Mark McDonald

In the prior post, I used the analogy of the newspaper industry to discuss on how technology could render some of IT’s greatest assets into their greatest liabilities.  Technology has changed newspapers by rendering their capital-intensive investment in print and distribution operations worthless.  The same can happen for IT, which according to analyst constitutes at least 50% of the average company’s capital expenditures.

Now you might think that the rest of this post is dedicated to the Cloud and the advent of managed services delivered via the Internet.  Such services, while not capital free, do not require up front CAPEX, etc.  The difference between current heavy weight and new lightweight technologies is discussed in an earlier post.

No, this post concentrates on what IT needs to evolve toward in order to survive in more or less its current state – the provider of choice for information, application and technologies.  This requires that IT be read all over, building off the children’s joke.  Note, this is something that I have written about in pieces before so I have provided links to other posts throughout this brief discussion.

Read as in Responsive, Economical, Adaptive and Deployed.

Responsive IT is one that is able to deliver services and create new services in every shorter cycle times.  It is more important to be responsive than it is to be agile; since every organization cannot know ahead of time which capabilities they need and therefore must have a tight learning to action cycle time.  For IT being responsive means managing IT processes and resources to reduce cycle time and increase their productivity, streamlining governance so IT decision making happens at the same pace as business decisions, and pushing nuisance demand into job jars are all examples of becoming more agile.

Economical means more that just cutting the cost of IT, it requires aligning IT cost structures with the cost structures of the business.  Metrics like IT budget as a percent of revenue are stupid—yes I used the S word, because they are grounded in the believe that IT moves with the business in only one direction – downward.  Economical means a greater degree of variable costs in the IT budget reduced capital requirements and the ability of IT to create leverage.  As one CIO told me, he replaced IT/Revenue metrics with the following – the number of IT employees to Free Cash Flow as it provides a greater measure of IT’s ability to create leverage.

Adaptive which may sound like another word for agile, but not in the sense for this idea.  IT organizations are among the most hide-bound and unwilling to change in terms of their practices, processes and particularly their skills.  IT itself needs to be adaptive in the way they work in order to provide services at speed and scale.  If you look at major IT internal initiatives you see hierarchical, command and control, stages and gates that are more akin to the bureaucracy of bygone eras than creating the dynamic organizations working with some of the most innovative technologies in the world.  IT has to be a leader in creating flat, adaptive, skills based organizations or it will be left in the dust, as it is unable to compete with service companies who are already there.

Deployed describes the actual application of IT services and resources in changing business performance.  Too often IT separates the creation of new services from their take-up, use and resulting benefits realization.  This is one of the ways CIOs make it easy for the business to separate itself from IT.  It is also the part of IT that is most susceptible to transformation via the application of lean principles and services as companies cut back on underused services that represent waste.  If you are changing business performance then you are creating value – all else is waste.

Now it’s easy to go on a 700-word rant about what has to change in IT.  But one of the things that I am seeing is organizations delivering significant changes in their performance curves – cutting months into weeks, trimming million dollar investments into a few thousand dollars all without changing the value of the outcome.  That kind of transformation coming in government, manufacturing, high tech, service industries across all geographies provides an indication that change is not only possible, but its happening.

Getting READ is not the only recipe for success in an ever competitive world, but it provides an idea for you to think about and assess how ready you are for the future.

1 Comment »

Category: Leadership Strategy Technology     Tags: Future of IT, Innovation, IT Leadership, IT management, IT organization, Strategy

Share

Tweet