Why Digitization Requires A New IT Operating Model

Digitization offers IT teams unprecedented opportunities to create value by becoming digital change agents for the enterprise, but the way most IT teams operate cannot support this ambition. As technology becomes central to company strategy and growth, IT teams face faster business change and rising volatility in demand, and they must rethink how they respond to technology spending outside of IT.

In this environment, traditional ways of running IT, such as plan/build/run, are falling short. CIOs need a fast, flexible operating model that can adapt to the blurring boundaries between IT and the rest of the business. To this end, we’ve identified nine operating model changes that will position IT teams for digital success.

Aside from the first change, which underpins the new model, the others are not in priority order. Each change is independently valuable based on the priorities of the department and the broader organization.

Products over Projects. The move to product lines lies at the heart of the new IT operating model. To enable fast, business-aligned decision making, CIOs are replacing portfolios of discrete capital projects with enduring product lines. Each product line -- also called end-to-end service or value stream -- enables a business capability. A dedicated product line or service manager works with business stakeholders to build a product strategy and roadmap and oversee the product line’s full lifecycle, from launch, to enhance and maintain, and to retire.

Adaptive Business Engagement. The technology needs of business partners are now too broad to accommodate through business relationship managers and similar structures. For example, more than 70 percent of business partners want strategic advice on digital opportunities and many want technical advice as well. A better approach than managing business relationships through dedicated roles is to flex engagement based on business context and need. When operating this way, IT staff shift between evangelizing, consulting, brokering, coaching, and delivering based on business partners’ digital ambition and ability.

Agile, DevOps, and Continuous Delivery. To meet expectations for responsiveness, output, and “always-on” products, IT teams are integrating delivery, engineering, and support so that software releases occur as soon as new functionality is ready. CIOs are doing this by combining iterative software development methods with DevOps and aligning the resulting teams to the product lines described above so each product line can deliver functionality at its own pace.

Customer-Centric Design. Today, the likes of Apple and Amazon shape customer and employee technology expectations, and corporate IT teams cannot afford to fall too far behind. In response, IT teams are embedding customer-centric design techniques into their operations, allowing them to understand customer experiences, root cause suboptimal experiences, and design better, easier experiences.

Applications Building Blocks. In an era when speed and flexibility are paramount, IT teams must incorporate advances in APIs, micro-services, containers, and other technologies into their operations. For example, by providing application development teams with tools and reuse capabilities to scale development and speed integration.

Cloud-Based Scalable Infrastructure. IT teams are finding that fixed-cost, capital-intensive infrastructure prevents them from rapidly ramping up and down in response to digital demand. Instead, leading teams are moving from experimenting with automation, “infrastructure as code,” and the cloud to putting these approaches at the heart of their operations.

Strategy over Governance; Management over Operations. IT governance functions such as Information Security and Enterprise Architecture increasingly help shape business -- not just IT -- strategy. For example, 94 percent of chief architects are dedicating more time to shaping business strategy today than they did previously. To make this shift they are delegating and automating many day-to-day governance and operational tasks while retaining responsibility for oversight, coaching, and auditing.

Data Strategy over Ownership. It’s rare to find a digitization strategy that doesn’t include big data, advanced analytics, and new-in-kind products and services underpinned by data. However, most organizations lack an enterprise-wide data strategy, and others report problems with burdensome data ownership and stewardship. Rather than worry too much about who owns what, a better way to operate is take a business-centric approach, promoting specific business opportunities to use data and analytics and aligning the necessary resources required to exploit these opportunities.

Adaptive Skills and Mind-Sets. CIOs cannot change IT’s operating model without also changing IT’s talent. To operate in a fast and volatile environment, IT employees need competencies in areas such as influencing, teamwork, communication, and learning agility. They must be tolerant of risk and open to moving rapidly between tasks and working closely with business partners. And those with technical expertise need the versatility to switch between technologies rather than focus on just one.

[Read more about the changes that the IT model faces in an age of digitization.]

While this list may seem daunting, each change has individual value. Indeed, only the most foolhardy IT leaders would try to change everything at once. The most successful CIOs set clear priorities and evolve their operating models in step with their companies’ digital ambitions.