As a Senior business leader in your organization, you have heard complaints about your IT organization. Projects may not be getting done, money is being spent on non-essential activities, or perhaps your IT organization just seems overwhelmed by requests. You may have spoken to several of the IT managers, discussed the problem with leaders of operational units and even spent some time trying to discern what is going on yourself. Still the answer remains puzzling.
This situation is more common than you might imagine. The good news is that the causes also seem to stem from common sources. Of course, your organization can have a wide range of individual issues that need to be resolved, but let’s look at three macro situations that cause under performance in IT organizations.
Using startup entrepreneurs as a template for your fast-growing business
A notion; if one hires smart tech people with lots of energy, they can just ‘figure out IT’. Recruit from from Ivy League schools, give big titles, promote them early. After all, that is how the hugely successful tech companies do it. Right? Probably not.
Failed startups are everywhere, and for many reasons. But the startup entrepreneurs that are successful are generally focused on building their product or service, not making an enterprise work. They require plenty of outside help themselves to create a running company. Entrepreneurs are not your template for a smooth-running IT organization.
IT can find themselves saddled with many Fast & Cheap Solutions from the startup phase, but Good solutions that allow an organization to scale are missing. Processes are fragmented, with lots of manual steps, data is incorrect or missing and business functions periodically stop working. IT staff is inexperienced at building for the long term and overwhelmed with keeping their patched together processes in place. And there may be no one with enough background to see the big picture of how IT should operate.
To scale, this organization must combine the essence of their new thought leaders with seasoned IT guidance. Hiring knowledgeable managers to work alongside the new thinkers is essential.
The Risk Averse organization – i.e. administration rules
Almost the opposite of the first case, is the more mature business situation. The highly trained IT staff is saturated with risk adverse thinking that has been honored for many years as protecting the organization. However, now the company is falling behind the competition. You have realized this and are changing the company culture, but IT is lagging your efforts because they already have so much to do. Your investigation shows that you are spending plenty on IT, but the backlog is filled with maintenance work and legacy support.
Consider that IT is rarely in this situation alone. The requests of IT are driven by business operations, where the business managers are of similar thinking. Maintenance, safety and non-disruptive small changes are the focus. Risk taking is seen as a threat. Change is something imposed from above, rather than driven by managers. Who in this case is making the big investment proposals that are going to really change your business? No one inside the organization is the likely answer. The business managers are filling up IT with incremental changes or worse, just maintenance.
In this case, your IT team becomes a reflection of your overall corporate environment. If you truly bring in innovative IT leadership, they will probably move on after a short time of being told “No, we don’t do things that way here”, “The cloud is too dangerous”, “Our regulatory requirements will not allow us to do that”, or “I need all these operational problems fixed first before we think about anything else”. Protecting old comfortable processes and people performing outdated tasks is the hallmark of this type of company.
The company is using IT like IT used to be used – i.e. revenue not spoken here
In so many organizations even today, IT is thought of as a support function. Automating more and more tasks, increasing efficiency, improving processes, eliminating work.
IT is only peripherally involved in revenue conversations. “We are going to talk about the sales forecast now, so you don’t need to be here if you have something else you need to do” is a common phrase that might be heard by the CIO.
Uber didn’t disrupt the taxi business because they worked on efficiency initiatives, they worked on the revenue side of the business. So why does this not occur more in your IT organization?
First, there are many IT people who perceive themselves as technologists first. They wish to talk about building systems, cloud computing, information security and the like. The business side of what the company does is frankly uninteresting. They don’t get excited to talk about the sales forecast. Their world is consumed with understanding the application of technology within your business, not changing the business itself. They want to “support the business”. Influencing direction of the business itself is not on their radar. IT as an order taker or a good soldier is a typical stance. Even many advanced CIOs view themselves in this ‘business partner’ role.
Second, staff on the revenue generation side tends to hold IT in this same back office light. If the CIO started to become more business-like and talked about how systems could allow them to obtain revenue from alternative markets or channels, create new products or services or increase sales, he/she would be encroaching on the well-worn territory of the Chief Marketing Officer or Product Development. The CIO could even be viewed as a threat, offering up technical ideas that are outside the training of business leaders. IT is not easily welcomed as a business innovator.
Either way, the byproduct of these situations is that the value proposition of IT is capped in some way. IT is a cost center to be managed. Mundane projects consume IT resources, IT only champions what will make processes better, not what will make the business better.
So it can be said that both IT and Business Leaders have a part in holding back the creative use and fast adoption of technology in their organizations.
Where are you headed with your technology organization?
Disruptor companies do not have the same demarcations between their business and technology organizations as do most companies. In fact, many high-tech companies have two or more IT organizations. One that supports the business in the traditional back office sense and one that is focused on whatever business they are in. To clarify – 1) A corporate IT function and 2) A tech organization that is revenue focused on building their technology business products. Think of any tech company and they probably have this dual organization paradigm.
But for the rest, it a confusing road where it is easy to mix these two concepts.
Managing IT spend from a cost containment perspective makes a company ripe for disruption by someone who invests in IT as a revenue generating tool.
Not a good place to be.
So the question is, what is the best technology strategy for your organization and how are you taking action to get there?
- Kim Terry
Founder, Subscription Systems LLC