The Modern IT Department: Driving Business Innovation

Introduction

Every working person wants to go home each day feeling like they have made a contribution to the health and growth of their organization. However, members of the IT team often feel disconnected from the organization they work for. They come to work worried about a network security issue, or mulling over a complex programming problem; they are uninvolved in or even unaware of their companies' core business mission. This limitation is often magnified when IT staff are operationally and sometimes physically segregated from the business's core staff.

Why are IT departments so often separated from other business functions? To explain this, one must consider that IT computing is one of the newest staff functions of most organizations. Computers emerged in the 1960s, and only started being used by mostly large businesses in the 1970s. Most of the other functions of running an organization, such as business management, accounting, finance, operations, sales and marketing, have much longer histories. Thus, IT remains the new kid on the block, never fully integrated into or utilized by the business.

The cost to organizations which have not fully integrated IT into their business can be high. Gartner and other research firms often quote IT project failure rates, measured by lack of on-time, on-budget delivery, to be close to 80%. This is an organization-wide problem, not just an IT problem. When IT projects run over budget, it is quite common for the blame game to occur between IT and business managers, further isolating IT from the core organization. A lack of shared understanding of IT's potential value when it is closely aligned with the business, and its associated synergistic effects for the overall organization, engenders a mistrust of the IT function and dooms many of its projects to failure.

Given the rapid advance of technology across virtually all industries and sectors, IT can no longer be viewed as a cost center purely working to keep the lights on and the gears turning. IT must transform and integrate into the core organization in order to become an agent for business innovation. The rest of this article describes how to achieve this transformation within your organization.

Transformation

It is time to bring the IT organization and the rest of the business together as a closely aligned team, where successes and failures are shared by the entire organization. Not surprisingly, the transition to this new paradigm will not happen overnight, but will take place over time, as everyone sees evidence that the organizational shift is working.

• The actual integration process starts through colocation of IT with the rest of the organization. This results in increased communication and easier scheduling of joint meetings, as well as the opportunity for everyone to gain visibility and insight into the day-to-day realities of the respective organizations.
• Consider organizing an "IT Restart" event for everyone in the business, where the physical relocation and other aspects of the planned transformation are introduced. This event-based approach gets everyone's attention and puts them on notice that things are changing.
• Create (or enhance) a joint steering committee comprising managers from each business area, including IT. The committee's functions would include: joint processes to resolve outstanding operational and communication processes, reviewing all existing processes to determine how they can be improved through organizational synergies, creating joint measurable scorecards which reflect synergistic performance, and building strategic processes that leverage organizational synergies to deliver increased business value. In this way, IT can understand and contribute to the business's key initiatives and demonstrate how well it can support them.

Process Improvements

There are a number of process improvements which often yield material benefit to the organization. Some will be specific to your organization's structure or industry, but here are a few that tend to be somewhat universal.

• Form an IT steering committee, if the organization does not already have one. This committee, made up of stakeholders from both within and outside the IT department, would review IT project requests together. This will create a better understanding all around of what is going on in the IT department and how it relates to the business mission.
• IT project requests need to be prepared in a business case format by business stakeholders, reflecting proposed project value as well as a detailed functionality description. IT then needs to estimate the project cost/duration to complete the process. Once the project request is completed and estimated, the IT steering committee needs to meet and review the business case. The committee would discuss the business need being addressed and the relative importance of requested functions and functionality-specific cost drivers; in this way, the business may be able to achieve the desired results while materially reducing overall project scope, cost and duration. This type of refinement process results in more frequent project approval and maximum project value measured against the lowest cost.
• Software selection and implementation is often fraught with problems and should be streamlined. Create a small team made up of IT staff and prospective users of the desired software—subject matter experts, as it were. This team can work together to establish requirements and vet a short list of candidate providers. The result will be much faster than a traditional RFP process and far more likely to produce useful results. See our article on software selection for more information.
• Whenever possible, seek out standalone solutions that do not involve costly, risky legacy system modifications. Legacy systems are by definition built over long periods of time, and are often poorly documented. When changes are made, unanticipated broad-based "collateral damage" occurs, resulting in material additional effort to get the legacy system back to its previous functionality. Even worse, some of the organization's capabilities or data could be irretrievably lost. Thus, when undertaking software acquisition or custom development projects, every effort should be made to build around existing systems. See our article on legacy systems for more information.
• Take every opportunity to educate users on the day-to-day lived realities of IT. For example, the business submits a request to IT focused upon improving poor network speeds. In responding to such a request, IT should express understanding and concisely explain the processes and/or costs required to correct the issue. This compares favorably with the traditional approach wherein the business submits a request, and receives a resolution date which makes IT seem ineffective or as though it is not making the request a priority.
• Lastly, broad-based joint business and IT communication processes are essential at all levels of the IT and business organization. While the steering committees discussed above bring the management teams together, they do not include organizational subordinates. Consistent communication processes enable regularly scheduled IT/business intercommunication, often through regularly scheduled joint meetings. These meetings should follow specific agreed agendas, generating a joint IT/business status report, based upon project-specific reporting. These regular status reports need to be consolidated monthly or quarterly, for joint presentation to senior management. For senior management to receive joint updates from the business and IT will initially be shocking, as this coordinated messaging exists in very few organizations. What will emerge from these senior management meetings is a joint understanding of projects and related support activities underway.

Emergent Capabilities

• Data warehouses have been advertised to create customer behavioral models and provide associated predictive analytics. However, it has only been in the last few years that behavioral and predictive analytics are finally starting to meet expectations. This is largely due to augmenting existing data warehouses with data available from social media, as well as customer loyalty cards, which are now more able to track customer group buying patterns. As IT and the business come together to provide customer behavioral and predictive data which result in incremental revenue increases, senior management will consider this new data as innovation, despite the fact that the underlying capabilities have existed for many years.
• Mobile computing is here, and businesses must consider how to propose mobile development projects which will keep the company relevant and competitive for this new user group. While being a big win for users, mobile can be problematic for IT and the business. IT now has to learn a new set of development technologies, and has to focus more intently on security.

Summary and Conclusion

IT innovation begins with senior management having confidence in the IT organization. Senior management establishes the strategic direction for the company, which almost always requires some form of IT innovation. With a joint IT/business view of the organization's strategic direction and how IT can support that vision, as well as a clear understanding of the status of IT projects underway, senior management can identify functionality gaps which can largely be filled with innovation-based projects.

As a natural outcome of an open and ongoing dialog between IT and other business areas, proactive thinking will occur, leading to innovative ideas that can be presented to senior management. This results in the best possible outcome of upward and downward organizational innovation being articulated—and acted upon.

We are rapidly moving into an age in which virtually every business must be technologically accessible. Technology users range from nursing home residents using handheld computing to get their news, weather and family photos all the way down to preschool children learning their ABCs on handheld devices. We have become a computer-literate population, putting IT front and center within organizations. Meanwhile, today's businesses must leverage their IT assets as never before, providing business intelligence, responsiveness and competitive agility.

Clearly, IT can no longer be disconnected from the business, but rather must have an equal standing across organizational areas. IT can no longer be viewed as tactical—it is strategic. In its short life, the IT function has evolved from a peripheral enabler to a fully integrated strategic partner providing much-needed creativity and innovation. Organizations must recognize and embrace this transition.