When I look at highly successful IT organizations, I discover that their success — and the value of technology in their enterprises — bears little relationship to the “standard” factors talked about in the IT industry.
They do not, for instance, predominately have their CIO reporting to the CEO: many of them report through Finance, while others report to the COO or the Chief Administrative Officer, although to be fair I expect a number of those reporting relationships to change with time.
They are led in a variety of ways, from Governing Board structures to a strong CIO, to a CIO/CTO pairing. Although Governing Boards are less common than the other two, they are far more effective at helping the CIO turn the IT organization into a successful one.
Nor are they either predominantly outsourced, or avoiding the sourcing vendors.
What they are is businesses (even though they are corporately a central service organization).
What do I mean by “a business” in this context?
Simply put, they operate — from their lowest organizational level up to their leader — as though they must compete for every scrap of business.
They assume nothing about the organization: they do not believe their position on a table of organization entitles them to anything.
They are often internally organized to serve their (internal) market’s needs, as opposed to its organization.
They have a true “IT strategy” — not a list of projects, nor a “the corporation ought to do this” wish-list, but a business strategy for themselves, and they follow it.
These successful units rest on a solid financial footing. Their portfolio of assets is known, measured, and they attack the weak spots within it.
They see their role vis-à-vis their customers as helping them understand where and how they can save money doing things they are already doing: that the order in which these are presented helps their own interests in recycling or eliminating superannuated skills or products from their mix is their benefit.
They are cautious about depreciation, seeing it (properly) as the taking on of debt: useful if it builds needed future capacity, a steep liability that limits their flexibility otherwise.
Asset replenishment cycles, including software, are managed to hold this drain on operations steady.
They have mastered the reinvestment business case and measure the effects of their decisions — and publish these — so as to maintain the political support for their financial management skills.
These IT groups do not automatically assume that, just because a piece of the business wants something, that they must fulfil it.
They are extensive, but highly selective and focused, users of external services. Applications that are “stable”, winding down their last few years before being replaced for financial reasons, often have their maintenance outsourced: this not only leads to a freeing of resources inside the group for other work, but it also puts a “real” price tag on small changes (a business that decreases their value overall).
Where they can significantly add value, however, they do not depend on the outside market at all: in every situation I looked at, all key projects were delivered with near 100% internal resources (only a few “extra hands” for infill purposes would be acquired from the contractor market, and never consultants to do the heavy lifting of design).
These organizations, in other words, took Nicholas Carr’s challenge as to the utility of IT to heart and have focused on places where IT will differentiate the business (and, by so doing, have differentiated themselves).
They are organized as practice areas specializing in various aspects of the change process, and deliver much value simply tuning and simplifying what exists in and around bespoke provisioning of new technology.
Strong Internal Processes
These IT groups tend, from the customer perspective, to be more nuanced than most, for they seldom lead with a “process redesign” presumption when an issue is being discussed (and it is they raising opportunities quite as much as the business doing so with them).
Internally, however, they are quite disciplined, with tight processes defined by outcomes: the path to completion can be loose, but checkpoints and measures are the “health check” for whether latitude is productive or not.
These groups tend not to be copiers of others — they study others’ practices and industry approaches to learn, but do not simply adopt them — and they are extremely good at cross-functional communication. For them, the recent explosion of collaboration tools has fit right into a culture of peer participation, innovation and decision-making.
Vendor management (due to their use of sourcing partners) is a key area of improvement and evolution that I noted in this year’s look at these organizations.
These are the three “feet” upon which these organizations rest. What makes them sustainable, however, is their focus on the fourth leg.
Learning & Organizational Development
Their number one issue at this time is strengthening their management teams: as with almost every organization, their management cadre is composed of ex-technical staff who took the promotion into management to continue to advance, and not because of a burning desire to manage people.
The process of developing leadership around the organization is what they see as their next challenge.
Coupled with this is their work to “dismember” their organization, spinning out corporate offices for various functions that IT makes use of (and historically developed capabilities for, such as program management) but actually can be enterprise-wide services, moving analytic capabilities into the business to help in business planning and analysis, etc.
Collaboration, for these groups, means that IT needn’t be “under one roof” — unless there’s value in it — because the bonds of co-operation and communication already exist.
All these groups had high credibility, and were actively generating demand for high value work.
If they were external businesses, I believe each and every one of them would be prosperous.
They are attractors: people working for consulting firms and doing well there nevertheless apply to work in these organizations, because of their ways of working.
What’s more interesting is that the enterprises these groups are part of are all successful as well.