“Let's buy this solution, we can use OpEx and don't need to involve IT.” “Great, it is exactly what I need to deliver/demonstrate XYZ in that period, but I have no idea if this is in line with over all IT strategy, but I don't really care to be honest.” “By the time IT realizes we run our campaign already.”
Standard conversations and discussions highly likely most of us witnessed multiple times in the past and in the present. Of course there is a benefit for a number of companies to push their services and software solutions in organizations as fast as possible, especially when shorter decision-making routes are available. And vice versa it is beneficial for Business Units when a program, campaign or app can be installed quicker, without a lot of approval processes to generate positive business results faster. The OpEx, speed and time to market argumentation repeatedly works and has its reason for being. Needless to say that such an approach — even if understandable in many instances — is not the best way when the big picture is being neglected: the overall company strategy which covers multiple aspects, compliance being one of them. We know that as well ...... In recent years budgets spent in business-led IT grew and will do so in the future, which is a good thing from my point of view. According to Gartner it is currently about 36% of the budget and an estimated 1/3 of the formal IT budget. This is significant and demonstrates even more why “shadow “ and “business-led” can use some sun, need clear ownership, integration and support.
What is shadow or business-led IT?
Shadow IT
Is an investment in I&T that is hidden, unnoticed, undercover and undetected. Given the nature of this, in many cases CIO and IT governance functions have limited influence and control yet usually remain implicitly accountable. This is not fair, creates risks in governance and compliance for example and may result in additional expenses.
Business-Led IT
This are investments in I&T where a business unit or function takes the lead. She or he carries the responsibility and accountability providing the funding and resources. IT approval is not needed, but the likelihood that IT will be informed, consulted is given, and they offer advice and supporting services.
Companies need to deal with constant changes like new market dynamics and technology developments to remain powerful, relevant and competitive. In addition, there are often challenges like internal hurdles, lack of transparency and egos as drivers for decision-making, which slows companies down, bundles valuable time, men-power and money. Another interesting aspect is the change of demographics. Why? Have you ever thought about the fact that the change of demographics within your team / employees demands new tools, new processes to ensure that the new gained knowledge and new way of doing things can be worked with and implemented? Shadow will not support that. Resistance is futile. Operating models need to change, and new requirements that reflect this need to be adopted. One key aspect here is or will remain technology ownership with a clear focus on value creation as the goal. For that accountability for value and quality is the key.
What could be the impact you may ask? In order to generate the best value from I&T a coherent strategy execution is required. The impact on value creation will increase and so will time to value which allows your company to scale innovation easier and quicker. The overall value business-led/shadow IT solutions can take some time till you see some results. Sometimes take up to 18 month or more. Reasons for that can be non-functional requirements and implementation.
A smart approach can be rather than being the “IT police” be the enabler and supporter. A change in attitude and shift to a culture of forgiveness and support is more helpful.
How can CIO's integrate business-led within the I&T operating model?
The CIO job is changing and is much more multidimensional. She or he is playing a leading role in maximizing the company’s return on business-led IT by supporting and preparing business partners to lead and manage their I&T investment, and by ensuring that the IT team can enable them better. The role also changes by extending to include stewardship off the enterprise I&T capability.
Four areas can be looked at to help set the frame to make it less complex:
1) Define the people who make the decisions on new technologies and ensure these owners are made accountable. Unfortunately this is not the case in many organisations these days. Remember: authority can not the disconnected.
2) Get a grip on the measures you take on increase or decrease of transparency. Transparency should always never increase the other way around.
3) How good is a process, policy or information flow that only works and makes sense in one line of business? An end-to-end view is inescapable and the solution.
4) Once the technology authority decision taker understands that I&T, no matter which one, is part of the business strategy and that therefore policies have to be applicable to all, only this way you can ensure accountability, transparency and synergies. The name of the game is to adjust and not to disregard. The governance model as correction and indicator to react if not followed.
But how does it work in reality if there are various models, no real transparency, the own motivation rules over company value and interests, plus there is a lot of friction between various departments like for example HR, Finance and R&D? First off all it makes sense to identify the point(s) of frictions between the various “areas of your organization” within the company. Then see what are the processes, systems, platforms etc. so they can be harmonized (if it makes sense) to ensure an aligned approach. One good reason is to guarantee security for example. Another one, of many, is recruiting or the war for talent as it is labeled these days. So far most companies have an independent approach with regard to recruiting and often search outside of their organization while there are great sources internally. Integrated approaches, connected systems etc. can help to ensure an efficient and smart system to include the in-house approach. This will increase personal career options for the employee and build greater loyalty at the same time.
SUMMARY
business-led IT is growing, shadow IT has no future
governance is at risk when ownership is not defined and implemented
a member of BU management team needs to be assigned and take on responsibility for BU IT
coordinating off IT within the BU and with central IT is a must (security, compliance, workload, quality, costs etc.)
integration of business-lead IT within I&T operating model is vital
focus on interdependence
use a system of systems approach to identify opportunities to align, integrate and create synergies
create added value within the company by creating service/advise teams for business-led IT like solution advisory services. Why? This way experts like Business Intelligence, Analysts can help to make better and more informed decisions
goal is to be able to ensure mission critical solutions or applications operate within the IT operating model which reflects the company business strategy and governance.
Remember after all digitization is evolution not revolution :) Contact me if you want to discuss further, need strategic support, want to explore ways on how to harmonize, evaluate, implement new processes, tools etc. or if you simply want to share your valuable feedback.
About the author:
Birgit Baier is a Strategic Realizer - making complexity simple. She is international and digital at heart, a passionate Business Transformer with over twenty five years experience in leading digital and integrated marketing, innovation, brand development companies and managed strategic technology alliances/partnerships. Creating meaningful solutions, products, services and brand experiences and delivering strategic innovation is what drives her. More details can be found here: www.bempowered.de.
You can book Birgit as a speaker: http://www.women-speaker-foundation.de/speaker_Birgit_Baier