the role of the it department in business
TRANSCRIPT
The role of Technology Services in the Business
Business IT Integration Framework
Technology has become part of all aspects of modern day society
• Customers expect to be able to communicate through at least one or more digital channel (portals, e-mail, social media, etc.)
• Most Tax Offices, financial services and suppliers are expecting the use of digital forms and digital payments
• Many internal business processes are at least partly monitored and controlled through IT applications (ERP)
• Most workers are using an IT device (desktop, laptop, tablet, smartphone) to perform their activities
• In many sectors the role of IT is increasing in importance: in Healthcare eHealth is booming, in Education MOOCs and other forms of digital education have become disruptive
Formal IT organizations are still needed to align with the business
• BITA (Business IT Alignment) is still a core challenge for most IT departments
• Shadow-IT is a growing concern: business users are actively searching and applying alternative IT solutions without consulting or engaging their IT department
• Bimodal-IT has become a viable option for many organizations: the formal IT department takes care of steady-state IT (continuity) while business based digital initiatives are renewing and innovating business models (disruption)
• In many occasions the IT department seems too slow to keep up with the digital initiatives in the world and seems more obstructive than cooperative when it comes to investigating new technology
A clear role of the IT service organization defined by the business
• A lot of IT managers have found that they do not have a clear assignment from the board that set outs their role within the organization
• Disruption and digital transformations are not equally relevant for all organizations and companies. For some it is strategically important to stay on top of technology and innovation for others it might be sufficient to follow the market
• Defining a shared business view on the role of IT within the organization guides the IT manager to bring the IT department up to par. It also helps with defining which aspects of IT services are key to the organization and which services can be outsourced
Business ViewsBusiness perceptions on their need for IT Services:
5 Possible views on IT by the business
• The business needs to express clearly their overall expectations of IT
• Why is IT (or an IT service) of importance to the business?
• What happens to the business when a specific IT service is temporary not available?
• How is the business expecting the IT provider to deliver the IT service?
• The role IT plays in the business will change over time
• Where IT might help to open a new market or introduce a new service, over time the business will want to consolidate more than they want to expand
• The competitive advantage of being the first to offer a specific IT based service will disappear over time when the technology becomes more widely available
• Competitive advantage might also turn into a disadvantage when there is a lock-in and the business is unable to work with the latest improvements in technology (legacy trap)
• The view and expectations of IT by the business are mostly determined by the dependency on IT in the core activities of the business
No Strategic View: the business does not feel that they need IT
No Strategic View
BUSINESS PERCEPTION OF NEED FOR IT
For some businesses IT is more necessary evil than strategic asset
• In some circumstances IT is not a real necessity for existence: tradesmen that are dependent on their skill and on recommendations through personal relations, local shops with a dedicated following, social workers, etc.
• They might need to use some IT solutions: to fill out their tax-forms, to do their regular banking or to communicate with clients
• They do not see the added value that some IT services can bring them and they might be even more aware of some of the negative aspects of the new digital world (the 24/7 notifications/disruptions)
• They only need IT support when IT is not working for them or when they are expected to use a new IT service for a specific situation. Most often they will find some IT support in a local setting (through relatives, friends, community)
Scattered View: some business managers perceive an use of IT
No Strategic View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT
For some business managers IT applications bring a specific advantage
• In the past 30 years of IT evolution a lot of new services were introduced in the workplace through business users that recognized a specific advantage of an IT application: bookkeepers introduced spreadsheets and sales managers introduced CRM like applications. To some degree examples of shadow-IT.
• With the focus on specific applications the business managers also expect specific focus on these applications by IT. In many situations this meant that IT was also expected to program and code to make the application fit to the requirements
• In most case these applications were more supportive within the business than they were supporting the core activities. It allowed a fragmented business strategy towards IT: some business managers were enthusiastic while others remained skeptical
Commodity View: The business sees IT as a supportive tool
No Strategic View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT
When IT is mostly supportive to the business
• For many companies and organizations IT is mostly supportive. Technology can play a part in many aspects of the business and at the same time it is not seen as crucial to the business survival.
• Failure in IT might cause the business to be upset and angry, then they will turn to alternative ways to deal with the situation and ultimate there will be little actual damage to the business. Most business organizations have had some major issues with IT in the recent past and thus there is a lot of understanding for the occasional breakdown of IT
• Most business staff perceive IT as tools to support their activities and they will only need a shallow understanding of the underlying technology
• In general IT services are perceived as an utility, like water and electricity. IT needs to work and the costs of running IT should be comparable to the competition
Enabler View: The business feels very dependent of IT
No Strategic View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT
There is a great dependency on IT services in the core of the business
• Digitizing their core activities in the past has led to a great advantage for the business now and at the same time has led to a great dependency of IT
• There is a high risk of losing business or harming the company when the technology is either unavailable or compromised (hacking, security-issues)
• In most cases the underlying technology of core activities is highly complex and difficult to understand for both business managers and general IT providers: high level of specific expertise is needed to support the business
• Risk is a more important driver for IT strategy than costs
Strategic View: IT is of great importance to the strategy of the business
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT
Technology can also expand the business and play a strategic role
• The use of technology can make it easier to access new markets or to reach a new group of customers
• Investing in new technology can bring the business a greater advantage over their competitors, business managers want to be on top of IT
• The distinction between business and IT becomes irrelevant, IT is the business or the business is IT
IT FocusWhat is on top of mind for the IT organization?
5 focus areas for the IT organization
• What is on top of mind of IT (in general) explains how IT is aligning with the business
• There can be a difference between what IT says their focus is and how they actually behave: action speaks louder than words
• Some of the focus of IT is more inside-out or provider perspective and others are more outside-in or business perspective
Technology Focus: there is no real interest in understanding how IT supports the business
IT SERVICE ORGANIZATION
Technology Focus
IT is mostly concern with the technology they are supporting
• The IT department is mostly concern with how IT works and less worried about how IT can support the business
• The IT department doesn’t really understand how technology is being used in the business
• When they deliver presentations they go straight into Operating Systems, Software Applications, Programming, Network Diagrams, etc.
• When they are asked to help solve a business problem they will dive into programming a solution from the start and will not even think to consider non-technology options
Product View: IT believes that business value is in the IT products
IT SERVICE ORGANIZATION
Technology Focus
Product Focus
The IT department delivers IT products to answer straight forward business questions
• The IT department has a general understanding that there are users for IT products in the business
• They have found manuals to help them create IT service organizations, like ITIL/Cobit/DevOps, Scrum or Prince2 and they try to follow these guidance they way they understand them
• The IT department seem to be pushing SLA’s and is very specific about availability of their systems (99.8%)
• The IT department is still reasoning from their delivery aspect and finds it difficult to see the business perspective.
Customer Focus: IT delivery starts with the customer demands
IT SERVICE ORGANIZATION
Technology Focus
Customer Focus
Product Focus
Answering customer questions is the base of IT delivery
• The IT department actively listens to the customer demands and tries to find answers that will truly help their customers to move forward
• The IT department is organized around timely service delivery and how to best support customer requirements.
• The customer is actively involved in the delivery of new IT services and in running the daily service operation. There are clear communication channels between IT and their customers.
• IT can support multiple customers with different demands and requirements as long as their customers can articulate these well.
• The IT department anticipates on future customer requirements and will educate their clients on new and relevant developments.
Business Focus: IT understands how the business is based on IT
IT SERVICE ORGANIZATION
Technology Focus
Business Focus
Customer Focus
Product Focus
IT understands certain aspects of the business better
• When business processes are running almost exclusively through IT systems it is possible that the people managing and updating these systems understand more how the specific business process work than the actual business users
• IT can take on the responsibility of the specific business process on an outcome or value based performance contract
• This changes the dynamics for the IT department: they were mostly supporting the core activities (cost center /overhead) now they are delivering one or more of these core activities (value or even profit center)
Strategy Focus: IT is of great importance to the strategy of the business
IT SERVICE ORGANIZATION
STRATEGY FOCUS
CUSTOMER FOCUS
PRODUCT FOCUS
TECHNOLOGY FOCUS
BUSINESS FOCUS
IT can open new markets or help the business become more competitive
• When IT learns to understand the business processes they support and they can play an active role in delivering these processes they can also find ways to apply new technology to increase the business, market share and value
• IT is not doing this from a supportive role, meeting business demands. IT themselves are in a driver seat and are actively working side-by-side with business management to explore the strategic potential of technology
• IT understands the true strategic value of technology in relation to the business they are in
BITI FrameworkDiscovering business expectations on the role of IT
Combining business view with IT focus creates a perspective on current and future needs for business and IT cooperation
• In most organizations there will be elements of all business views and often there will be some aspect of IT that is considered to be strategic
• It is relevant to find the business view that is close to the actual understanding of the business need for IT. It might be that overall IT is more seen as supportive to the business (ic Commodity View) than that IT is expected to play an active role in the business (ic Enabler or Strategic View)
• This might require asking more questions to drill down the actual perception of IT
• The same can be done for finding the relevant IT Focus. Often asking the business users and managers their perception of the current IT support will help.
The BITI Framework can be used to assess the current level of business and IT cooperation
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT IT SERVICE ORGANIZATION
STRATEGY FOCUS
CUSTOMER FOCUS
PRODUCT FOCUS
TECHNOLOGY FOCUS
BUSINESS FOCUS
In most organizations there is a unbalance in business perspective and IT focus
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT IT SERVICE ORGANIZATION
Product Focus
STRATEGY FOCUS
CUSTOMER FOCUS
TECHNOLOGY FOCUS
BUSINESS FOCUS
There are several different kinds of unbalance in business and IT cooperation
• In most organizations the Business View is actual fuzzy (scattered) and implicit, it is difficult to identify the actual View from the perspective of the IT department. The IT department tends to guess the Business View to be lower than it actual is. There are many IT managers who think that their business users are not mature enough for professional IT services
• The IT department thinks that they need to have business focus and the business has actually a commodity view: the IT department presents solutions for the business that is not expected of them
• Most often the IT department think they have a customer focus and in reality they are still in product focus where the business is in Commodity View
• The most problematic is where the business is in Enabler View, feeling the dependency on IT services, and IT is in product or customer focus.
It helps to determine where IT needs to put their focus and improve their performance
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT IT SERVICE ORGANIZATION
Customer Focus
Product Focus
STRATEGY FOCUS
TECHNOLOGY FOCUS
BUSINESS FOCUS
There are several scenarios for improving the relationship between business and IT
• In a lot of cases the IT department needs to switch from an inside-out to an outside-in perspective first to be able to have an relationship
• Part of this switch is business management allowing the IT manager to become truly accountable for IT service delivery and for the IT department
• The business often needs to learn to better articulate their demands and requirements to IT, this might be accomplished through a kind of broker (business relationship manager, service broker)
• On the other side IT will have to learn to articulate their services in terms that business users and managers understand and recognize. IT needs to take ownership of these services, in terms of costs and risks, and negotiate price and conditions with the business.
The BITI Framework helps to understand the position of IT within the business
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT IT SERVICE ORGANIZATION
STRATEGY FOCUS
CUSTOMER FOCUS
PRODUCT FOCUS
TECHNOLOGY FOCUS
BUSINESS FOCUS
IT is Cost Center
IT is Value Center
Each Business View has its own demands on the IT organization
IT SERVICE ORGANIZATION
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
On-time support
Inventivesolutions
Quality of Service
Mission Criticaldependence
CompetitiveAdvantage
• Innovation• New Markets/New
business• Shared
• Prevention• Anticipation• Understanding• Pro active • Beyond IT
• Cost efficient• Standard• Measurable• Auditable• End-to-End
• Off the shelf or• Custom-Made• Per process or function• Project based
• Off the shelf• Small/free
STRATEGY FOCUS
CUSTOMER FOCUS
PRODUCT FOCUS
TECHNOLOGY FOCUS
BUSINESS FOCUS
BUSINESS PERCEPTION OF NEED FOR IT
Understanding what is expected of the IT department supports finding the role of the IT department
• When IT plays a supporting role in the perspective of the business it will be difficult for the IT department to play an active role in (digital) transforming the business
• When IT is perceived as a cost center it will be confronted on a regular basis with the need to lower their operational costs and there will be little room for IT to show how technology can lower business costs
• When IT is still internal focused it will not be considered mature enough as a partner to the business: this role will be taken by external advisors and providers
The expected role of the IT organization and the nature of the relationship
No Strategic View
Strategy View
Enabler View
Commodity View
Scattered View
BUSINESS PERCEPTION OF NEED FOR IT IT SERVICE ORGANIZATION
System Administrator
Co-Owner
IT Business Partner
Internal or ExternalIT Service Provider
IT Department
trust
contract
Overhead/colleagues
The IT organization needs to work with their own business partners
• When the expectations of the business on the current and future role of IT are clear than the expected role of the IT service organization can be defined
• When Strategy View and Strategy Focus come together the distinction between business and IT become irrelevant
• When the IT Service organization is expected to be a (business) partner to the business, delivering specific services and competences to support the core activities of the business, than trust is the guiding principle for the relationship
• When IT services are considered to be commodities for the business, the relationship will become more contractual and financial. It will also mean that one provider can be exchanged for another provider without extreme difficulties
Next Steps
Idwell services in Business IT Integration
Idwell helps organizations in designing digital strategies and in helping them find the best solution to control and manage the execution of these strategies
• Idwell offers services to identify Business Views by interviewing key business users and managers as well as offering workshops where business management and IT management can discuss expectations and roles
• Idwell offers services to help IT departments identify their key IT Focus as well as assessing the quality and maturity if their IT service delivery. This can be used as input to identify key areas for improvement and to start a lasting transformation of the IT service organization
Contact Information
Paul Leenards (Idwell):
+31 6 1869 3246
http://idwell.eu
http://idwell.nl
Acknowledgements
• The are several publications on the BITI Framework or BITI Maturity Model
• Job Ten Hagen, designing and transforming IT organizations: roles, responsibilities and organizational structures (TSO, 2012)
• Paul Leenards, Kijk door de Service Management bril naar de regie organisatie (TijdschriftIT Management, 2013)
• Paul Leenards en Julius Duijts, Governance van Outsourcing (IT Beheer Magazine, 2006)
• Oleksandr Varlamov (University of Twente) has done research into the framework in 2010: http://www.slideshare.net/VarSan/biti-mm-aligns-the-worlds-hat-belong-together