Monday, September 20, 2021

Forrester analyst: Does your IT operating model need an overhaul?

An analyst from Forrester Research argues that your organization should reevaluate its approach to ensure maximum customer value.

Digital transformation concept

Image: Romolo Tavani/Shutterstock

According to Forrester, only 42% of IT transformations generate the agility organizations expect. This raises questions about whether IT is not aligned with the business or has the wrong practices. Gordon Barnett, principal analyst, stated that the pandemic demonstrated that organizations that don’t adapt to the pace and consequences of transformation are at risk of losing competitive advantage.

Barnett states that traditional tech models are based upon resource pools of skills, such as enterprise architects, app developers, and project managers. They should instead be built around a network-based operating unit of products, customers, or platforms. 

SEE: It can be difficult to balance remote work and children’s education. Here are some ways employers can help(Free PDF) (TechRepublic).

CIOs have had to struggle to meet business expectations and needs in times of change and volatility. Barnett suggested that these organizations avoid the so-called “dysfunctional trap”, and create an IT operating system that adapts to changing needs.

Barnett suggests five design principles to help CIOs create an adaptive IT structure.

  1. Scalability and adaptivity are more important than scalability. Adaptability is defined as the ability to move assets or resources to places where they are needed. Scalability, on the other hand, means that something can be made bigger. You should not be rigid in your thinking, but flexible enough to allow you to move around and change things quickly. 
  2. Networked activities are better than individual jobs. This refers to an entire ecosystem that delivers value, rather than individual skills. It is a network of people working together to provide value to the customer. “It doesn’t really matter if someone is a good coder if other people aren’t. [on a team] didn’t deliver,” Barnett said. The whole network can deliver a product or service that is of value.
  3. Autonomous over controlled control. He stated that this approach allows teams to be autonomous in how they work and not for someone in the network to coordinate or control it. “Autonomy is when you empower people closer to the work to actually execute it … and taking away the constraints of speed,” he said.
  4. Multiskilling over single-skilling. Today, when someone gets hired for a job, the company looks for specific skills that can develop. This is a very individualistic focus. Barnett believes that in the future, it will become more important to have a team with a variety of skills so that even if someone leaves, the team can still perform. He said, “So you want fungible groups rather than being dependent upon individuals.” He explained that a multiskilled team is one that works together and has multiple people with the same skills.
  5. Evolution over the target state. In the past, goals were established for where a project should stand at a given time. Teams work to achieve that goal. This is called a target state. Barnett said that the evolution approach is based on having an aspirational state that evolves for dynamic flexibility. “You don’t want your company to be rigid, say “We’re going after this” and then assume that it will happen. Customers’ demands and competition “move at the speed of light” so an assumption that is valid today may not be valid three months later. You have to adapt to that environment. This requires constant flexibility. Target states ignore what’s happening in their environment.

Be customer-driven

IT has a choice to make—does it use an outsourced model, shared services, be aligned to business streams or does it stay focused around traditional IT, Barnett said. “We see a combination from all of them.”

The CIO needs to choose the model in the context of how its organization operates—not based on “what a consultant or white paper says you should do.”

The most important thing to remember is that the customer an organization serves is at the heart and soul of any IT operating system. He stated, “So you have to know your customers.” “Many IT operating systems don’t get the people they’re serving, and treat all internal employees the same way.

SEE: How data sharing ecosystems give organizations a competitive advantage (TechRepublic).

The CIO can ensure that IT delivers value to customers by considering the customer.

Barnett stated, “That’s your operating strategy: What market are you going to play in and what strategies will you use to win?” Once the CIO has this information, they can ask for the capabilities needed to deliver services. The most valuable competitive advantage capabilities should be the focus.

The CIO can then consider structure and what they must do to execute and provide value to the customer. Part of the operating plan includes deciding what should automatically be done and what should be outsourced.

Barnett stated that the operating model is focused on the core work you must do and that you will design around it and create cross functional teams to execute the work. “Now you have consistency in operations.”

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