Many enterprises are in the process of fundamentally changing their business models to compete on a global stage - they are changing strategies, structures and processes. Once you place a product or a service on the internet you are immediately in the global market and to scale your business effectively, efficiently and in a cost effective manner you will need to leverage global partners. Situations such as this, is leading enterprises to collaborate outside of the enterprise and form a large ecosystem of partners to help drive effectiveness, and efficiency which results in domain expertise no longer existing internally only. The other aspect of business today is the speed of change both within the terms of business and the move in the industry to minimize investments in initiatives that are not delivering value which many call "failing quickly."
A great example of "failing quickly" was a soda manufacturer who delivered a new product to market as a limited time flavor and based on its success the manufacture would either retain the flavor for permanent production or cut it if the flavor did not meet acceptable market momentum. If the flavor fails the company would then replace it with a new flavor and continue the momentum of the business.
Emerging markets are using access mechanisms such as the soda example above to help attract new customers. In the past it would have been done through a web browser on a PC or laptop, but with the rapid rise of mobility this approach is also continuing to evolve.
This change in business is having a visible impact on IT development. Relevant CIO's and IT organizations are looking to transition budget and headcount to deliver rapid innovation and the emerging best practice is to ensure that IT is business driven. To do this, IT can no longer exist as a separate, distinct business entity. At the same time the dependence on IT is growing daily as IT becomes more critical to operations and strategies. So for too long, boards, management and shareholders that previously did not pay close attention to IT now need a closer understanding of what it does and how it can change market landscapes. (I plan on addressing the relevance of communications regarding IT to shareholders, management and boards in a future blog.)
So where are we in this transformation?
I would like to say that all IT organizations are undergoing a transformation to help them add more value and been more relevant to the business. Unfortunately my experience to date shows me this is not always the case with too many organizations. The good news is that forward thinking CIO's are headed in this direction of splitting their organizations into at least 2 organizational constructions. Those organizations who are transitioning are splitting into 2 parts (if they have not done so already) with one group responsible for the sourcing and delivery of infrastructure and applications, and the other group focused on architecture, change, driving business innovation and risk. The first component, the infrastructure team, will put their efforts towards sourcing and driving out costs - such as removing infrastructure that doesn't make sense for the organization to deliver, transitioning capabilities to third parties, and looking for ways to help free up capital for investment in growth. The other half of the IT organization will transition to focusing on initiatives to drive value, whilst effectively delivering the business value demanded.
That all said, we cannot forget that the dependence on IT will increase in the future and IT will assume the execution of the business risk so your IT shop better be close to the business. Perhaps this is a good time for the CIO or your IT organization to be close friends with the Chief Risk Officer.
Where is your organization? Transformed, Transforming or out of business?