Optimized Service Delivery? Prepare to be Jettisoned!
Information Technology organizations have varying degrees of relationships with the business. These are typically grouped in to 5 levels of maturity in characterizing those relationships, based on CIO Magazine’s annual State-of-the-CIO survey of non-IT business leader’s perceptions and observations.
- Cost Center
- Service Delivery
- Business Partner
- Business Peer
- Business Leader
The bottom rung of this maturity ladder is as a cost center. Repeated surveys over the last decade have placed this structure as about 18% of all IT organizations. A cost center is perceived to be just that: a necessary business cost. Your IT organization is a mechanic, keeping the IT car running when something breaks.
The next rung comprises the overwhelming majority of IT organizations; service delivery. This is the core of operating and maintaining the smooth operation of the computing environment. About 56% of all IT organizations fit into this bucket. You provide computing services to the business, often as a commodity. And that’s the rub; if IT is considered a commodity, you are ripe for outsourcing, as you provide little additional value to the business outside of smooth IT operations, which typically can be delivered better, cheaper, faster, using outside shared providers.
CIO’s in category 1 & 2 average less than 3 years in their jobs.
We work with IT leadership in these organizations to elevate their perspective on IT’s role in the organization to one producing business value beyond the scope of an optimized computing environment.
So with 74% of all organizations in the “upgrade and maintain the car” mode, the issues with providing IT value are pervasive - and limiting both IT and business’s potential.
IT should be creating competitive advantage and market differentiation, bringing real, tangible value to the business and the key enabler of business - more so today than at any time in the past - the other 26%.
Business Partner - you listen to the business needs, and create what you perceive they need to operate. The role is often after the fact, being reactive/responsive to pre-defined needs. IT is the solution provider.
Business Peer - the business engages IT in the decision process on anything where there is a technology component, allowing IT’s insights on technology to be a proactive part of the decision process. IT is becoming the strategic partner.
Business Leader - a very small percentage of IT organization fit in this lofty and elusive role, as, in most cases, technology in NOT the business driver, but the business ENABLER. Some organizations use technology as their driver, and therefore, may find this organizational perspective appropriate. IT becomes the innovator, anticipating the business needs, and proactively aligning strategy to meet the future business needs using IT as the lever.
CIO’s in category 3-5 average > 13 years in those roles, as the business values their contributions to corporate value.
Why Does IT NOT have a seat at the “big table”?
In level 1 and 2 organizations, it is obvious. The business sees IT as a service provider - a waiter or mechanic for their shiny computing toys. CIO’s are often their own worst enemy in these situations, having been raised as a techno-geek, and used their über skills to transition to a management role, without ever accumlating the business acumen to become a level 3-5 IT leader. They have also done little to show non-technical leadership, how IT can provide the true business value to be considered as a business partner, peer, or leader.
And other C level leadership is part of the issue as well, as - unless they have experienced it previously - do not truly understand that IT can be that partner in furthering the competitive advantage and market differentiation and an IT-enabled business can provide. As a result, they never ask IT to operate outside of a cost center or service delivery mode.
Getting there is the trick; of the dozens of IT leaders we’ve worked with, a significant percentage has not been able to, or willing to make the leap from an IT leader running and IT organization, to a C level BUSINESS leader that brings the technology perspective to the future of the company. Those not making the transition, are at best, VPs of IT, leading singular functional organization. If they remain in the CIO role, they are a boat anchor to the business, not an enabler.
Those that do, typically end up in a company that is not stagnant, but potentially, as an industry leader.
So where are you in this IT maturity scale?