CIO club members and business leaders are actively discussing information technology management strategies and digital transformation strategies. IT departments are becoming the key driver of changes that are important both in terms of IT infrastructure compliance with new requirements, and company development as a whole, along with getting extra perks. In this context CIOs (CDOs, CDTOs) exceedingly need to justify their actions and build trust with businesses. This is the only way to achieve speedy implementation of changes and maximum efficiency of innovative IT solutions.
IT through a business lens: turbulence amid the evolution of technologies
Everyone – not only IT guys – knows that information technologies have penetrated every aspect of our lives and are rapidly evolving. Every month, the volume of transmitted and accumulated data grows exponentially, companies need effective tools for processing this data, high-performance computational capacities and storage facilities are emerging. On the one hand, IT is becoming cheaper and more accessible, but at the same time geopolitical conflicts cause a shortage of electronics and the need to revise digitalization strategies. Gartner Hype Cycle annual research is constantly publishing new promising technologies that can potentially replace or complement the old ones, and we haven’t yet figured out existing technologies.
If we look at Adoption of Technology in the US, another periodic study, which assesses the speed of technologies taking over the mass market, we may notice another pattern. While in the 1950s-1970s it took a few decades to adopt new technologies, today they penetrate societies within literally five years, almost as soon as they emerge.
No doubt, CEOs feel the exact same trends. After all, they have access to analytics, their colleagues’ and world experts’ opinions, technology leaders as role models in various business areas. A company is now driven by flexibility and adaptability to rapid external changes. The rule is, if you want to be stable, you need to run faster and faster.
Moreover, top managers are even more critical about modern technological trends than IT experts. They see it as a collapse of their usual methods of doing business, communications and management. For example, in their MBA courses they were told about so-called universal ‘best practices’ and business rules. But these rules are not that obvious anymore, and an MBA doesn’t seem that competent. Back in the old days you could take certain patterns to make decisions and implement them within your comfort zone. You were backed up by a team of marketing experts, analysts and researchers. You had enough time to verify and adjust their analyses. But today the best decision is always the one you could have made yesterday. You don’t have time to think, yet the cost of a mistake is higher than ever.
That’s the reason why many leaders feel insecure. A turbulent environment and a growing volume of information from without is something we have to deal with every day. The situation is aggravated by black swan events that are hard to predict and have severe consequences, such as a pandemic or economic sanctions.
What’s the role of IT in all this? Of course, technology boosts a company’s chances and development prospects, while providing it with new niches. But executives see that amid rapid changes, existing IT departments respond in a somewhat inert manner and can even slow down development. Businesses expect that IT would at least support them, and, in a perfect world, return on their investment and provide a specific, thoughtful and reasonable action plan.
Business-IT relationship: from inertia to proactive support
IT teams in companies will have to make a shift from being a department with clear-cut instructions to an independent, proactive body that can dictate rules and strategies to the business, if necessary. IT should now focus on two main tasks. First of all, they should provide timely support to address current problems and understand what current business processes can actually be supported with modern IT tools quickly and efficiently. The second task is to search for new opportunities, new technologies and products, and assess how effectively these products can be applied. In both cases it’s important to remember about information security. Many companies, especially quasi-state companies, are facing increased attacks from cybercriminal groups. The value of personal data is growing both for the company and for attackers. Another important factor in IT development in Russia is import phase-out. Replacing imported products with other solutions is relevant for businesses as much as for the public sector due to impossibility of their further support, renewal of licenses and technical support.
The pandemic has shown that in a critical situation, IT can really take over the issues of competent and proactive business support. In the early months of 2020, with everyone rapidly shifting to teleworking and employees experiencing high levels of uncertainty, it was the IT departments that jumped into action. They provided executives with helpful tools such as remote communication solutions, remote business processes, online access to the company’s resources, leak prevention tools and other advanced information security systems, as well as electronic workflow. In fact, all of this is now corporate mainstream, but back then it took much courage and responsibility to implement those tools.
The first step towards a healthy business-IT interaction is frank and honest communication. There is a largely fair stereotype that IT men and women are introverts who avoid communication at all costs. Now they need to learn the art of communication. For example, some IT departments have appointed a designated employee who would collect all IT-related news and use in-house tools (like e-mail, messengers or corporate website) to share it with the entire staff in the company – for instance, what are the emerging solutions out there and how can they be applied. When people have a better grasp of the goals of IT changes, dissatisfaction decreases, and employees are more willing to help the IT department in solving in-house problems.
On the other hand, the head of IT should know the business even better than other functional managers (to some extent). They should study the trends of their business development, compare them against competitors, and take note of what technologies they are using. A proactive CIO is a key to success of adopting changes. Their proactivity is manifested through learning about the specific features of their business and accountability for the initiatives they put forward.
Digital transformation or simple automation?
IT and businesses should be talking the same language, and to ensure that we must be aware of the difference between automation, informatization, digitalization and digital transformation. What does a business mean when it approaches the CIO with a request to conduct a digital transformation? Is it your basic business process automation or a radical restructuring, including making new products and exploring new markets?
There are big conceptual differences between these words. Automation implies the introduction of local tech solutions that replace the manual element in routine procedures, but don’t interfere in the decision-making process. Informatization is a complex concept, implying that automation doesn’t only cover a specific business process, but the entire company. Digitalization begins when a software can make independent decisions based on the established criteria and input data. For instance, smelting iron in a blast furnace used to be controlled by chief process engineer based only on their experience, but now a neural network can do it through analyzing Big Data.
Digital transformation is, in fact, the most large-scale overarching phenomenon. The transformation completely restructures the company’s business model, brand new products are invented, new markets are entered. Such cases are pretty rare. At one point in time Kodak might have profited from a digital transformation by entering the digital camera market, but the company missed the chance to do it. Apple, however, jumped at the chance and tapped into all of its huge potential in their smartphones, by creating a whole business ecosystem around the new technology.
IT strategies: from project planning to agile methodologies
So, the CIO and the business hit it off. Can they jump right into strategic changes and digital transformation?
First things first, it would be a good idea to conduct a bilateral SWOT analysis. It’s an efficient tool for assessing the state of IT in a company that focuses on a few internal and external factors: Strengths, Weaknesses, Opportunities, Threats. A two-way process means that the business should conduct an IT SWOT analysis while IT should do the same with the business. This way, CEOs will get a better understanding of what benefits they can get from technology and when technology may be a barrier for development.
The next step is the classic planning sequence: IT strategy, project schedule, tracking the target. But you need to keep in mind that strategies are prone to change, they are becoming less solid and more flexible. Even the most efficient strategy that lacks flexibility and is overly detailed may become a barrier to change. Pure project management and Waterfall from setting a task to its implementation no longer work. After all, when you draw up a program with a 2-3 year horizon, it’s obvious that you’ll be adjusting it in six months.
Here the development of a high-level business architecture of the company may come in handy. This means that a specific IT toolkit is superimposed on the main building blocks of business processes. This roadmap can look like a brief document prepared by the IT department that can later be used for communication with the functional business leaders. A set of measures is created, implemented, and flexibly adjusted based on this program along with feedback from the company structural units.
To draw the line, the main thing for a company do to is not to outline a clear development plan, but to build relationships with platforms, partners, suppliers and contractors for product development, so that it’s able to respond flexibly to changing environments, by managing its pool of products and collaborating with IT manufacturers.
The product approach, i.e. developing your own or adapting existing IT products, is important both for the development of external business processes (like communications with customers) and for in-house departments. Companies that are developing their own digital products should pay attention to the Design Thinking that implies a creative approach to problem solving. The idea behind this approach is to create an ecosystem of various start-up development teams in the company structure that are clearly focused on the needs of the internal customer. Departments that deliver IT products to customers and implement new systems should understand how their product will be used, what goals it will achieve for the business. For example, there are many thorough and logical IT systems which are unrealistic in terms of practical use. The contrary is also true – a system that may not be perfectly functional but is well thought-out in terms of internal organization will be welcomed by users. You should stick to the golden mean. The product should both win user empathy and solve business problems in an optimal way. As a bonus, the startup ecosystem will provide the company with an influx of new ideas and resources.
The next steps in Design Thinking are focus, idea generation, prototyping and testing. They correlate well with the MVP concept (minimum viable product) that can emerge, for example, as a result of agile development. These MVPs can be verified in designated areas of the IT infrastructure called sandboxes. Our premise is that the company has a new IT product, a truncated prototype of a future global solution. But not all even mature technologies are applicable in a company. Many of them need to be grounded to specific conditions. So business users ideally can test their MVP in an experimental environment where a mistake with the product won’t entail dire consequences. Based on these tests, a company can understand what specific classes of digital solutions it needs before opting for a full-fledged purchase or development.
Therefore, companies are refusing to develop solid IT strategies that would lead the company’s IT infrastructure to a certain target state and a specific set of services through a schedule of projects. Instead, they are choosing high-level business architectures and so-called network-centric structures that enable IT units to flexibly manage the implementation of planned actions (managing development and resources, testing certain products, hypotheses, business models in a sandbox without rigid rules or strings attached). By the way, a sandbox is not only a dedicated infrastructure segment, but also a resource for holding hackathons that test certain products and demonstrate real-life cases of how useful a particular technology is.
Change Management as an Essential Soft Skill
If classic solid IT planning is obsolete, what’s there to replace it? First of all, a business should be able to very quickly prototype, test, and deploy certain IT solutions. For example, banks can become technology leaders if they have reduced the cycles of launching their digital products on the market from a few months to just a few weeks, while maintaining a high level of development security. Fast delivery of solutions and services is becoming a company’s fundamental survival factor and a competitive advantage. Indeed, to do so companies should deploy a certain organizational structure built on DevOps and DevSecOps principles.
Executive competencies are changing along with the market. Today, almost all layers of management imply a certain degree of adventurism. While the classic theory taught managers to avoid risks, modern leaders should take them by default. The risk management strategy boils down to the development of mechanisms for responding to risks.
Finally, all of this leads to change management. The cycle of change adoption in a company normally begins with the external environment resistance. Only when others have clearly understood the benefits of new technologies, is it possible to start implementing digital solutions. Staff needs to be taught new competencies, as well as involved in product testing and demonstration of their advantages. IT saves time, improves quality, and allows to exponentially increase the amount of information processed. The most important thing is to show each employee’s personal benefit from the changes. Planning communications enables you to make the process of change less painful, more transparent and efficient. Due to various well-known techniques, executives can predict certain reactions of their staff, so the process of change adoption today is more manageable than ever.
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