IT-business engagement model: The IT-business engagement model must be different in today’s digital world than it was only a few years ago. Previously, the company’s leaders would tell IT what they wanted and would be confident that IT would deliver it.
Now, however, leaders don’t know what digital technologies can do for the company, so they don’t know what to request or what to expect from IT. Therefore, they must change the way they work with IT. They must replace their old, fragmented or cyclical business engagement model with one that allows constant, ongoing engagement with IT.
Most companies are still coming to terms with the changing role of technology. But a few understand how significant the change is and are addressing the four challenges that would otherwise undermine their future success.
Financial services companies are leading the way. They are making changes—such as enabling customers to deposit checks merely by taking pictures of them with their smartphones—that are completely redoing their approach to business and to delivering IT services.
Other companies are also altering the way they do business. One restaurant chain has stated that it no longer just offers food; it also gives customers a digital experience that's second to none. Since the digital and food requirements of this restaurant’s many customer segments vary, it adjusts both its menu and digital offerings for specific times of the day and week to best meet customer demands for what they want to eat and do digitally while in the restaurant.
Among the lessons these companies have learned is that IT must rely heavily on analytics at every level, so it knows exactly what is required to deliver a specific product or service. IT has to measure everything it does internally and then use the information from this measurement to optimize how it delivers products and services.
Furthermore, using analytics to measure every external aspect of the project is no longer an option. Instead, it is a core element of how the technology organization must work if it is to deliver differentiated IT and play a role in enhancing the business.
These companies have also learned that the IT function must address all four of these IT challenges at the same time if it is to be successful in the future. It can’t, for example, allocate additional funds to handle projects relying on new technologies without also adding employees who have the skills to work with these technologies. Without overcoming all four challenges at once, IT will be less capable of delivering either essential IT or differentiated IT.
IT stands today at a critical crossroads, and the road taken will determine whether the function remains relevant in the future. One road—that of delivering only essential IT, as it has done in the past—will certainly lead to the function’s becoming downsized or even outsourced completely.
The other road—that of providing both essential IT and differentiated IT—will make the function more relevant to the company’s leadership and establish its role in helping enable the company’s evolving business model.
The choice seems obvious. But choosing the second road requires flexibility, agility and the ability to manage the changing role of technology.