Lessons from Janus?

February 2013

Roman two headed coinCSC’s Leading Edge Forum has been conducting next practice research for ambitious CIOs and executive teams at the intersection of business, IT and management for over 30 years.

One of its recent reports focuses on the future of enterprise IT. ‘The role of the CIO today is to virtualise, consumerise and repurpose enterprise IT,’ says Richard Davies, VP and MD at the Leading Edge Forum.

Our research sought first to understand and explain how the purpose of enterprise IT is likely to change over the coming years, and second, what these changes mean to the skills, competencies and cultures that firms need to retain and develop.

We believe the opportunities in information technology have never been greater, but only for those organisations that embrace a much more front-of-the-firm future.

Today’s ever more demanding marketplace is characterised by both exciting new opportunities and formidable new competitors, many of them based in Asia.

Increasingly powerful and cost-effective technologies offer the potential for both differentiation and market access for new competitors. At the same time, the business environment has become more punitive, and employees and customers have become much more familiar and adept with technology and less willing to be led by enterprise IT. All these trends have been accelerated by the ongoing economic downturn.

Firms are responding to these challenges by using technology to flatten their organisations and offload non-value activities to external partners, making the networked organisation a fundamental business reality. But organisations are also becoming more complex as they strive for greater geographic coverage and more differentiated and customer-specific offerings.

In response to the heightened exposure to risk - from both cyber attacks and adversarial media - firms are also bolstering their risk and security management processes. But they are struggling to reconcile this increased governance with the increasing value placed on information transparency, and the demands of a new generation of managers who want to be connected to information anytime, anywhere.

With the worst of the downturn hopefully behind us, and after years of cost cutting, many firms are turning again to innovation and growth. In the course of our research we discovered how some of the most advanced IT organisations we know are coping with the above pressures and working to assure their future in this demanding but opportunity-filled new world.

Businesses always have to balance the demands of two strategic agendas: 

The ‘bottom-line agenda’, concerned with improving the efficiency and effectiveness of the current business model. Here, business value is achieved through ruthless standardisation and leveraging economies of scale. The ongoing business downturn has raised the profile of this agenda, spurring a global drive across all industry sectors to reduce costs by sharing support services and outsourcing non-core activities.

The ‘top-line agenda’, focused on creating new business value. Here, business value is achieved through innovation. This is the emerging priority for many organisations now that the worst of the downturn has seemingly passed.

As illustrated opposite, an effective management team has to be ‘Janus-faced’, able to rationalise and build on past investments, and at the same time to embrace and take bets on the future. Yet these two agendas clearly call for very different and often conflicting skills, management styles, ways of working, behaviours, measures of performance and IT support. Enterprise IT has to decide which side of Janus to emphasise, and develop its strategies accordingly.

Many organisations have addressed the bottom-line business agenda through ‘smart procurement’. On the demand side, this involves working more closely with the business to define and agree requirements.

On the supply side, it means sourcing the bulk of IT delivery activities to external partners. To ensure success, enterprise IT facilitates communication between the external partners and the business, but retains firm control of business/IT strategy, enterprise architecture, IT portfolio management, and the business/IT change roadmap.

Such organisations have evolved what we call the company store model. This provides a limited range of common, externally-supplied services ranging from IT platforms to full business process outsourcing (BPO) offerings, as well as a restricted set of approved standard devices for use by business staff. The emphasis here is on robustness, cost-effectiveness and reliability, rather than on innovation and flexibility.

In the most advanced firms enterprise IT is also addressing the top-line business agenda by moving beyond the company store model to a combination of three new models:

Process manager - This model focuses on adding value through improving, and sometimes radically reengineering, the design of business processes that may serve both business agendas.

DIY - This model is inspired by the examples of some major do-it-yourself retail store chains. These stores offer not just the wide range of products designed to meet the needs of the amateur builder, but also much-needed in-store help. Similarly, in this model, enterprise IT offers and supports a wide range of self-service technologies, often acting as a coach to employees who are familiar with IT, but are not fully self-sufficient.

Studio - As in a modern-day Hollywood studio, a changing mix of IT and business skills are brought together to produce innovative solutions to meet sophisticated business needs. These teams are double-deep by nature, having an intimate knowledge of the business and its competitive environment coupled with a deep understanding of the relevant technologies.

Together, these three models encompass much of the future of the enterprise IT function on the right side of Janus, where business and IT co-evolve and funding is increasingly bundled into wider business initiatives.

Like finance and operations, enterprise IT has a solid, firm-wide view of how the business works. But unlike the other two functions, it also has deep knowledge of the firm’s processes, information flows and ongoing change initiatives. This makes enterprise IT uniquely qualified to play an enhanced governance and control role - what we call stewardship.

Almost all of the organisations we interviewed for our research project recognised the need for enterprise IT to acquire new skills and probably new people in order to add significant value in the future. Skills and competencies required for the stewardship role were deemed critical, as were skills associated with the business itself, such as business consulting and change management.

On the supply side, vendor management (or ‘smart procurement’) was cited almost universally as a vital competence for enterprise IT. Most interviewees were happy to delegate the operational side of IT services management to their sourcing partners, as long as enterprise IT retained oversight and control of service delivery.

Service integration emerged as a further important responsibility of enterprise IT, particularly in a multivendor environment where application support, hosting and network services may all be managed by different service suppliers.

In conclusion, enterprise IT is being transformed by the development of ever more pervasive technology, by a steadily expanding and improving IT services sector, and by the emergence of a generation of increasingly tech-savvy employees. These forces are reshaping the mission of enterprise IT along three main lines - virtualisation, consumerisation and repurposing:

  • As enterprise IT’s vendor management skills improve, most back-office delivery tasks will be virtualised - that is, moved to various types of third-party suppliers, with the exception of the most ingrained legacy systems.
  • In the front office, consumerised, largely self-service technology will be put directly into the hands of professional employees who will need to become double-deep in business and IT to succeed in their fields.
  • In most industries, competitive pressures will require that IT be increasingly built directly into product and service offerings, requiring close-knit, joint business and IT teams. Successful enterprise IT organisations will be repurposed to participate in this work. 

As enterprise IT steps back from the in-house IT development and service delivery activities, it will tend to migrate towards one or more of the three emerging higher-value models: process manager, DIY and studio. Each of these needs very different skills and competencies.

To obtain and retain these new competencies, enterprise IT will have to accept and even seek higher levels of staff turnover and recruit many of its people directly from the business, as well as from the supplier and management consulting communities.

Over time, enterprise IT will become smaller, more highly skilled and more strategic in its focus, but will also be more transient. Many more executives and employees will spend time in the function, but fewer will make an entire career there.

The net result of these shifts will be a reinvigorated IT function that has rightfully discarded its ‘retained IT’ label: a function that will enjoy a new and more valuable future at the front of the firm. 

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