Is the era of centralised IT over?

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Is the era of centralised IT over?

For the majority of businesses IT is a function alongside Accounts or Marketing. For most employees it’s the guy who comes to fix your computer or who you call to get help with email. Over recent decades IT has grown as more and more business functions have become enabled through technology. From the Mainframe to SharePoint the enterprise has evolved into a business dependent on IT. Despite this the view of IT in many organisations can be negative. Much of IT’s time can be spent “keeping the lights on” and often not acting as a pro-active and responsive partner to the rest of the business.

Digital Transformation puts new pressure on traditional IT models

Now the evolution of the enterprise, often referred to as digital transformation, is leading to IT capabilities being more woven into the fabric of the organisation. Lines of business (LoB) are beginning to recognise that they are not just dependent on IT to carry out day to day tasks but that their very purpose is to deliver technology based solutions. For example, Marketing delivers websites, mobile apps and social media campaigns; Sales delivers real time data via dashboards to senior executives; Procurement enables integrated supply chains through web services; HR enables employees to book holidays via their phone. Many C-Suite executives today will tell you that their business, whatever the industry, is becoming a technology business.

We see this in the way that they open up APIs to external developers, engage with the developer and start-up community through incubators and hackathons, and fight each other to recruit the best IT talent. The business is expecting IT to deliver more and faster, mainly in the form of mobile apps. Faster often means moving from traditional Waterfall methodologies to new Agile processes (in itself is a significant transformation). Even where projects are outsourced there is increasingly a greater need to integration with the systems that IT hold the keys to. As if to compound the challenge, many technology budgets, especially those that involve an increase in IT spend are seeing control of the increased portion shifting from the CIO to the lines of business. As more is expected of technology those whose domain it is, are in danger of seeing their authority diminished.

So the question for many, even if they are not asking it, is what does this mean for IT long term? Perhaps it is the case that a single IT function serving the whole enterprise is simply no longer viable. While IT has become increasingly distributed in larger organisations the basic structure remains the same. If any part of the business needs something that could be deemed technology centric then the request goes to IT. It is hardly surprising that frustrations with this approach, which can sometimes result in slow response times, has led many employees and functions to look for alternative solutions. This is often called “Shadow IT”, where parts of a business procure their own technology solutions without the knowledge of IT. Dropbox, Box or Salesforce.com are typical examples of IT technology/application acquisitions that have been made outside of central IT’s direct control.

The criticism of this is that these technology choices often serve the needs of those who use them but without addressing many higher level concerns. Security and geolocation of data being frequently cited. While Dropbox might make it super easy to share files within a team those files may not be stored in a way that is compliant with either internal or external regulatory compliance. There is also the challenge of managing these services especially when they start to grow in terms of users or even in terms of implementations. It has not been unusual to see a large organisation with multiple Salesforce.com accounts which at some point in time have to be integrated into one. A job that often then falls to IT. As these scenarios escalate the likelihood of a breakdown in the basic business/IT relationship increases.

An IT for each Line of Business (LoB)

One possible solution to this is that IT becomes a function of each line of business. An independent IT function would still make sense in a coordination and oversight capacity. But the actual delivery of solutions for a LoB would be done within that LoB. In this way the members of the IT team are working with the domain experts that each solution needs to serve. This is something that has been happening in some organisations. For example, many Marketing functions have operated IT capabilities within their own purview and budget for a number years.

The issues related to the traditional separation between IT and the LoB were apparent when implementing User Experience programs. IT development teams would receive functional requests from the line of business but having no idea why these requests existed they would be implemented functionally correct but in an inappropriate way. By bringing the two sides physically together the implementation improved and so the UX got better. That resulted in more efficient and effective employees within the LoB.

If the development team was located within the LoB then this problem would be inherently solved in most cases. This tighter collaboration would mean that IT professionals were better placed to help LoB colleagues identify and implement solutions. Should the question of Dropbox versus Box come up then their input would help to identify the solution that meets the needs of the LoB and the higher business requirements. As these IT teams are dedicated to the LoB then there should be little delay in delivering new solutions. They are not entering into a long queue made up of requests from across the business.

Some may now argue that in many enterprises there are IT teams dedicated to certain LoBs. However they still usually sit within IT and essentially operate as an outsourced service. What is being advocated here is IT within the LoB, even physically co-located where possible. The team would be part of that LoB and not simply a part of IT seconded to the LoB. What then remains as an IT function would make sure that all LoBs were aware of organisation wide rules, standards, patterns and compliance requirements. They would also have oversight of all solutions and address scenarios where one function or department is thinking of implementing a solution where another already has the same or similar. Plus of course they would still be responsible for enterprise wide IT functions such as email.

Empowering the Chief Information Officer (CIO)

To be in a position where it has a view into potentially every LoB would give IT incredible company visibility and awareness – perhaps matched only by the Chief Operating Officer (COO) or the Chief Financial Officer (CFO). In many cases IT already has this visibility but not being closely integrated with these functions diminishes its level of insight and with it the potential power and influence. This would in turn open the way for the CIO to regain and even surpass the levels of power and influence that they once held. It would also free up IT to be more proactive and less reactive. This combined with the LoB integrated teams would greatly improve and raise the profile of IT across the organisation. Freed from the operational challenges of running a large technical department the CIO and his IT team could become more business aware (e.g. speak in the language of the business). We might even start to see some CIOs becoming CEOs.

Modern development and operations capabilities and processes will be integral to such a shift. Agile methodologies mean smaller teams of cross discipline capabilities. This would make IT within LoB far more cost and time effective than traditional Waterfall. Cloud would enable more streamlined deployment scenarios reducing (though not eliminating) the need for Operations. In addition the broad fragmentation of tools would be less of an issue than it has been in IT. Each LoB team could decide on their own tooling preferences that suit their skills and requirements. A move to micro services and low code development environments would minimise the fragmentation of development approaches. This would make architectural and pattern oversight easier by central IT.

Some movement of people between LoBs would also help to share best practices – something that IT vendors have found benefit in doing over recent years. If enterprises want to be technology businesses then using vendors as a model where possible (at least in terms of structure and process) is probably not a bad thing. While some functions and some organisations have shifted towards such a distributed model for IT more need to do so (with IT driving the change) in order to empower their CIOs.

For if enterprises truly want to achieve such an ambition then they are going to need to radically rethink their IT. Otherwise the cog at the heart of the machine will fail and with it the whole enterprise. For IT perhaps the time has come when it needs to take ownership of its own future. If CIOs want to be head of a function that commands influence rather than being no more than a support service then they need to step up to that position. A new IT will require a new contract with the business and it will be up to IT to shape that contract. Those that do will probably not just be better for it but their businesses will prosper from it as well.

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