Transform IT for the digital economy.

As companies increasingly become digital, information technology needs to be central to their evolution. However, this implies a fundamental change in thinking from both IT and the business. Are both entities ready to take a new start? Let me give you an example. Let’s think about a manufacturing company that wants to deliver services to complement the utilization of its products. Up till now, the IT department is considered as a supporting function, allowing R&D to create new products, manufacturing to produce them and distribution to deliver them to clients. The business expects IT to deliver them the functionality required to support the conception, production and distribution of their products.

DIBut by using information technology to deliver complementary services, the role of IT is changing fundamentally. IT is becoming part of the business and is no longer just a supporting function. IT needs to be involved in R&D to ensure the services are developed correctly and take full advantage of the support systems already existing. This in turn results in those support systems needing different characteristics so they can respond not only to the needs of the internal users, but to requests coming from clients. The functionality developed by IT is directly used by the client, which means that IT participates in creating a positive image of the company. IT needs to become service oriented, and we’ll discuss how this can be achieved, but the business also requires to involve IT early in the development of new product/service combinations rather than telling them after the facts what they need to develop.

IT’s experience in how information technology can support services is of great importance in the design of the product/service combinations, but is often forgotten by the business. Perceived past delivery and frustrations created from misunderstandings and lack of perceived responsiveness have put IT at odds with the business in many enterprises. The business rather goes around IT to source appropriate technologies directly from external parties, but then expects IT to manage, support and integrate those in the overall information technology landscape. This leads to further frustrations on both sides. How do we get those addressed?

Does IT knows and understands where the business is going?

Both parties need to understand they are complementary to each other and have to collaborate to make the company successful in the digital world. Understanding each other’s needs is critical to reach that collaboration. I would suggest to start with both parties in the room and walk them through a real case. We often suggest to take one business process that requires “digitization” as a starting point. Have both parties describing the process, identifying the process steps that need digital support and defining what “service”, in the cloud sense of the term, is required to support that step, allows the development of an understanding of the business to IT alignment. Jointly then review which application contains the functionality required to deliver that service and how that application needs to be transformed to deliver the service at the quality level expected by the business, helps the business understand the digital assets available. Finally reviewing what is required from an infrastructure perspective to enable the service to run correctly under all circumstances, will enable the business to understand how decisions they take affect IT. It will also help IT understand how they can affect the business.

Such approach brings with it several benefits. First the business and IT start talking the same language. This will facilitate further discussions. Second they gain an understanding of each others added value and how to take full advantage of it. And thirdly, they reach a consensus on how to digitize a business process.

But more is required to have such approach becoming a standard practice. Complementing this workshop with the establishment of a proper portfolio management and governance is key. It’s interesting to see that business people in the manufacturing industry will go a long way to properly plan their production so they can maximize the delivery to their clients, but just dump requirements on IT without any planning.

Build a portfolio management and governance function

This is where portfolio management comes in. IT is an organization with a limited capacity, both from a people and business perspective, in exactly the same way as a factory. So clearly defining what needs to be built, how much resources it will take and how much time will be required enables proper planning and with it setting the right expectations.

But there will typically be more requests than there is capacity, so the need to prioritize is key. And here again we can borough some ideas from manufacturing. The Sales & Operations Planning (S&OP) process is defined to address such situations. The governance I propose consists of both business and IT people. Their role is to prioritize the requirements so IT can deliver them in time and budget.

Understanding the true value added (from a business perspective) should provide a good criterion to rank the requirements. Asking the business teams raising the requirements to estimate the additional revenue or cost reduction associated with their demand focuses the discussion and makes requestors think about the difference between a “must” and a “nice to have”. It also guides the governance board, and through it, the IT department, to focus on the essential requirements.

Establish a business architecture.

One additional element to facilitate collaboration is the building of a business architecture. Let’s draw, from a business perspective, how the different functions in the enterprise work together and how business processes are executed. You do not need to start from scratch. A number of industry frameworks exist. Here are some you can use as a starting point:

They typically address level 1, 2 and 3 of the business processes as these are fairly generic. You will have to implement level 4 and potentially 5 as they will describe precisely how your company works.

This will give you a framework facilitating discussions and allowing the positioning of the business process under review in a wider context.

Development, business as usual… but with transparency.

Once it’s clear what needs to be developed, agile and DevOps methods may be used to improve interactions with the business and fasten delivery. However, this only makes sense for applications that change on a regular basis (more than 2-3 times per year). But this is what IT departments should be doing anyway. Where the difference is, is in the progress reporting. Providing the governance board information on progress regularly allows the business to remain aware of what is happening and when functionality can be expected. Communication is at the center. So, when do you evolve your IT department to a services organization and enable it to be part of the business?

Tell me what is going through your mind.

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